38
Chief Executive Perspectives: 2008 Results from the 2008 Annual Member Survey Asia Business Council November 2008
Chief Executive Perspectives: 2008
Results from the 2008 Annual Member Survey
Asia Business Council
November 2008
2
The Asia Business CouncilIndependent association of CEOs from leading Asian and MNC firms
69 members representing 12 Asian countries, Australia, Europe and the US84% of Council members (58 of 69) are business leaders from Asian companiesMarket capitalization (members’ public companies): $1.03 trillion (as of August 2008)
Mission: to work toward the continued economic development and competitiveness of Asia as a region
Foster dialogue and understanding amongst business leadersImprove the efficacy of the private sector in promoting continued economic growth and development in the regionBe a collective voice to influence other corporations, governments, multilateral organizations and members of civil society
The Council’s annual survey is designed to gauge Asian business leaders’perspectives on issues affecting both Asia and the world
3
Survey overview
Survey conducted in September and October 2008
Response rate of 78% (54 of 69 members)
Members asked about their economic outlook and investment plans
Members also asked to consider 56 issues and rank their importance for business in Asia in general and their own businesses
Issues covered:Energy & EnvironmentFinancial & Business Geo-PoliticalSocial
* For analysis purposes, non-respondents were ignored and response percentages were calculated based on the number of responses to each question. Non-responses to individual questions did not exceed 6% unless noted.
4
Overall outlook has become more pessimisticPessimistic about business conditions in Asia—75% of the respondents felt that business conditions in Asia will worsen
In 2007, 28% felt that the economic conditions would get worse; in 2006, only 4% of respondents thought the economy would worsen
Only 6% of respondents felt that economic conditions will improve, whereas in 2007, 32% felt the economy would improve
How Do You Feel About Overall Business Conditions In the Next 12 Months?
6%
32%44%
75%28% 4%
19%
40%52%
0%
20%
40%
60%
80%
100%
2008 2007 2006
Will Remain/Remained about The Same
Worsened/Will Worsen
Improved/Will Improve
5
Inflation and recession are seen as key threats to Asia in 2009
42% of respondents thought that inflation was the biggest problem in Asia, while 30% thought that recession was the biggest problem. 8% of respondents cited both as problems
The current financial crisis, global impact of a U.S. economic slowdown, and commodity price inflation also were cited as key concerns
Biggest Economic Problem Facing Asia
42%
30%
20%
8%
0%
10%
20%
30%
40%
50%
Inflation Recession Other Both Inflationand Recession
6
Members report little change in current and future investment plans amid global economic uncertainties
China saw the most investment activities in the last 12 months. The top 4 investment locations were the same as those from last year (though Vietnam surpassed the U.S.)
There is little change in reported investment plans in the next 1-3 years compared to the last 12 months. This suggests that respondents may be adopting a wait-and-see attitude amid uncertainties about the future investment climate. Vietnam saw the highest jump in investment momentum—28% invested in the past 12 months and 33% expect to invest in the next 1-3 years
China, the U.S., and Singapore have seen a declining trend in reported investments over the past two years
0% 20% 40% 60% 80% 100%
China
India
Vietnam
U.S.
