European Businesses Expect an Increase in ASEAN Profits

European businesses continue to have a very positive outlook in Southeast Asia and expect to see ASEAN profits increase, according to the third annual EU-ASEAN Business Sentiment Survey, which polled more than 300 executives from European companies around Southeast Asia.

Three-quarters (75%) of European businesses expect an increase in ASEAN profits for 2017 and almost three-quarters (71%) have said ASEAN has become more important in terms of global revenues over the last two years.

As a result, 94% of European businesses plan to expand or maintain their current levels of operations and headcount in the ASEAN region. A majority (86%) of them expecting their level of trade investment in ASEAN to increase over the next five years.

The report also reveals that European businesses in the region are keen to see strengthened ties between the EU and ASEAN. More than four-fifths (88%) of European companies believe the EU should pursue a region-to-region Free Trade Agreement (FTA) with ASEAN, a significant increase on the 66% surveyed in 2016, and more than half (55%) feel they are at a disadvantage in ASEAN without an EU-ASEAN FTA.

Challenges for businesses remain

However, challenges for businesses remain, impeding ASEAN from reaching its maximum economic potential -- almost two-thirds (61%) of European businesses say that non-tariff barriers are hampering supply chain efficiency.

Thailand and the EU has a total trade value of 33 billion Euros (~1.3 trillion baht). Thailand ranks second in best availability of competitively priced labor, ease of recruiting labor from abroad, prevalence of business-friendly customs procedures, fiscal structures, administrative costs for business and infrastructure. These rankings were an improvement from the 2016 survey conducted.

"ASEAN is becoming the next key driver of global economic growth,” says EU-ASEAN Business Council chairman, Donald Kanak.  “This Survey shows that European businesses will continue to contribute to ASEAN by increased trade, investment and employment. Respondents strongly support a deep and comprehensive a region-to-region EU-ASEAN FTA to enable greater European investment in the region and continued collaboration on reducing trade barriers and trade frictions."

The survey also showed that nearly three-quarters (71%) of respondents said that further ASEAN economic integration was important to their business success in the region, as compared to the 66% surveyed in 2016.

There is also no significant fall out from Brexit on trade and investment plans, with only 12% saying that it would affect their trade and investment plans.

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