More than half of US firms in Asean expect Covid-19 to continue hitting revenue in 2021

OVER half of the United States businesses surveyed for the annual Asean Business Outlook Survey expect the impact of the Covid-19 pandemic to continue taking its toll on revenue this year, with an increasing number foreseeing stagnation in revenue generation from Asean markets in the next two years.

According to the survey conducted by Blackbox Research, 54 per cent of respondents said they expect continued revenue reductions, 19 per cent were neutral, and 27 per cent expect positive impact on business.

Of those that expect continued revenue reductions, the majority (58 per cent) said they expect a 1 to 10 per cent reduction in revenue.

Monica Chitnis, research director at Blackbox Research who presented the findings at the AmChams of Asia Pacific Business Summit on Thursday, noted that an increasing number of members foresee a stagnation in revenue generation from Asean markets in the next two years.

In terms of how important the contribution of the Asean market is for company revenue, 42 per cent of those surveyed said it is "more important", while 47 per cent said it "remains the same". Compared with the previous year (survey conducted in 2019), American businesses were more bullish on Asean then - 54 per cent said the region is more important and 36 per cent said it remains the same. In 2018, 61 per cent of respondents said the region is "more important".

"This signals an opportunity to reinvigorate the Asean value proposition to fuel optimism and encourage increased membership and investment potential in the coming years," said Ms Chitnis.

In terms of expansion plans, more businesses are putting local expansion on hold. This is expected as nine in 10 businesses reported a negative impact on local operations due to Covid-19, she noted.

Less than half (42 per cent) of those surveyed have plans to expand locally (notably, Malaysia is the most optimistic in this segment, with 48 per cent set to expand locally), 51 per cent intend to "stay the same" (60 per cent of businesses in Singapore are set to carry on at a similar capacity), and 4 per cent expect to decrease.

For overseas expansion plans for the Asia-Pacific (APAC) region, 73 per cent of the businesses are planning to expand overseas in the next five years. The country with businesses least likely to expand is Thailand, at 58 per cent.

The five countries highlighted as leading investment destinations comprise Vietnam (44 per cent), Thailand and Malaysia (31 per cent each), Indonesia (28 per cent) and China (27 per cent).

"We asked companies what were some of the developments that influenced their decision to expand within APAC. The top reasons were rising demand (39 per cent) and the technological advancement (38 per cent) in the region," said Ms Chitnis. A further 27 per cent reported increased geopolitical tensions outside of the Asia-Pacific region.