Europe
Singapore
Indonesia
Other
Malaysia
Philippines
Taiwan
Japan
Korea
Pakistan
Thailand2008 2007 2006
7
70%
67%
50%
39%
33%
33%
29%
28%
26%
23%
22%
17%
13%
13%
11%
11%
6%
2%
30%
31%
41%
59%
57%
48%
58%
50%
50%
57%
54%
36%
59%
63%
44%
41%
40%
43%
2%
17%
13%
22%
24%
21%
24%
43%
28%
24%
37%
41%
47%
53%
0% 20% 40% 60% 80% 100%
China's Economy
U.S. Economy
U.S. Foreign Policy
China-USA Relations
China's Foreign Policy
India's Economy
Bilateral/Regional Trade Agreements
China-Taiwan Relations
Japan's Economy
WTO
Middle East Conflict
Southeast Asia Integration
China-Japan Relations
Europe's Economy
India-Pakistan Relations
North Korea
Japan's Foreign Policy
Europe's Foreign Policy
Very Important Important Of Little Importance Not Important at All
China’s economy is becoming more important relative to the U.S. economy; China-U.S. relations are less important
China’s economy surpassed the U.S.’s economy to become the most important overall economic and geo-political issue. 70% of respondents rated it as very important (66% in 2007), compared to 67% for the U.S. economy (75% in 2007). An increased proportion of respondents considered China’s economy to be very important to their businesses (69% compared to 63% in 2007)
The proportion of respondents rating China-U.S. relations as very important dropped from 60% in 2006 to 55% in 2007 and further to 39% in 2008
8
There are several perceived threats to the global trade system
Bilateral/regional trade agreements have gained favor relative to the WTO. 29% of respondents considered bilateral/regional trade agreements very important compared to 21% in 2007, whereas 23% considered WTO very important compared to 30% in 2007. In addition, a lower proportion of respondents considered WTO very important for their own businesses (17% compared to 25% in 2007)
A third of the respondents thought the collapse of the Doha trade round has an impact on their business, up from 23% in 2007
Perceived importance of nationalism increased, with 74% rating it in the top half compared to 64% in 2007
9
While access to quality HR is still important, access to capital markets has also become a major concern amid the current financial crisis
The access to high-quality HR remains a top issue of importance for Asia and also has the greatest impact on respondents’ own businesses. However, its relative importance has diminished, with 67% of respondents rating it as very important compared to 79% in 2007. Perceived impact on business has decreased slightly from 79% in 2007 to 72% in 2008. Perhaps a reflection of a global hiring slowdown, the proportion of respondents rating education availability and quality as very important also decreased (42% compared to 55% for the former and 57% compared to 68% in 2007 for the latter)
Amid the current global financial turmoil, access to capital markets has increased in importance (35% rated it as a very important issue compared to 28% in 2007) and impact on respondents’ businesses (39% rated the issue as important to business in 2008 compared to 28% in 2007)
Entrepreneurship and innovation remains the second top issue in terms of both importance and business impact, but the proportion of respondents considering it as very important for their businesses has increased (57% in 2008 compared to 49% in 2007). In contrast, the proportion considering government R&D as very important or important for their businesses has declined from 50% in 2007 to 36% in 2008
10
Oil and gas prices top energy and environment concerns, followed by energy efficiency, which has grown in perceived business impact
Oil and gas prices were ranked highest in terms of importance to Asia and was considered very important by an increased proportion of respondents (64% in 2008 compared to 57% in 2007). The issue also grew in business impact (54% ranking it very important for their businesses compared to 47% in 2007)
Alternative energy sources were seen as highly important to the region, with 46% rating them as very important compared to 40% in 2007. These are marked increases compared to the 29% in 2006 who considered this issue very important
Energy efficiency was considered the second most important energy and environment issue, with 59% of respondents considering it very important for Asia. The proportion of respondents considering the issue very important for their businesses has grown to 46% from 36% in 2007 and 33% in 2006
A much larger proportion of respondents indicated that they will buy carbon credits—50% in 2008 compared to just 13% in 2007
11
Overall social risks have received less attention
Terrorism and religious extremism have become relatively smaller concerns for members’ businesses. 57% rated terrorism in the top half in terms of business impact, down from 69% in 2007. 36% rated religious extremism in the top half, down from 49% in 2007. Both issues have also declined as regional issues of concern, with 28% reporting terrorism as very important (compared to 45% in 2007) and 21% reporting religious extremism as very important (compared to 28% in 2007)
The perceived risk of pandemics has fallen in importance, with 60% rating this in the top half compared to 77% in 2007, and 49% rating it as important for their businesses compared to 62% in 2007
A smaller proportion of respondents reported intellectual property rights as a very important issue (21% compared to 32% in 2007)
12
Survey summary
Overall outlook has become more pessimistic—three-quarters of respondents felt that business conditions in Asia will worsen
Both inflation and recession are seen as key threats to Asia
China’s economy is becoming more important relative to the U.S. economy, while the relationship between the two is perceived to be of declining importance
While access to quality HR is still important, access to capital markets has become a major concern
Oil and gas prices and energy efficiency are considered very important to business in Asia as well as members’ own businesses
13
Survey Data
14
In what countries have you invested or increased your investment? (2008)
61%
32%
28%
22%
20%
20%
17%
14%
13%
13%
13%
12%
12%
7%
57%
32%
33%
22%
22%
19%
17%
19%
13%
16%
17%
10%
13%
0%6%
10%
0% 20% 40% 60% 80% 100%
China
India
Vietnam
U.S.
