Southeast Asia sees brighter future in shifting global economy, integrated ASEAN Community
Goods are loaded onto trucks at a wholesale market in downtown Hanoi on January 7. A survey by accounting and consulting firm Grant Thornton has found that despite declining global business optimism, optimism in Southeast Asia has increased for the third straight quarter. PHOTO: AFP
Despite the fact that global business optimism has declined, optimism in Southeast Asia ticked up for the third straight quarter, according to the International Business Report released by accounting and consulting firm Grant Thornton.
At this time last year, business optimism in the ASEAN economies stood at net 25 percent.
However, the picture heading into 2014 is markedly different with optimism in the ASEAN rising to 45 percent, driven by improvements in Philippines (90 percent), Indonesia (78 percent), Vietnam (up from -10 percent to 40 percent) and Malaysia (up from 12 percent to 20 percent). Global business optimism stood at only 27 percent, a decline from last year.
With ongoing political unrest, optimism in Thailand remains unsettled at -20 percent.
Indonesia saw a strong increase from 56 percent in Q3 to 78 percent in Q4 2013.
"We're braced for a momentum shift in the global business dynamics as we enter 2014. Things seem to be improving quite markedly in ASEAN," said Ken Atkinson, managing partner at Grant Thornton.
"The contrast from 12 months ago is stark as business leaders plan for 2014, optimism in the ASEAN looks more robust however uncertainty is growing in some countries."
But revenue prospects across ASEAN have fallen from 59 percentage points 12 months ago to 54 percent now.
In Vietnam, expectations for revenue growth have decreased from 90 percentage points to 52 percent over the same period. Expectations for rising profits dropped in Vietnam, Thailand, Singapore, Malaysia and the Philippines compared with 12 months ago (Q4-2012).
By contrast, Indonesia was the most optimistic about increasing profitability at 70 percent.
Atkinson said growth prospects in the ASEAN looked markedly different a year ago.
"More recently we have seen growth return to these economies as unemployment falls and consumer spending rises," he said.
"Consequently businesses are seeing renewed demand for their goods and services but this does not appear to be translating into confidence in revenue or profit growth."
Expectations for employment, investment and salaries have recovered to 37 percent in the ASEAN after a slowdown from Q1 to Q3 last year.
However Thai business leaders are more pessimistic than their peers in the Philippines (26 percent), Vietnam (32 percent) and Malaysia (36 percent). Thailand was gripped by riots in December that hindered business growth.
Atkinson said ASEAN countries are moving toward a more balanced regional economy with fewer extremes.
"This should support business growth prospects; greater balance and less volatility means businesses can plan for the future and make decisions with greater certainty," he said.
ASEAN countries include Brunei, Cambodia, Indonesia, Laos, Malaysia, Singapore, Myanmar, Thailand, Philippines and Vietnam.
The ten-nation bloc is looking forwards to establishing the ASEAN Community in 2015 with stronger regional economic integration.
At a summit last October, Nyan Lynn, Deputy Secretary-General of ASEAN said ASEAN has made progress in implementing the ASEAN Community blueprint and that the leaders of the bloc have been encouraged by the enhanced progress in external relations as well as greater solidarity among the member nations.
An average of 82.5 percent of all action lines towards the ASEAN Community 2015 have been completed or are being implemented"”representing 78 percent of the pillars for the political security, 79.7 percent of economic pillars and 90 percent of socio-cultural pillars, he said.
The ASEAN leaders also adopted the "Bandar Seri Begawan Declaration on the ASEAN Community Post-2015 Vision" where they tasked relevant bodies with further articulating ASEAN's vision of a community that is "not only politically cohesive, economically integrated, socially responsible but also truly people-oriented, people centered, and rules-based."
The ASEAN Economic Community (AEC), the goal of regional economic integration by 2015, envisages key characteristics including a single market and production base, a highly competitive economic region, a region of equitable economic development, and a region fully integrated into the global economy.
The AEC areas of cooperation include human resources development and capacity building; recognition of professional qualifications; closer consultation on macroeconomic and financial policies; trade financing measures; enhanced infrastructure and communications connectivity; development of electronic transactions through e-ASEAN; integrating industries across the region to promote regional sourcing; and enhancing private sector involvement for the building of the AEC.
In short, the AEC aims to transform ASEAN into a region with free movement of goods, services, investment, skilled labor, and freer flow of capital.
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