NAYPYIDAW, Myanmar, Sept. 1, 2014 /PRNewswire/ -- U.S. companies remain optimistic about business prospects in the Association of Southeast Asian Nations (ASEAN), according to new survey results released today by the U.S. Chamber of Commerce and the American Chamber of Commerce in Singapore (AmCham Singapore). In a poll of 588 senior executives representing U.S. companies in all ten ASEAN countries, 74% reported that their company's level of trade and investment in ASEAN has increased over the past two years, and an overwhelming 89% of respondents expect it to increase over the next five years. The profit outlook is solid, with 63% of executives expecting profit increases this year, and 81% next year. Slightly over half (53%) of the respondents expect their companies' workforce to expand this year, while only 5% expect decreases.
"This survey underscores the confidence that U.S. businesses have about ASEAN, particularly as it integrates economies, deepens its trade and investment relations with major trading partners, and makes the region an important, attractive destination for U.S. investment," said Tami Overby, the U.S. Chamber's senior vice president for Asia. "The ASEAN countries that are participating in the TPP will enjoy the greatest benefits from this trend toward regional integration, and we continue to encourage those countries that are not yet in the TPP to consider participation."
AmCham Singapore Executive Director Judith Fergin added, "These positive findings point to positive outcomes for ASEAN -- more jobs, more exports, more commerce, and more rapid economic growth. U.S. companies are happy to be contributing to this good news story."
However, the survey also found substantial concerns and impediments to companies' growth in the region. As in previous years' surveys, corruption was the top issue across ASEAN, cited by a majority of respondents in all countries except Brunei and Singapore. American companies also pointed to burdensome laws and regulations, lack of transparency, poor quality of infrastructure, and the difficulty in moving products through customs in some countries as obstacles to greater investment.
"U.S. investors express serious concerns over many policy and operational areas, ranging from rapidly escalating costs, to corruption, inadequate infrastructure, and the need for more engagement with the private sector as laws and regulations are developed," said Overby. "The survey results point clearly to a number of areas that ASEAN countries can address in order to maintain and enhance their competitiveness and attractiveness to foreign investment."
The survey also revealed that U.S. companies take advantage of regional economic integration efforts, including ASEAN's free trade agreements (FTAs) with Australia and New Zealand, China, India, Japan, and Korea. Nearly half (49%) of respondents report that they use the FTA to export goods from ASEAN to China. American companies' use of the other FTAs ranges between 43-47%.
ASEAN's efforts to more closely integrate the economies of its ten member nations are also important to U.S. companies' investment plans in the region. 53% of respondents said that their company has a strategy based on the goals of the ASEAN Economic Community, which aims to integrate the region by 2015.
"This survey substantiates what ASEAN-based executives of U.S. companies witness every day -- that ASEAN is a dynamic and forward-looking region with enormous growth potential, energetic populations, and exciting prospects for regional integration," stated AmCham Singapore Chairman James Andrade. "This survey illuminates where opportunities are great and suggests areas where increased resources and fresh approaches will further strengthen the business climate for foreign and domestic investors alike. We welcome the opportunity for policy dialogue with public officials and private sector representatives to follow up on the survey's findings."
Of the 588 executives representing U.S. companies in all ten ASEAN countries, 55% are in services industries, 31% are in manufacturing, and the remainder are in extractive and other industries. The companies surveyed had turnover ranging from below $50 million to more than $1 billion.
The complete survey is available here.
Highlights of findings from respondents from each country
Brunei
Brunei is one of two countries in ASEAN where the majority (56%) of respondents indicate satisfaction with a lack of corruption. Respondents in the country are also highly satisfied with personal security, sentiment towards the U.S., and the stability of the government and political system. Business leaders do indicate challenges in finding trained personnel in the country.
Cambodia
Major strengths cited by respondents in Cambodia include availability of low cost labor and positive sentiment towards the U.S. Corruption remains a problem, as 82% of respondents expressed concern, up from 65% last year.