Europe
Singapore
Indonesia
Other
Malaysia
Philippines
Taiwan
Japan
Korea
Pakistan
Thailand
In the Last 12 Months In the Next 1 - 3 Years
15
In what countries have you invested or increased your investment? (2007)
64%
37%
27%
25%
24%
18%
15%
15%
15%
13%
13%
9%
9%
9%
69%
45%
24%
42%
16%
12%
24%
16%
9%
15%
18%
7%
12%
13%
1%
0% 20% 40% 60% 80% 100%
China
India
U.S.
Vietnam
Singapore
Malaysia
Europe
Philippines
Other
Indonesia
Japan
Korea
Taiwan
Thailand
Pakistan
In the Last 12 Months In the Next 1 - 3 Years
16
In what countries have you invested? (2006-2008)
61%
32%
28%
22%
20%
20%
17%
14%
13%
13%
13%
12%
12%
7%
6%
64%
37%
25%
27%
15%
24%
13%
15%
18%
15%
9%
13%
9%
1%
9%
77%
38%
19%
38%
19%
38%
26%
13%
19%
13%
13%
15%
6%
2%
13%
0% 20% 40% 60% 80% 100%
China
India
Vietnam
U.S.
Europe
Singapore
Indonesia
Other
Malaysia
Philippines
Taiwan
Japan
Korea
Pakistan
Thailand
2008 2007 2006
7
17
Overall Economic and Geo-Political:How important is this issue for business in Asia? (2008)
70%
67%
50%
39%
33%
33%
29%
28%
26%
23%
22%
17%
13%
13%
11%
11%
6%
30%
31%
41%
59%
57%
48%
58%
50%
50%
57%
54%
36%
59%
63%
44%
41%
40%
43%
17%
13%
22%
24%
21%
24%
43%
28%
24%
37%
41%
47%
53%
0%
4%
0%
0%
7%
7%
8%
2%
0% 20% 40% 60% 80% 100%
China's Economy
U.S. Economy
U.S. Foreign Policy
China-U.S. Relations
China's Foreign Policy
India's Economy
Bilateral/Regional Trade Agreements
China-Taiwan Relations
Japan's Economy
WTO
Middle East Conflict
Southeast Asia Integration
China-Japan Relations
Europe's Economy
India-Pakistan Relations
North Korea
Japan's Foreign Policy
Europe's Foreign Policy
Very Important Important Of Little Importance Not Important at All
18
Overall Economic and Geo-Political:How important is this issue for business in Asia? (2007)
75%
66%
55%
53%
42%
38%
30%
26%
25%
23%
21%
21%
17%
9%
6%
6%
25%
34%
43%
43%
56%
51%
58%
49%
65%
62%
69%
51%
38%
68%
62%
57%
51%
52%
4%
11%
11%
23%
10%
13%
10%
26%
43%
23%
28%
32%
43%
48%
4%
6%
4%2%
0% 20% 40% 60% 80% 100%
U.S. Economy
China's Economy
China-U.S. Relations
U.S. Foreign Policy
China's Foreign Policy
India's Economy
WTO
China-Taiwan Relations
Japan's Economy
Middle East Conflict
Bilateral/Regional Trade Agreements
China-Japan Relations
Southeast Asia Integration
Europe's Economy
Japan's Foreign Policy
North Korea
India-Pakistan Relations
Europe's Foreign Policy
Very Important Important Of Little Importance Not Important at All
19
Overall Economic and Geo-Political:How much does this issue affect your business? (2008)
74%
69%
36%
30%
30%
30%
30%
28%
25%
23%
22%
17%
17%
15%
9%
9%
9%
8%
26%
23%
42%
42%
38%
43%
55%
57%
36%
30%
53%
26%
55%
36%
40%
34%
23%
28%
25%
26%
15%
11%
28%
45%
25%
51%
26%
38%
38%
43%
47%
45%
6%
2%
11%
13%
13%
21%
19%
26%
19%
8%
4%
11%
0%
6%
4%
4%
0% 20% 40% 60% 80% 100%
U.S. Economy
China's Economy
China-U.S. Relations
China's Foreign Policy
India's Economy
Japan's Economy
U.S. Foreign Policy
Europe's Economy
China-Taiwan Relations
Middle East Conflict
Bilateral/Regional Trade Agreements
Southeast Asia Integration
WTO
China-Japan Relations
Europe's Foreign Policy
Japan's Foreign Policy
North Korea
