JAKARTA (TheInsiderStories) – In the next 12 months, Indonesia alongside with Vietnam and china, will become the top three countries that will receive increased cross border investment in 21 APEC economies, survey on 1,400 CEO by PowerWaterhouseCoopers (PwC) revealed.

According to PwC, about 518 CEO or 37 percent of their correspondent are very confident of revenue growth during the next 12 months, up from 28 per cent in 2016 despite trade policy uncertainty and related political tensions in many of the economies that make up APEC. In addition, from total 77 Indonesian’s CEO surveyed, 65 percent of it expect expanding their business.

In the next year, a net 50 percent of businesses surveyed by PwC will increase their global investments (including those outside the APEC region), up from 43 percent last year, as APEC businesses increase their foothold and influence on the global economy,” Bob Moritz, PwC Global Chairman said.

Chart by PwC

As much as 71 percent of those surveyed who are raising investment will direct those increases into APEC economies in 2018, and 63 percent of all APEC CEOs expect their broader global footprint to expand over the next three years. Vietnam, China, Indonesia, the US and Thailand are the top APEC targets for business leaders’ overseas investment.

According to Moritz, business leaders’ confidence suggests they are not waiting for the fog of uncertainty to clear to push ahead with investment plans. In the short term this will drive momentum for APEC, increasing its global influence and supporting deals activity with 71 percent of CEOs expecting to rely more on business partnerships/joint ventures in the future.

Yet, CEOs’ concerns about restrictive trade conditions, particularly the movement of labor and goods, has to be a key area of discussion for APEC leaders at the upcoming summit as it directly impacts competition and growth. They start exploring labor mobility solutions.

In the survey almost a quarter of APEC CEOs admit they experienced a more restrictive trade environment, particularly focused around employing foreign labor (23 per cent) or in moving goods across borders (19 per cent). In the near term, 30 percent expect labor restrictions to increase, and a quarter expect an increase in barriers on moving goods to increase in the next 12 months.

As a result, a majority of CEOs (71 per cent) expect to rely more on business partnerships and joint ventures in response to changing trade environment, and plan to increase business domestically, or in economies with bilateral ties.

“With confidence increasing, perceptions of the opportunities for innovation-driven growth have improved, but business leaders’ concern about their ability to secure the right skills to compete globally is increasing. Automation is a key recurring theme in strategies for building the workforce of the future, with 58 per cent automating certain functions, 40 per cent investing in machine learning and emerging technologies, and 41 per cent identifying workers are skilled at using new automation tools,” Moritz said.

Bridging MSMEs and Inequality

APEC statistics also show that in this region there are about 110 million micro, small, medium enterprises (MSMEs), accounting for 98 per cent of the total number of enterprises. These enterprises account for 70 per cent of total exports and create jobs for 54 per cent of the population.

In particular, the agriculture-food sector is expected to have a considerable growth potential, accounting for 4 percent of APEC’s GDP growth as well as 23.4 per cent of employment.

APEC working members on MSMEs believe that start-up entrepreneurs will face increasing difficulties in conducting cross-border exchanges and entering the international market if they do not accept the rapid change of digital technology.

In fact, the development of information technology and the digital economy has become one of the key core issues in modern economic development. Thus, only when MSMEs have knowledge and understanding of the opportunities and challenges of digital change, can fully realize their potential and create sustainable development, to integrate into a common future of the regional economies.

The Internet is considered an important driving force in the context of APEC being connected more than ever. There are now 3 billion people connected to the Internet in APEC economies and the number is expected to increase to 5 billion by 2025. The Internet helps businesses reduce costs and improve productivity.

Minister of National Development Planning Bambang Brodjonegoro said APEC’s committee meeting and sub-forum can address inclusive economy through MSMEs empowering. One of the main reasons Indonesia still face high inequality is that MSMEs still has no adequate asset ownership and wealthy only concentrate in certain peoples.

“There is a need to increase MSMEs role in global value chain, including through TI utilization and increase e-commerce,” he said.

According to the seventh Global Wealth Report by Credit Suisse Research Institute last year, the richest 1 percent of Indonesia’s adult population of 164 million own 49.3 percent of the country’s $1.8 trillion wealth by June this year, a drop from last year’s 53.5 percent.

Written by Yosi Winosa, email: yosi.winosa@theinsiderstories.com

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