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2016-11-17

PwC: Trade and business uncertainty won't hold back investment for APEC

APEC CEO Summit 2016: 17-19 November, Lima, Peru

* Over half of APEC business leaders plan to increase investment
* Short term revenue growth outlook flat
* One third of CEOs expect new sources of revenue from digital data on
connected devices

LIMA, Peru, Nov. 17, 2016 (GLOBE NEWSWIRE) -- Over half the businesses in the
Asia-Pacific Economic Co-operation's (APEC) 21 economies (53%) surveyed by
PwC this year plan to increase their investments over the next 12 months.
This is despite reporting fragile confidence in prospects for revenue growth
over the next year and disappointment with pace of progress on free trade in
the region.

PwC surveyed over 1,100 business leaders in 21 APEC economies in the run up to
the annual APEC CEO Summit in Lima, Peru (17-19 November).

Long term, it is good news for APEC economies, with over two thirds (69%) of
the increased investment to stay within APEC economies. China, the US,
Singapore and Indonesia are set to attract investment from more CEOs. A
regional diversification strategy is also apparent. On average, APEC
businesses PwC surveyed invest in seven other economies. Last year, on
average, they were investors in six. Almost a third (31%) of businesses plan
to focus investment increases in economies outside of APEC.

Overall, just 28% of all APEC business leaders remain very confident about
revenue growth over the next 12 months. It's the second year in a row CEOs
have had a subdued outlook for revenue growth. Businesses leaders in APEC's
youthful, faster-growing economies have higher levels of confidence in near
term revenue growth than before. These include The Philippines (65% very
confident in revenue growth), and Viet Nam (50% very confident).

This year, while more CEOs reported seeing significant progress towards the
goal of free trade in the Asia Pacific than did two years ago (22%
significant vs 15% in 2014), the majority (53%) in this year's survey
continue to see progress as slow.

At the same time, the competitive environment in APEC economies is changing.
More CEOs today see the leading company in their competitive set as either a
multinational based in emerging economies (18%) or a regional leader in APEC
economies (20%). This compares with 10% and 12%, respectively in 2014. The
biggest competitive threat remains multinationals from developed economies.

"A subdued level of confidence in the business outlook is hardly surprising
given geopolitical events this year. What's critical for the region is that
business leaders hold their nerve on investment and innovation.

"For the foreseeable future, APEC business leaders will have to balance the
short term economic outlook with investing for the long term. The wider
regulatory and tax environment are critical factors in business confidence
and investment. Standing still on regulatory conditions is not the way to be
competitive in a paradoxically cash-rich but slow-growth world," said Orlando
Marchesi, country senior partner, PwC Peru.

CEOs' outlook on the pace of GDP growth in China is mixed also. Almost half of
APEC CEOs believe China's GDP in the next three years will grow on average at
or below 5-6% a year. Despite this, CEOs are not ignoring the growth
potential for their business. Over the next three years business leaders want
to build their brand, expand inland and work in partnerships. These are the
strategies most common to business leaders, foreign and domestic, with
investment in China.

Raymund Chao, PwC China chairman, comments:

"It's significant that APEC business leaders look beyond a slowdown to the
long term. China is a prime example. Its scale and skills means concerns
about its slower economic growth are not enough to put business leaders off
investment and expansion. China remains a powerhouse of potential for APEC
businesses for new products, and partnerships."

In a warning sign for the APEC economies' leaders, CEOs point to continued
uncertainty around policy-related costs. Only 14% of all respondents say
they've become 'more confident' that they're able to forecast compliance
costs and tax liabilities than they were at this time last year.

Respondents are more likely to rank the regulatory environment (transparent
rules, lack of corruption) as the factor that matters the most in cross
border investment decisions within the region. Moreover, over half (58%)
expect the regulatory environment to exert 'more influence' on their
investment decisions in APEC economies over the next 3-5 years. The findings
suggest that business investment is now more likely to flow to APEC economies
with the right policy environment and talent pools as well as dynamic growth
prospects.

APEC businesses are also turning to wider strategies for revenue growth. CEOs
report that digital upgrades throughout the enterprise are helping them
target results in operational and cost efficiencies, improving customers'
experience and asset optimization.

Over the next three years, the findings suggest that real-time or near
real-time data collection in logistics, equipment, and point of sale devices
will become ubiquitous in the region.

One third of respondents expect new sources of revenue as a result of
integrating the role of connected devices in their businesses.

"APEC's manufacturing and resource rich economies have the potential to show
how data analytics can be used to inform business strategy, using information
from production, partners, logistics, customers, and the shop floor. The
power of digital data is not in how much of it you gather, but how you action
the information it gives you," added Orlando Marchesi.

Notes

1 PwC is the Knowledge Partner of the APEC CEO Summit 2016. For a full
report, go towww.pwc.com/apec
2 PwC interviewed 1,154 CEOs and industry leaders across the 21 APEC
economies during May to July 2016.
3 The level of those 'somewhat confident' in the outlook has risen (from 39%
in 2015 to 49% in 2016), at the expense of a falling level of those 'not
very confident' (from 27% to 17%) and not at all confident (from 5% to 3%).

4 Competition: 34% identify developed economy multinationals as their biggest
competitive threat. But concern has risen about the threat from
multinationals in emerging economies (from 10% to 18%), and regional
leaders in APEC economies (from 12% to 20%).

About PwC
At PwC, our purpose is to build trust in society and solve important problems.
We're a network of firms in 157 countries with more than 223,000 people who
are committed to delivering quality in assurance, advisory and tax services.
Find out more and tell us what matters to you by visiting us atwww.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of
which is a separate legal entity. Please seewww.pwc.com/structure for further
details.

© 2016 PwC. All rights reserved

Contact:
Mike Davies
Tel: +44 7803 9874136
E-mail: mike.davies@uk.pwc.com

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This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: PwC via Globenewswire

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