India-Pakistan Relations
Great Impact Some Impact Not Much Impact No Impact at All
20
Overall Economic and Geo-Political:How much does this issue affect your business? (2007)
67%
63%
35%
29%
27%
23%
23%
23%
22%
21%
21%
15%
15%
13%
10%
8%
6%
31%
33%
41%
40%
50%
50%
50%
56%
52%
33%
60%
35%
38%
40%
35%
29%
23%
40%
21%
25%
23%
15%
26%
37%
17%
44%
42%
40%
46%
38%
50%
52%
10%
6%
4%
6%
10%
25%
21%
6%2%
17%
22%
4%
6%
6%
10%
0% 20% 40% 60% 80% 100%
U.S. Economy
China's Economy
China-U.S. Relations
India's Economy
WTO
China's Foreign Policy
Europe's Economy
Japan's Economy
Bilateral/Regional Trade Agreements
China-Taiwan Relations
U.S. Foreign Policy
China-Japan Relations
Southeast Asia Integration
Middle East Conflict
Japan's Foreign Policy
North Korea
India-Pakistan Relations
Europe's Foreign Policy
Great Impact Some Impact Not Much Impact No Impact at All
21
Financial & Business:How important is this issue for business in Asia? (2008)
67%
57%
37%
35%
28%
26%
20%
17%
15%
11%
31%
39%
59%
57%
59%
47%
63%
63%
60%
59%
7%
21%
15%
15%
23%
28%
6%
4%
4%
4%
13%
0% 20% 40% 60% 80% 100%
Access to High-Quality HR
Entrepreneurship and Innovation
Corporate Governance
Access to Capital Markets
Corporate Social Responsibility
Protectionism
Shareholders' Rights
International Environmental Standards
Research & Development Funding
International Labor Standards
Very Important Important Of Little Importance Not Important at All
22
Financial & Business:How important is this issue for business in Asia? (2007)
79%
60%
40%
30%
28%
27%
19%
19%
18%
13%
21%
38%
53%
57%
62%
54%
75%
62%
71%
62%
13%
19%
6%
19%
12%
25%
9%
8%
0% 20% 40% 60% 80% 100%
Access to High-Quality HR
Entrepreneurship and Innovation
Corporate Governance
Corporate Social Responsibility
Access to Capital Markets
Protectionism
International Environmental Standards
Shareholders’ Rights
R&D Funding
International Labor Standards
Very Important Important Of Little Importance Not Important at All
23
Financial & Business:How much does this issue affect your business? (2008)
72%
57%
43%
39%
30%
28%
22%
17%
15%
13%
26%
37%
52%
35%
50%
43%
50%
35%
50%
43%
19%
26%
24%
43%
33%
39% 6%
6%
6%
20%
7%
6%
4%
4%
0% 20% 40% 60% 80% 100%
Access to High-Quality HR
Entrepreneurship and Innovation
Corporate Governance
Access to Capital Markets
Corporate Social Responsibility
Protectionism
Shareholders' Rights
Research & Development Funding
International Environmental Standards
International Labor Standards
Great Impact Some Impact Not Much Impact No Impact at All
24
Financial & Business:How much does this issue affect your business? (2007)
79%
49%
43%
28%
28%
25%
25%
19%
15%
13%
21%
43%
45%
38%
55%
40%
47%
49%
40%
42%
23%
34%
19%
26%
42%
42% 4%
17%
11%
8%
9%
6%
4%
11%
0% 20% 40% 60% 80% 100%
Access to High-Quality HR
Entrepreneurship and Innovation
Corporate Governance
Access to Capital Markets
Corporate Social Responsibility
Protectionism
Shareholders’ Rights
International Environmental Standards
R&D Funding
International Labor Standards
Great Impact Some Impact Not Much Impact No Impact at All
25
Energy & Environment:How important is this issue for business in Asia? (2008)
