Companies bullish on business and economy
TOP BUSINESSMEN remain confident about their companies’ prospects in a fast-growing economy, according to results of a survey conducted by Isla Lipana & Co./PwC Philippine in collaboration with the Management Association of the Philippines that were released to journalists yesterday.
The “Building partnerships in ASEAN: Reimagining the possible” chief executive officer (CEO) survey among 114 Philippine respondents showed that about 68% believe gross domestic product (GDP) growth will hit the government’s 6.5-7.5% target this year, compared to the 59% in the 2016 survey, while four percent expect GDP to exceed that official goal, compared to 2016’s 21%. GDP grew by an average of 6.45% last semester, putting the lower end of the full-year target within reach.
About 63% of survey respondents believe GDP growth will hit the government’s 7-8% target for 2018, while nine percent expect the economy to exceed that range.
The respondents expect their businesses to thrive in that general environment, with 54% “very confident” and 34% “somewhat confident” of their companies’ prospects for revenue growth in the next 12 months, and 57% “very confident” and 37% “somewhat confident” of such prospects in the next three years.
Similarly, 55% of respondents were “very confident” and 37% were “somewhat confident” of their industries’ prospects for revenue growth in the next 12 months, while 54% were “very confident” and 39% were “somewhat confident” of such prospects over the next three years.
PwC Philippines Assurance partner Aldie P. Garcia said at a media briefing yesterday in Makati City that the study found CEOs “confident and ambitious”, as well as “collaborative and visionary.”
“They are confident that they have what it takes to succeed in an integrated ASEAN,” Mr. Garcia said, referring to the Association of Southeast Asian Nations’ declaration at end-December 2015 of an ASEAN Community. “They are collaborative in a sense that they are more open to entering into strategic alliance and partnerships (within the country and with other ASEAN members).”
“Globally, the same optimism was shared by the majority of CEOs, as disclosed by PwC in its most recent survey publication, ‘20 Years Inside the Mind of the CEO… What’s Next?” the Philippine report read, adding that the bigger “survey covered 1,379 CEOs from 80 countries and 51% expressed an extremely positive view on prospects for revenue growth over the next three years.”
Asked to cite the top five concerns they believe the administration of President Rodrigo R. Duterte “should prioritize during its term”, the respondents cited, in descending order: good governance, adequate physical infrastructure, peace and order, an internationally competitive and efficient tax system, and adequate digital infrastructure.
Asked on the top five economic, policy, social and environmental threats, respondents cited, in descending order: terrorism (89%), increasing tax burden (83%), inadequate basic infrastructure (82%), geopolitical uncertainty (81%) and over-regulation (77%).
Bribery and corruption remained the top business threat (79% from 76% in 2016), followed by readiness to respond to crisis (78%), cyber threats (76%), speed of technological changes (75%) and availability of skills (72%).
Asked what business initiatives they plan to undertake in the next 12 months “to respond to the changes in the macroeconomic and business environment”, 75% of Philippine respondents said they will enter into a strategic alliance or partnership (compared to 76% in 2016), 73% said they would reduce costs (flat from 2016), 46% will outsource a business process or function (53%), 41% will “complete a domestic merger and acquisition” (31%), 31% will “complete a cross-border M&A” (17%), 22% will bring back a previously outsourced process or function (34% in 2016), while 16% said they would sell majority interest in a business or exit a significant market (flat from 2016).
Moreover, 52% said their firms “are very likely/likely to compete in other industries” (45% in 2016), citing the consumer and retail sector; healthcare, pharmaceuticals and life sciences; retail and wholesale distribution; technology; food and beverage; as well as real estate and construction.