Fluid Trade Policy Status in ASEAN
Paving the way for new potential through commercial agreements
Based on insights from more than 1/5th of business executives asked by PwC throughout APEC and ASEAN, revenue maximization is anticipated as a result of emerging trade deals.
• 28% of ASEAN business executives and 27% in APEC expect revenue growth to raise as a result of new commercial agreements.
• 21% of surveyed (across ASEAN & APEC) anticipate in a fall in revenue potential as a result of postponed or failed commercial agreements.
This also applies to Vietnam’s export-centered manufacturing industry. The relevant survey conducted by PwC last year has found out that more than the average % of business executives from the export-oriented industry anticipate revenue streams to rise (38%) or fall (27%) by commercial agreement results. This varied reaction could also be originating from diverging growth in commercial agreements with primary import markets.
Despite US recently quitting their participation in TPP, Vietnam has now become the 2nd ASEAN market, following Singapore, to discuss a free trade deal with the EU. Essentially, the agreement includes both production and service provision fields, which is an indicator that authorities could be paving the way for a gradual long-term progress from an industrial to a service-powered economy.
More limited trade and investment opportunities emerging
In 2017, more than 1/5th of business executives questioned in both ASEAN and APEC stated having raised obstacles across an array of trade availability measures, and mainly in using foreign labor (ASEAN: 26%, APEC: 23%) and offering or getting services between borders (ASEAN: 21% & APEC: 20%). Furthermore, many surveyed anticipated to experience such problems in the new year.
A growingly limited foreign investment environment emerges, which hints increasing perplexities for global business as a high number of business executives anticipates to encounter more obstacles in their foreign market investments. The percentage has increased in the course of one year from 18% for ASEAN and 19% for APEC to 24% and 25% respectively. Simultaneously, almost 25% of business executives anticipate a cross-border data transfers to become even more challenging in the upcoming year (ASEAN: 24% & APEC: 23%) signaling potential limitations or issues emerging in the digital commercial era.
The limiting investment measures are burdening even more business executives in Singapore. Last year, more than the average percentage of surveyed in Singapore encountered growing obstacles with:
• Hiring foreign workers
• Offering or getting cross-border services
• Transferring data between borders
• Investing in foreign markets
The above strenuous measures affect more Singapore due to the fact that the city state is among the most open and foreign-friendly economies in the area. This has left Singapore more at the mercy of “headwinds” in global trade and the international investment environment than its nearby nations.
Aim to develop global footprint
Despite increasing limitations to trade across borders and falling confidence in export acts, most ASEAN business executives (higher than the average percentage of APEC) anticipate to expand their international footprint within the upcoming three years (ASEAN: 72% & APEC: 63%). Other ASEAN states who are even more positive are Malaysia (89%) and Vietnam (86%).
Graded as the top emerging market in the area, Malaysia is placing itself as a portal to Asian’s emerging markets and as a cost-efficient ground for companies. At the same time, Vietnam is in the race to become one of the fastest developing economies in the globe starting from 2016 to 2050. It is expected to be placed among the leading 20 economies in the globe and top 10 in Asian region, by 2050.
Within the current business environment where businesses encounter increasing issues with foreign trade acts and investments, what are the strategic plans that ASEAN business executives are about to follow to enter in markets abroad, capitalize on growth opportunities, raise profits, and support business stability?