64%
59%
52%
46%
42%
32%
28%
24%
20%
15%
4%
34%
39%
39%
41%
53%
58%
62%
63%
65%
54%
45%
13%
9%
9%
13%
13%
27%
45%
4%
6%
9%
6%
0% 20% 40% 60% 80% 100%
Oil & Gas Prices
Energy Efficiency
Oil & Gas Supply
Alternative Energy Sources
Water Supply
Water Quality
Carbon Emissions
Air Pollution
Global Warming
Nuclear Power
Desertification
Very Important Important Of Little Importance Not Important at All
26
Energy & Environment:How important is this issue for business in Asia? (2007)
60%
59%
55%
53%
47%
46%
40%
35%
29%
26%
14%
38%
39%
45%
43%
51%
46%
49%
52%
61%
48%
48%
4%
8%
11%
13%
10%
20%
36%
6%
0% 20% 40% 60% 80% 100%
Energy Efficiency
Oil & Gas Supply
Oil & Gas Prices
Water Supply
Water Quality
Air Pollution
Alternative Energy Sources
Carbon Emissions
Global Warming
Nuclear Power
Desertification
Very Important Important Of Little Importance Not Important at All
27
Energy & Environment:How much does this issue affect your business? (2008)
54%
46%
37%
33%
26%
20%
9%
6%
6%
6%
0%
37%
43%
44%
30%
37%
37%
44%
46%
41%
22%
15%
31%
33%
41%
44%
46%
54%
50%
19%
35%
19%
11%
9%
9%
6%
4%
7%
35%
6%
0% 20% 40% 60% 80% 100%
Oil & Gas Prices
Energy Efficiency
Oil & Gas Supply
Water Supply
Water Quality
Alternative Energy Sources
Carbon Emissions
Air Pollution
Global Warming
Nuclear Power
Desertification
Great Impact Some Impact Not Much Impact No Impact at All
28
Energy & Environment:How much does this issue affect your business? (2007)
47%
40%
36%
28%
19%
19%
10%
9%
9%
6%
0%
42%
38%
43%
45%
43%
49%
62%
55%
53%
25%
19%
21%
28%
27%
34%
34%
55%
65%
15%
34%
21%
21%
9%
4%
4%
15%
4%
6%
0% 20% 40% 60% 80% 100%
Oil & Gas Prices
Oil & Gas Supply
Energy Efficiency
Water Supply
Alternative Energy Sources
Water Quality
Carbon Emissions
Air Pollution
Global Warming
Nuclear Power
Desertification
Great Impact Some Impact Not Much Impact No Impact at All
29
Social:How important is this issue for business in Asia? (2008)
57%
50%
43%
43%
42%
40%
28%
25%
21%
21%
21%
19%
19%
15%
9%
9%
6%
42%
42%
47%
47%
47%
51%
58%
60%
65%
62%
47%
68%
42%
58%
45%
62%
40%
9%
9%
11%
15%
13%
17%
30%
13%
40%
25%
43%
28%
49%
0%
6%
11%
9%
8%
0% 20% 40% 60% 80% 100%
Education-Quality
Government Corruption
Government Accountability
Government Regulations
Education-Availability
Entrepreneurship
Terrorism
Aging Society
Intellectual Property Rights
Healthcare Availability/Costs
Religious Extremism
Income Disparity/Social Inequality
Pandemic
Nationalism
Government R&D
Human Rights
AIDS
Very Important Important Of Little Importance Not Important at All
30
Social:How important is this issue for business in Asia? (2007)
68%
55%
49%
45%
42%
40%
40%
32%
28%
28%
26%
25%
23%
16%
11%
8%
0%
32%
42%
49%
42%
55%
58%
51%
64%
64%
47%
62%
64%
55%
69%
47%
55%
64%
13%
9%
4%
8%
25%
11%
9%
23%
16%
40%
38%
36%
4%
4%
0% 20% 40% 60% 80% 100%
Education-Quality
Education-Availability
Government Regulations
Terrorism
Government Accountability
Entrepreneurship
Government Corruption
Intellectual Property Rights
Income Disparity/Social Inequality
Religious Extremism
Health Care Availability/Costs
Aging Society
Pandemic
