- Trade conflicts, geopolitical uncertainty top list of CEO worries
BANGKOK, 21 February 2019 – CEOs and top executives across the Association of Southeast Asian Nations (ASEAN) are more worried about this year's growth prospects than their global counterparts, according to PwC's 22nd Annual Global CEO Survey.
What a difference a year makes. The PwC survey of 1,378 CEOs across 91 countries included 78 from ASEAN. Nearly half of them, or 46%, believe global economic growth will decline in the next 12 months. That's up from 10% in last year's survey – a record jump in pessimism.
Similarly, 28% of business leaders globally believe that global economic growth would slow, compared with just 5% last year. This is just one of the key findings of the flagship survey launched at the World Economic Forum Annual Meeting in Davos.
Still, all is not doom and gloom: 42% of CEOs still see an improved economic outlook, though this is down from a high of 57% in 2018.
Sira Intarakumthornchai, CEO for PwC Thailand, said:
"This year's survey reflects the bearish views of CEOs, who see the global outlook trending downward. They view the U.S.-China trade conflict and widespread geopolitical uncertainty – including overregulation – as major risk factors.
"On top of this, we found that ASEAN CEOs are even more pessimistic than their global peers. This is the opposite of what we've seen in the past, as CEOs in this region are usually quite optimistic."
ASEAN CEOs ranked trade conflicts as the biggest threat to their organisation's growth prospects at 83%. That was followed by geopolitical uncertainty at 81%, policy uncertainty at 78%, overregulation at 77% and global economic volatility at 73%, the 2019 PwC Survey showed.
Lingering trade concerns between the US and China have prompted a majority of CEOs in ASEAN to adjust their supply chain and sourcing strategy (29%) and delay capex (29%). Some 17% are shifting their growth strategy to alternative markets such as Indonesia and Vietnam, Sira explained.
The unease about global economic growth has also hit confidence among CEOs about their company's revenue outlook in the short term. Only 33% of ASEAN CEOs said they're 'very confident' about their organisation's growth prospects over the next 12 months, down from 44% previously. In the medium term, just 39% believe their revenue will increase over the next three years, down from 53% a year ago.
In our new data-driven world, 82% of ASEAN CEOs are concerned about availability of key skills, primarily digital skills that are hard to find and in high demand. That's followed by cyber threats (81%) and speed of technological change (72%).
"The availability of key skills is a huge problem for ASEAN," Sira said. "With a lack of skilled talent, businesses are going to miss out on lots of opportunities: competitive advantages, product and service development and market expansion."
Asked to name the top three most important countries for growth, ASEAN CEOs mentioned China (42%), Indonesia (24%) and the US (21%).
Is ASEAN ready for AI revolution?
ASEAN CEOs are aware of the impact of Artificial intelligence (AI) on business operations, Sira said.
In fact, 87% of ASEAN CEOs expect AI will dramatically change their business over the next five years, and 72% say it will have an even larger impact on the world than the internet revolution.
Still, 36% of ASEAN CEOs currently have no plans to pursue AI. While 32% have plans in the next three years, another 28% have taken a limited approach and just 4% have included and implemented AI on a wider scale.
"One of the reasons why a vast majority of CEOs are still reluctant or sitting on the fence when it comes to adopting AI is partly because they struggle with closing the skills gap," Sira said. "They can't find enough workers with the skills and capability to work with AI-based technology."
Closing the skills gap
The talent gap is impacting business: 58% of ASEAN CEOs say they're unable to innovate effectively. Others fail to pursue market opportunities, meet growth targets and ensure a quality customer experience.
"In an age where robotics and automation are disrupting the way businesses operate, we all need to constantly retrain and upskill with digital knowledge, as well as data analytical and reasoning capabilities.
"I still believe that AI will act more like a helpful co-worker who assists us in performing routine and repetitive tasks, allowing us to focus on more complex tasks. But this also means that we need to work harder at keeping up with the technology and using it effectively.
"Universities and educational institutions need to address these demands by supporting STEM education in order to arm a new generation of workers with skills in science, tech, engineering and mathematics. These are increasingly needed in the job market along with soft skills, which are also highly critical."