Asean CEOs' business outlook dimmer than global peers'

JANUARY 22, 2019 - 5:50 AM

Singapore

CHIEF executive officers (CEOs) across Asean are harbouring greater pessimism than their global peers, in a stark turnaround from previous years, when they were more optimistic.

PwC's annual survey of more than 1,300 CEOs around the world has found that nearly 46 per cent of Asean CEOs are saying that global economic growth will decline. Globally, 29 per cent of business leaders say the same.

This significant rise in pessimism is in contrast with the findings of last year's survey. Back then, only 5 per cent of CEOs globally projected a decline in global economic growth; this year, the figure is nearly 30 per cent.

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Yeoh Oon Jin, executive chairman at PwC Singapore, said: "CEOs' views of the global economy generally mirror the major economic outlooks. These business leaders are adjusting their forecasts downward in 2019.

"This is especially so in Asean this year, with Asean CEOs showing even greater pessimism than their global counterparts. This is in stark contrast to sentiments of the past few years, when there was greater optimism in Asia."

The increased pessimism colours their outlook for their own companies' business prospects: While slightly over a third of the 78 Asean CEOs surveyed described themselves as very confident about their organisation's growth prospects over the next 12 months; nearly half said they were "somewhat confident", and the remaining 15 per cent said they are not confident.

Trade conflicts topped the list of threats identified by Asean CEOs, with 83 per cent citing this. The other major threats were geopolitical uncertainty (81 per cent) and policy uncertainty (78 per cent).

While CEOs largely named the trade conflict between the United States and China, others pointed to the tensions between the European Union (EU) and the US, EU and United Kingdom, as well as Canada, Mexico, and the US.

To navigate the business risks and challenges highlighted, a majority of the Asean CEOS surveyed said they are taking a strong reactive approach to the geopolitical shift: 29 per cent said they are amending their supply chains and sourcing strategies; 29 per cent said they are delaying capital expenditure, and 17 per cent are adjusting their growth strategy to different countries.

This year's survey also did a deep dive into questions around data and analytics and artificial intelligence (AI).

On data and analytics, the poll revisited questions relating to data adequacy first raised in 2009, and found that, despite significant investments, the gap between the information CEOs need and what they get has not closed even now, 10 years on.

When asked why they do not receive comprehensive data, Asean CEOs in Asean pointed to the "lack of analytical talent" (53 per cent versus 54 per cent globally), "poor data reliability" (53 per cent versus 50 per cent globally) and "inability to quantify external information" (50 per cent versus 40 per cent globally) as the primary reasons.

On the AI front, 87 per cent of Asean CEOs (versus 85 per cent globally) predicted that AI would dramatically change their business over the next five years. A further 62 per cent said they believe AI will displace more jobs than it creates, versus 49 per cent globally.

However, more than a third of CEOs (36 per cent Asean, 23 per cent globally) currently have no plans to pursue AI.

A further 32 per cent (35 per cent globally) plan to do so in the next three years, while 28 per cent have taken a limited approach (versus 33 per cent globally). Four per cent have implemented AI on a wide scale.

Business leaders also indicated they are looking to the government to lead the future agenda on AI. Nearly four out of five (79 per cent) of Asean CEOs said governments should play a critical and integral role in AI development. They said that governments should develop national AI strategies and policies, including the examining of the expected impact on communities, introducing incentives to speed up the adoption of AI and providing a safety net for people displaced by it.