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EU firms in Asean see region as having greatest potential
A GROWING majority of European firms in South-east Asia believe further Asean economic integration will be important to their business, with many finding the current pace too slow, the fourth EU-Asean Business Sentiment Survey has found.
Conducted by the EU-Asean Business Council, the survey found that European firms in the region were optimistic about prospects, though this was subdued compared to a year ago.
Of 338 respondents, 75 per cent expect to expand their levels of trade and investment in Asean over the next five years, down from 86 per cent the year before. Another 24 per cent expect to keep current levels.
As for profits in Asean, 72 per cent of firms expect these to rise in 2018, down marginally from 75 per cent in the previous survey.
More than half still see Asean as the world region with the greatest economic potential, with China coming in a distant second.
Said the business council's chairman Donald Kanak: "This year, our survey again shows European businesses' high optimism in the growth opportunities throughout the Asean region, and strong intentions to invest and expand employment."
More firms also see further Asean economic integration as important to their business: 85 per cent, up from seven in 10 previously.
Yet only 42 per cent feel that integration has made a positive impact on their business to date.
More than half believe the pace of Asean economic integration is too slow, while two-thirds think there are too many barriers to the efficient use of regional supply chains.
"Our survey shows clearly that European businesses want the AEC (Asean Economic Community) and see its benefits, but are becoming frustrated at the slow pace of implementation and the rising number of non-tariff barriers to trade," said the business council's executive director Chris Humphrey.
On the need to remove non-tariff barriers, the survey report warned that "further delays in delivering on this key area will only serve to dampen the enthusiasm of European firms in Asean''.
The survey also found that interest in a free trade agreement (FTA) between the European Union and Asean has grown.
Almost three-quarters of respondents believe they are at a competitive disadvantage without such an FTA, up from 55 per cent a year before.
Most businesses across Asean markets feel that a region-to-region FTA would deliver more advantages than a series of bilateral FTAs.
And 98 per cent believe the EU should accelerate negotiations on FTAs with the Asean region, up from 94 per cent previously.