By Victor V. Saulon
Sub-Editor
APEC business leaders expect revenue to grow in the next 12 months despite rising trade tensions between the US and China, according to a survey prepared ahead of a conference of chief executives in the region.
PWC, in a survey of 1,189 business leaders across the 21 economies within Asia-Pacific Economic Cooperation (APEC) bloc, found that 35% of respondents were very confident of revenue growth, slightly lower than the 37% a year earlier.
Some 51% plan to increase investment over the next year, the firm said in its report, which had 61 responses from the Philippines or 5% of the total. The survey was carried out in the lead up to the APEC CEO Summit, which is taking place this week in the Papua New Guinea capital Port Moresby.
Business leaders in the US and Thailand were among the most confident, with 57% and 56% “very confident” of revenue growth. Those in China and Mexico, two of the largest trading partners of the US, showed below average confidence, PWC said.
“Following the imposition of further tariffs between the US and China in September, a second survey of 100 business leaders in the US showed a majority (69%) expect a positive impact on their revenues from tariffs and only 27% expect a negative impact from tariffs on company costs,” PWC said.
Aside from a positive outlook on revenue growth, business leaders at a net 51% are planning to raise levels of investment, up from 43% two years ago.
“The biggest winners across APEC for foreign investment will be Vietnam, China, the US, Australia and Thailand, with Australia entering the top five investment destinations as a new entry among respondents, and Indonesia dropping out of the top five this year,” the firm said.
Business leaders are also looking beyond the largest markets for future investment targets, it said.
When asked which APEC economy beyond the US and China has the right conditions to host the next “unicorn” start-up, Singapore and Japan were the top choices.
Raymund Chao, chairman of PWC Asia Pacific and Greater China, said that while business leaders do not like uncertainty in business and flows of trade, “they are learning to adapt to the new reality and finding ways to grow and thrive.”
“While around a fifth of the business leaders we spoke to had experienced new barriers to trade this year the number of CEOs who are seeing new opportunities coming out of the new trade arrangements has doubled over last year,” he said.
“While there are winners and losers in any trade war, our research clearly shows that businesses are uncovering new paths to growth,” he added.
PWC said the report also showed that the market for employment was looking positive with 56% of business leaders expecting to create more jobs and only 9% actively reducing headcount as a direct impact of technology on their work force.
But it said the right talent is not always readily available with 34% of business leaders struggling to find the people that they need with the right skills and experience.
It said the gap is felt acutely across science, technology, engineering and maths (STEM) skills with 65% of business leaders stating that their governments need to do more to train STEM professionals and only 14% feeling their government is doing enough in this area.
“This sentiment is also reflected when business leaders were asked what could be done to make growth more inclusive for more people across APEC. The number one factor that business leaders identified was expanded access to high-quality education at all levels followed by improved transport,” the firm said.
Mr. Chao said the issues of training and education are on the top of the agenda for business leaders in APEC, giving a clear message to heads of state as they meet in Port Moresby to discuss what more can be done for business to secure long term success.
PWC said APEC business leaders are also very well aware of the need to invest more in becoming digital.
With the Internet economy projected to surpass $200 billion in Southeast Asia by 2025, the top investment priority for business leaders is digital customer interactions closely followed by digital skills for the work force, it said.
PWC said business leaders also know they need to do more when it comes to being digital.
It said only 15% of business leaders describe their use of artificial intelligence (AI) as highly competitive while 33% are not making use of AI at all.
“Those companies that describe themselves as highly competitive at AI are clear what they need to do to build on their perceived lead: increase investments, build more capability in AI and invest in local start-ups,” PWC said.
However, it said that while technology can provide part of the answer to sustainable growth, it is also presenting challenges in the new trade environment with moving data across borders identified as the area where businesses have experienced the biggest increase in new barriers in the last year to 20% from 15% in 2017.
“As APEC’s businesses become more digital and embrace new technologies such as AI, data flows will increasingly become the fuel that will drive global trade. Dealing with concerns about increased barriers to data flow will remain a priority for business for some time,” Mr. Chao said.
APEC, the premier regional economic forum, aims to support sustainable economic growth and prosperity in the region.
PWC said it supports APEC’s goal by conducting research, sharing insights and facilitating public-private sector dialogues on topics including food security, infrastructure development, international trade and investment and digital work force of the future.

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