Despite rising trade barriers business leaders plan to increase investment in Asia Pacific

Despite rising trade barriers business leaders plan to increase investment in Asia Pacific 

• A third of business leaders surveyed by PwC (37%) say advanced automation and AI are top strategic priorities in the next two years

• Over 80% of business leaders in the region are increasing spend on upskilling

• Asia Pacific business leaders call for increased regulation of AI, Cyber and Data to enhance trust

New York, 21st November 2019 - Business leaders across Asia Pacific experienced more barriers to cross border activities in 2019 than they had expected and they anticipate similar level of restraints in 2020. Business leaders also predict increased challenges in the year ahead with 25% expecting an increase in challenges hiring foreign workers, 26% saying the same for providing or receiving services across borders and 24% saying moving data will become even more of a challenge in 2020.

This finding comes from the latest survey by PwC of over 1,000 business leaders from all 21 Asia-Pacific Economic Cooperation (APEC) member economies.  

Business leaders also had a clear message to Asia Pacific policymakers. When asked which one change to policy would have the most impact on their ability to grow their business,  44% of business leaders said a reduction in tariffs or more directly a resolution to US-China trade tensions would be the greatest help.

Despite concerns about tariffs and the trade tensions between the US and China, business leaders remain positive about prospects for their own organisations, with 34% “very confident” of revenue growth in the year ahead, little changed from 35% in 2018.

Viet Nam continues to top the list for an increase in foreign investment with Australia taking the second position and Singapore third. For the first time since 2015, when PwC began analysing net future investment targets across borders in Asia Pacific, neither China nor the US make the top three.

“Uncertain trade conditions have impacted the relative attractiveness of the US and China in this year’s survey,” said Bob Moritz, PwC’s Global Chairman.  “While countries like Viet Nam and Australia are benefitting as companies begin to rethink their footprint and look closely at the increased risks of new trade rules.”

There is also relatively good news on the impact of automation on jobs.  More businesses (36%) are creating jobs as a result of automation than are reducing headcount (24%) but the gap is narrower than last year. Sentiments are also encouraging in Malaysia, with 37% of Malaysian business leaders saying that there has been no change to headcount as a consequence of automation but substantial change to employees’ roles; compared to the 20% that are reducing headcount. More businesses also say they are redefining roles and responsibilities as a result of automation.

But while business leaders are creating more jobs they are also struggling to fill them with 23% saying they are finding it hard to recruit the talent they need. Faced with increasing barriers to movement of labour in some markets, business leaders are now ramping up their investment in upskilling their workforce with 86% across Asia Pacific and 90% in Malaysia saying they will increase the budget allocated to digital skills development in the year ahead. 

57% in Malaysia are significantly expanding automation into new areas of business, an encouraging finding given the nation’s push towards embracing the Fourth Industrial Revolution. 

“Providing the skills to ensure that no one is left behind as technology revolutionises the workplace is one of the biggest challenges we face,” said Bob Moritz. “Business, policymakers, NGOs and educators must come together as we look to reskill people on a massive scale across industries, the public and private sectors and the whole Asia Pacific region.”

“A World Economic Forum (WEF) report¹ cites that 65% of children entering primary school will end up working in completely new jobs that don’t exist yet,” said Sridharan (Sri) Nair, PwC Malaysia Managing Partner. The move to introduce STREAM (Science, Technology, Reading, Arts, Music) education to replace arts and science streams for Form Four is progressive, taking into account the need for more practical and career relevant subjects in line with students’ talents and interests.

The debate on upskilling is only effective if our schools and universities are part of the movement to shape the workforce of the future. We have an opportunity as businesses to support Malaysia’s Fourth Industrial Revolution agenda by reskilling our workforce as it evolves with the arrival of new talents from our future generations.

Understanding how our people are responding to technology and automation is a good first step, as is giving them the opportunity to develop digital skills as part of their development goals,” continued Sri.

Regulation and Trust:  In other findings from the survey a majority of business leaders across Asia Pacific say additional regulation is needed to enhance public trust in the areas of artificial intelligence (72%), cyber security (76%) and privacy (70%).

“Business leaders don’t often call for more regulation but companies are acutely aware of the risk that disconnected or ineffective policies in areas such as AI, cyber security and privacy protection can have on their plans for investment and the trust that consumers have in business,” said Bob Moritz.

“With regulation of AI at an early stage there is a real opportunity for policy makers across Asia Pacific to develop standards that support innovation but also promote inclusive and responsible AI. But the time to act is now and we must ensure that fragmented AI policies don’t become a new digital barrier to progress in the Asia Pacific region.”

The need to move quickly on a coordinated policy framework is reflected in how business leaders are now viewing advanced automation and AI. Thirty seven per cent of business leaders across Asia Pacific say AI and automation is a C-suite priority for them with another 49% saying it is a priority at a division or IT level. In Malaysia, only 12% see AI and automation as a C-suite or organisation-wide priority, while 63% view it as an IT priority. Only 12% of Asia Pacific business leaders are not viewing AI and automation as a key factor for their business in the next two years.

ENDS
 

^[1] World Economic Forum’s ‘The Future of Jobs: Employment, Skills and Workforce Strategy for the Fourth Industrial Revolution’, 2016