European businesses are planning to expand their investment and operations in Asean as the region grows in global importance and Asean profits increase, according to the second annual European Union (EU)-Asean Business Sentiment Survey, which polled more than 200 executives from European companies around Southeast Asia.
Key findings from this year’s survey include:
- Nearly three-quarters (74 percent) of European businesses project a rise in Asean profits for 2016 and almost three-quarters (74 percent) expect Asean’s importance to global revenues to increase over the next five years.
- As a result, European businesses are upping their investment in the region. Nearly two-thirds plan to expand operations and employment in the Asean region, and 85 percent are planning to increase their regional trade and investment. By contrast, less than half of European companies in China are planning to expand.
- European businesses in the region are keen to see strengthened ties between the EU and Asean. Almost two-thirds (66 percent) of European companies want a European region-to-region free-trade agreement (FTA) with Asean, and more than half (58 percent) feel they are at a competitive disadvantage without an overarching EU-Asean FTA.
- However, policy challenges for businesses still remain, impeding Asean from reaching its maximum economic potential—more than half (52 percent) of European businesses say that trade barriers are hampering supply-chain efficiency.
- Nearly half (44 percent) of European companies in Asean report facing unfair competition from local and regional incumbents, including state-owned and government-linked enterprises.
Based on survey findings, the EU-Asean Business Council (of which ECCP is a member and is represented on the Supervisory Board) is calling for the acceleration of the process for an EU-Asean FTA and for a speedier conclusion to existing bilateral FTA negotiations; more frequent and regular interactions between EU and Asean governments and the private sector; and continued progress on trade liberalization among Asean member-states and with their external trading partners.
Commenting on the results, EU-ABC Chairman Donald Kanak said: “It is clear that European business are optimistic and are investing for future growth in Asean. At a challenging time for the global economy, Southeast Asia is an economic bright spot and European companies are keen to invest in the region’s rapidly developing consumer market and increasingly integrated production base. The survey shows strong support for a substantive and meaningful EU-Asean FTA to support sustained European investment in the region, and the EU-Asean Business Council urges leaders from the EU and Asean to work together toward that end, and in the meantime the rapid conclusion of bilateral FTA negotiations between the EU and Asean member-states.”
Commenting on the survey, EU Ambassador to Asean H.E. Francisco Fontan said: “Southeast Asia is central to the EU’s global trade-negotiation agenda. As such, we welcome European businesses’ embrace of Asean as a center of global economic growth. Industry and government must work together more closely to fulfill our shared goal of ever closer economic ties between the EU and Asean.”
This survey comes at the right time: Asean and the EU, two regional organizations with their own respective dynamics and histories, will celebrate the 40th anniversary of their formal relations next year, precisely when Asean itself will turn 50 years old. To make it even more exciting: the Philippines is chairing Asean in 2017!