By Andrew Batt:
Thailand is ranked as the fifth most popular investment destination for global multinational companies in Asia according to a new report published today by The Economist Corporate Network.
In its 2013 Asia Business Outlook survey, 38.6 percent of executives stated they planned to increase their levels of investment in the Kingdom during 2013. Only China, the Indian subcontinent, Indonesia and Malaysia saw higher levels of investor confidence.
Some 33.9 percent of those questioned said they are already in the country but have no plans for further investment in 2013, while 25.2 percent had no plans to invest whatsoever. Just 2.4 percent said they planned to reduce their investment in Thailand.
The 2013 survey, released today, suggests that executives are buoyant about Asia in general, with almost half of respondents (47 percent) saying expectations for their business in the region have risen over the past 12 months (as against 15 percent for whom they have fallen). Companies are predicting that sales will grow at a faster rate in 2013 than in 2012 for every APAC market (excluding Japan).
Given higher growth rates in Asia than other parts of the world, the region is rapidly gaining importance in the portfolio of operations at most global multinationals. For the 170 non-Asian companies in the survey (those with headquarters outside the region), Asia’s share of global revenues rose from 19 percent in 2011 to 22% in 2012. Companies expect this figure to reach 32 percent by 2017.
But despite this optimism, 44 percent of respondents say their firms are not hiring and investing at the right rate to capture the potential of Asia’s growth. Indeed, while the growth rates that companies are recording in Asia might look impressive by Western standards, the ABOS survey suggests a more measured interpretation. For many global multinationals, their rate of sales growth in many Asian markets is lagging behind the underlying rates of economic growth.
Justin Wood, Director, Southeast Asia at The Economist Corporate Network, said: “For the past couple of years, we have been picking up a gentle warning from Asia’s international business leaders to their global headquarters. This year it has risen to a clarion call. International business is simply not investing enough to keep pace with Asia’s expansion.
“The message just isn’t getting through to London, New York and other global HQs. Too many Western boardrooms see impressive rates of sales growth coming out of Asia, and feel they are doing enough in the region. But when viewed correctly, growth rates in Asia are often lower than they should be, and suggest widespread under-investment. While many Western businesses are in the race, they are off the pace.”
The 2013 Asia Business Outlook Survey was completed by some 207 senior executives with management responsibility for businesses across Asia. They operate in a wide spread of industries, reflecting the Economist Corporate Network’s diverse client base, from financial services to manufacturing to retail to healthcare.
As in previous years, the respondents mainly represent large companies; three quarters had more than US$1bn in global revenue, and 35 percent of respondents oversaw operations in firms with revenues of US$10bn or more. The survey respondents largely reflect the views of the Western multinational in Asia, as the vast majority have headquarters either in North America (35 percent) or in Europe (41 percent). Of the remaining 24 percent of respondents, most worked at Asian companies, with a smattering coming from Australia and South America.
Source: http://ftp01.economist.com.hk/ECN_papers/ABOS2013.pdf
Andrew Batt, International Group Editor of PropertyGuru, wrote this story. To contact him about this or other stories email andrew@allproperty.com.sg
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