Consumption growth, not integration, leads investors to ASEAN
Corruption tops among ASEAN challenges, survey says
Agrowing consumer market has been identified as the number one attraction of ASEAN, rather than its economic integration, in driving investors into the region, results of a survey conducted among Australian businessmen showed.
The survey also noted that corruption among ASEAN countries ranked as the number one challenge faced by Australian companies in operating in the region, even as they acknowledged the huge opportunities of doing business in the world’s fastest trading bloc.
The Australian Business in ASEAN Survey 2017 was conducted by the Australia Chamber Singapore in collaboration with the other Australian chambers and business councils from each of the ASEAN member countries to bring together a survey of Australian business interests in the region.
Notably, survey results identified the growing consumer class as the number one reason by business for expanding trade and investment in ASEAN.
A majority of 61 percent, an improvement from 60 percent last year, of Australian businesses have identified the growing consumption among ASEAN people as the main reason for doing business in the region.
The second reason identified was improvement in infrastructure at 35 percent, a 5 percent increase from 30 percent in the previous survey.
Regional integration ranked only third among the top three factors for business expansion in the region with only 36 percent of Australian businessmen putting importance on the ASEAN Economic Community as a major come on for them.
The survey results showed that regional economic integration of ASEAN has lost its weight as an attraction of the 10member countries to foreign investors.
In the previous survey, 53 percent of Australian businessmen ranked economic integration as the second most important reason for investing in ASEAN.
Nonetheless, only 19 percent of Australian businesses believe that ASEAN integration does not matter to their business, although it has also increased from 16 percent in 2016.
The survey, however, tried to explain why economic integration has been relegated as a lesser attraction of the region to poor understanding of the ASEAN integration and therefore Australian firms need more information on the region’s economic integration.
Survey respondents also said that market access and better mobility of staff as the major areas of benefit from ASEAN integration for their operations.
While ASEAN is a priority region for many Australian companies, the survey said that 17 percent of firms did not consider that their head office had a strong understanding of the region.
Australia-ASEAN Chamber of Commerce President Fraser Thomson noted that in their 2016 survey showed that the AEC and regional integration was the second important motivation for Australian firms wanting to invest and operate in the region.
Thomson said that Australian firms surveyed indicated that they wanted more information to properly understand what ASEAN regional integration could mean for their business.
Priority areas to accelerate in order to achieve ASEAN integration were seen as the removal or reduction in investment or service restrictions, fair enforcement of the law, and eliminating infrastructure gaps.
The survey further highlighted that 42 percent of Australian businessmen still identified corruption as number one challenge of doing business in the region.
The score though posted a 1 notch improvement from last year’s survey at 43 percent.
The other two top challenges were barriers to ownership and investment, and lack of access to skilled labor, among 13 challenges identified in the survey.
Corruption, barriers to ownership and investment, and lack of access to skilled labor continue to be substantial roadblocks to operating within ASEAN for the Australian business community and were noted by more than a third of firms, the survey said.
In the Philippines, majority or 52 percent of Australian businessmen ranked corruption as number one challenge among the 13 business challenges they identified.
Among ASEAN countries, corruption ranked high in Vietnam with 72 percent; Cambodia with 67 percent; and, Indonesia with 55 percent. Only 32 percent of Australian businessmen noted of corruption in Singapore, which is the lowest in the region.
Overall, 42 percent of Australian businessmen were challenged by corrupt practices in the region.
Despite these challenges, the survey showed that Australian businessmen still continue to transact business with the world's fastest growing region.