Industry leaders say infrastructure investment is the key to opening up Asia Pacific economies to more growth.
The growth-driving Beijing Olympic games are a distant memory and worries over the bursting of Asian bubble economies persist, yet CEOs operating in Asia Pacific remain confident of opportunities in the region. According to PricewaterhouseCoopers’ just released report, Towards resilience and growth: Asia Pacific business in transition — a survey of 478 CEOs and industry leaders in 21 Asia Pacific economies — 42 percent are “very confident” of revenue growth during the next 12 months and nearly 70 percent intend to increase investments in the region. The study was released at the Asia-Pacific Economic Cooperation (APEC) forum in Bali, Indonesia.
What’s got industry excited about Asia Pacific? According to the survey, the trend toward urbanization in many Asia Pacific economies, the emergence of the local middle class and the need for infrastructure development are boosting confidence.
Survey respondents noted the information and communications tech grid (44 percent), transport networks in urban areas (44 percent), trade infrastructure (42 percent), energy (40 percent) and social infrastructure education (40 percent) as the infrastructure sectors where further investment would create significant growth opportunities for principal economies:
“There are clear cases where further improvements in infrastructures will fuel business growth. CEOs identify power supplies as an area where development translates into greater opportunities for more businesses. Above all, more CEOs believe lifting regulatory barriers that raise costs and uncertainties around trade and long-term investments can directly support business growth. Yet no business operates in isolation. When asked where improvements could create opportunities for the economies where they are based, more CEOs pointed to clogged transit networks in many Asia Pacific urban centers as a priority. They also expect the extending of broadband access (and lowering the costs) to more people will create ‘significant opportunities’ for growth in their countries.”
Another 49 percent of respondents indicated public private partnerships are important models for their companies’ growth and 20 percent said existing IT infrastructure is a barrier or emerging barrier to business growth.
The economy with the best chance of surprising with its business opportunities is Indonesia followed by Myanmar, China, the Philippines and Vietnam. Among the most cited attractive qualities for these economies were expanding middle classes, ample natural resources, increasing transparency, infrastructure improvement plans and political stability.
Despite increasing prospects for the region, “APEC economies now also face many of the uncertainties of slower growth, previously limited to the more developed markets,” states Dennis Nally, chairman of PricewaterhouseCoopers International Ltd.
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Drew Campbell is senior editor of Institutional Investing in Infrastructure.