Indonesia
Indonesia was rated as the top destination in ASEAN for expansion, despite the many challenges companies cite in doing business there. Overwhelmingly, insufficient infrastructure was identified as the greatest drawback in Indonesia. Other significant challenges include corruption, finding trained personnel, moving products through customs, and problematic laws and regulations. Satisfaction with personal security in Indonesia has increased by 24 percentage points since 2009.
Laos
The availability of low cost labor and personal security are strengths in Laos, as they are across much of ASEAN. Challenges for U.S. companies in Laos include corruption, insufficient infrastructure, lack of trained personnel, and problematic laws and regulations. In addition, U.S. companies are viewed less favorably in Laos than in any other country in ASEAN.
Malaysia
Sentiment towards the U.S., the quality of infrastructure, and reasonable office lease costs are significant strengths for Malaysia and the country enjoys moderate strengths across many business factors. In contrast, corruption and personal security remain challenges. Additionally, Malaysia continues to battle with the pitfalls of the middle income trap relative to the rapid growth potential of its ASEAN neighbors. As Malaysia moves up the value chain, the satisfaction level with the availability of trained personnel, infrastructure, and office lease costs have significantly decreased.
Myanmar
Myanmar is one of the most popular countries for business expansion in ASEAN, offering a ready supply of affordable labor, personal security, and positive sentiments toward the U.S. In addition, U.S. companies are viewed more favorably in Myanmar than in any other country in ASEAN. However, the U.S. business leaders currently operating in Myanmar cite eleven out of the sixteen business factors in the survey as challenges. The highest levels of dissatisfaction are with the cost of housing, infrastructure, lack of trained labor, and office lease costs.
Philippines
Satisfaction in the Philippines increased across nine of the sixteen business factors over the last five years, led by a 23 percentage point increase in satisfaction with the stability of the government and political system. Today, 86% of respondents are satisfied with the positive sentiments toward the U.S. and 78% with the availability of trained personnel in the Philippines, each representing the highest percentage in ASEAN. Insufficient infrastructure, corruption, the difficulty of moving products through customs, and the tax structure remain challenges in the country.
Singapore
Singapore-based respondents cite greater satisfaction across polled business factors than any other ASEAN country. Major strengths in Singapore include personal security, a stable government and political system, infrastructure, and a lack of corruption. Challenges for businesses in Singapore, as in recent years, include high housing costs, high office lease costs, and a lack of low cost labor.
Thailand
Respondents see personal security, positive sentiments towards the U.S., housing costs, and infrastructure as major strengths in Thailand. The lack of a stable government and political system and corruption are cited as the biggest challenges with 80% and 71% of respondents, respectively, indicating dissatisfaction. Increasing labor costs have also led to a 26 percentage point decrease in satisfaction with the availability of low cost labor since 2009.
Vietnam
Vietnam is the second most listed location for business expansion in ASEAN. Its strengths include positive sentiments toward the U.S., the availability of low cost labor, and the level of personal security. Respondents indicate that corruption is one of the biggest problems in Vietnam with 69% of respondents indicating dissatisfaction. Over the past five years, cost pressures have eased, as levels of satisfaction with the availability of low cost labor, housing costs, and office lease costs have all increased significantly. In contrast, respondents have noted a decrease in satisfaction with the business incentives offered by the government and personal security, among other factors.
About the U.S. Chamber of Commerce
The U.S. Chamber of Commerce is the world's largest business organization, and represents the interests of more than 3 million businesses of all sizes, sectors, and regions. Chamber members range in size from small enterprises and local chambers to leading industry associations and large corporations.
About AmCham Singapore
The American Chamber of Commerce in Singapore is the leading international business association in Singapore, with over 5,000 members representing more than 750 companies. American companies' direct investment in Singapore exceeds an estimated an estimated S$170 billion.
Contact:
Thomas McNutt, AmCham Singapore, +65-6597-5732, tmcnutt@amcham.org.sg
Lisa Belot, US Chamber of Commerce, lburgess@uschamber.com
