Despite worries about corruption and burdensome laws and regulations, U.S. companies remain optimistic about business prospects in the Association of Southeast Asian Nations (ASEAN), according to a survey released by the U.S. Chamber of Commerce and the American Chamber of Commerce in Singapore.
Majority or 74% of the 588 senior executives representing U.S. companies in all ten ASEAN countries, reported that their company's level of trade and investment in ASEAN has increased over the past two years, and an overwhelming 89% of respondents expect it to increase over the next five years.
The profit outlook is solid, with 63% of executives expecting profit increases this year, and 81% next year. Slightly over half (53%) of the respondents expect their companies' workforce to expand this year, while only 5% expect decreases.
"This survey underscores the confidence that U.S. businesses have about ASEAN, particularly as it integrates economies, deepens its trade and investment relations with major trading partners, and makes the region an important, attractive destination for U.S. investment," said Tami Overby, the U.S. Chamber's senior vice president for Asia.
Overby notes that ASEAN countries that are participating in the TPP will enjoy the greatest benefits from this trend toward regional integration.
"We continue to encourage those countries that are not yet in the TPP to consider participation," says Overby.
AmCham Singapore Executive Director Judith Fergin added, "These positive findings point to positive outcomes for ASEAN -- more jobs, more exports, more commerce, and more rapid economic growth. U.S. companies are happy to be contributing to this good news story."
Impediments to growth
However, the survey also found substantial concerns and impediments to companies' growth in the region. As in previous years' surveys, corruption was the top issue across ASEAN, cited by a majority of respondents in all countries except Brunei and Singapore.
American companies also pointed to burdensome laws and regulations, lack of transparency, poor quality of infrastructure, and the difficulty in moving products through customs in some countries as obstacles to greater investment.
"U.S. investors express serious concerns over many policy and operational areas, ranging from rapidly escalating costs, to corruption, inadequate infrastructure, and the need for more engagement with the private sector as laws and regulations are developed," said Overby.
Overby notes that the survey results point clearly to a number of areas that ASEAN countries can address in order to maintain and enhance their competitiveness and attractiveness to foreign investment.
Free trade agreements
The survey also revealed that U.S. companies take advantage of regional economic integration efforts, including ASEAN's free trade agreements (FTAs) with Australia and New Zealand, China, India, Japan, and Korea.
Nearly half (49%) of respondents report that they use the FTA to export goods from ASEAN to China. American companies' use of the other FTAs ranges between 43-47%.
ASEAN's efforts to more closely integrate the economies of its ten member nations are also important to U.S. companies' investment plans in the region. 53% of respondents said that their company has a strategy based on the goals of the ASEAN Economic Community, which aims to integrate the region by 2015.
"ASEAN is a dynamic and forward-looking region with enormous growth potential, energetic populations, and exciting prospects for regional integration," stated AmCham Singapore Chairman James Andrade.
Of the 588 executives representing U.S. companies in all ten ASEAN countries, 55% are in services industries, 31% are in manufacturing, and the remainder are in extractive and other industries.
The companies surveyed had turnover ranging from below $50 million to more than $1 billion.