The latest ICAEW Global Enterprise Survey suggests businesses in the Asia-Pacific region are recovering from the shocks to the global economy.
Business growth is getting back on course throughout the Asia-Pacific region but it is unlikely to reach pre-crisis levels in the next couple of years, according to ICAEW 2010 Global Enterprise Survey.
The survey found almost 90% of businesses in the region were expecting turnover to grow in the next two years – with 12% predicting expansion of more than 30% in the period. However, based on previous ICAEW surveys, overall growth will subdued in Hong Kong, Singapore and Malaysia than before the global financial crisis started to bite. Even so, it is clear from the survey that the Asia-Pacific region represents a global economic powerhouse.
Across the region, fluctuations in the costs of raw materials were repeatedly given as a stumbling block to business competitiveness. Companies in Australasia were more likely than those in some other countries in the region to have suffered from changes in access to finance and interest rates, while the impact of future national governments’ measures is a concern for some.
The survey shows businesses in Singapore and Hong Kong consider their regulatory and tax regimes to be more business-friendly than other global regions. Businesses in Singapore are also more likely than most other countries in the Asia-Pacific region to welcome increased market globalisation, largely because of the increased access to new markets that this brings.
Businesses in the Asia-Pacific region that are looking to expand tend to target other countries within the region, with China a target for half of these businesses, followed by Indonesia (23%) and Vietnam (22%). India is also a target for 24%.
The main barriers to international expansion were administrative, regulatory or legal issues which were mentioned by 56% of respondents, the political environment (54%) and the ineffectiveness of legal systems (54%). Half were concerned about corruption while the availability of local management and skilled local workers were barriers for about one third of companies.
The Asia-Pacific region is also fast becoming the economic powerhouse of the global economy. Though businesses in the developed countries tend to outsource activities to the region to cut costs, this survey suggests that Asia-Pacific businesses are looking to higher value added products and services to maintain the pace of economic activity. The increased global competition will be good for consumers around the world. China’s exceptional growth saw them overtake Japan to become the second largest economy. Our survey shows that it is increasingly becoming a major market for businesses around the world.
Our 2010 survey suggests some increase in growth plans for businesses in the developed economies, but we are not back to the levels seen in 2008. There is a concern that once these economies are back to more normal levels of growth, demand for raw materials and oil will escalate causing renewed global inflation.
The survey draws on the expertise of ICAEW members who work at the heart of business in positions such as chief financial officers, finance directors and senior management. It incorporates responses from 11 countries within the Asia-Pacific region as well as from the European Union, the US, the Gulf and Africa.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Asian Banking & Finance. The author was not remunerated for this article.
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Mark Billington is Regional Director at ICAEW South East Asia. He is a UK qualified Chartered Accountant with 15 years experience in various business units.