Human Rights
AIDS
Government R&D
Nationalism
Very Important Important Of Little Importance Not Important at All
31
Social:How much does this issue affect your business? (2008)
57%
57%
45%
42%
36%
23%
23%
23%
19%
17%
15%
15%
15%
9%
8%
0%
36%
38%
45%
45%
49%
50%
49%
40%
30%
40%
44%
21%
36%
51%
28%
38%
9%
11%
25%
26%
30%
40%
40%
37%
51%
45%
30%
53%
51%
66%
4%
13%
4%
9%
11%
9%
25%
2%
11%
9%
6%
8%
8%
11%
4%
4%
0% 20% 40% 60% 80% 100%
Education-Quality
Government Regulations
Entrepreneurship
Government Accountability
Government Corruption
Education-Availability
Aging Society
Intellectual Property Rights
Pandemic
Terrorism
Healthcare Availability/Costs
Government R&D
Nationalism
Income Disparity/Social Inequality
Religious Extremism
Human Rights
AIDS
Great Impact Some Impact Not Much Impact No Impact at All
32
Social:How much does this issue affect your business? (2007)
54%
54%
40%
35%
35%
33%
24%
17%
17%
13%
13%
8%
6%
6%
4%
4%
0%
37%
42%
50%
43%
35%
54%
63%
44%
52%
56%
48%
44%
43%
56%
46%
46%
17%
16%
10%
14%
31%
21%
25%
35%
40%
39%
33%
40%
40%
56%
6%
8%
12%
6%
10%
10%
27%
29%
6%
4%
8%
4%
8%
10%
4%
6%
4%
0% 20% 40% 60% 80% 100%
Education-Quality
Government Regulations
Entrepreneurship
Government Corruption
Intellectual Property Rights
Government Accountability
Education-Availability
Pandemic
Terrorism
Aging Society
Health Care Availability/Costs
Nationalism
Religious Extremism
Income Disparity/Social Inequality
Government R&D
Human Rights
AIDS
Very Important Important Of Little Importance Not Important at All
33
How do you feel about overall business conditions? (2007-2008)
How Do You Feel About Overall Business Conditions In the Next 12 Months?
11% 6%
76%75%
13% 19%
0%
20%
40%
60%
80%
100%
In the Last 12 Months In the Next 12 Months
Will Remain/Remained about The Same
Worsened/Will Worsen
Improved/Will Improve
2008 2007
How Do You Feel About Overall Business Conditions In the Next 12 Months?
51%
32%
8%
28%
42% 40%
0%
20%
40%
60%
80%
100%
In the Last 12 Months In the Next 12 Months
Will Remain/Remained about The Same
Worsened/Will Worsen
Improved/Will Improve
34
Future business outlook (2006-2008)How Do You Feel About Overall Business Conditions In the Next 12 Months?
6%
32%44%
75%28% 4%
19%
40%52%
0%
20%
40%
60%
80%
100%
2008 2007 2006
Improved/Will Improve Worsened/Will Worsen Will Remain/Remained about The Same
35
Inflation and recession concerns (2008)Biggest Economic Problem Facing Asia
42%
30%
20%
8%
0%
10%
20%
30%
40%
50%
Inflation Recession Other Both Inflation andRecession
36
The impact of Doha (2007-2008)33% of the respondents thought the collapse of the Doha trade round has an impact on their business
This proportion has increased from 23% in 2007
Doha Trade Negotiation Collapse
67%
0%
33%
72%
6%
23%
0%
10%
20%
30%
40%
50%
60%
70%
80%
No Impact Positive Impact Negative Impact
2008 2007
37
Carbon credits (2007-2008)
Will They Buy or Sell Carbon Credits
50%47%
13%
88%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Buy Sell
2008 2007
Will They Deal in Carbon Credits
56%
44%39%
61%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Yes No
2008 2007
