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Asean’s big role in American firms’ future seen

American businesses operating in the country are optimistic that the Philippine economy will continue to grow, and that the Association of Southeast Asian Nations will play an increasingly large part in the future of United States-based businesses.

According to the results of the latest Asean Business Outlook, a survey conducted in seven countries by various chapters of the American Chamber of Commerce, 77 percent of local respondents believed the Philippine economy would continue to expand in the coming months. Only 2 percent saw a contraction.

Amid this bullishness, however, 85 percent of those polled expected living costs to increase and 75 percent believed housing costs would go up. Also, most of the respondents cited corruption and inadequate infrastructure as issues that the government would have to address to create a better business environment.

Existing laws and regulations were also cited as a concern.

The country lost out to Indonesia and Vietnam as the most popular investment location for US businesses.

The survey revealed that Indonesia was the Asean destination of choice of American businesses, with 72 percent of respondents saying they planned to expand there. Vietnam was the second-most popular investment location, as cited by 25 percent of the respondents.

Indonesia’s edge was its overall low-cost business environment: low labor cost, low housing cost, and low office lease cost. As with the Philippines, however, corruption, infrastructure, and laws and regulations were huge concerns among American investors.

What American businesses liked about Vietnam, on the other hand, was its stable political environment, high degree of personal security, and stable government and political system. Concerns were expressed over government corruption, inadequate infrastructure, and high housing and living costs.

While Vietnam continued to provide low-cost labor, American investors were concerned that there could be a shortage of skilled personnel in the long run.

Thailand, another close competitor of the Philippines in terms of securing foreign investments, was also a well-liked business location, with 98 percent of the expatriates polled there saying they were satisfied with their assignments.

Corruption and government and political instability, however, served as a dampener to Thailand’s attractiveness. These issues could be offset by a good level of personal security, adequate infrastructure, and reasonable housing and office lease costs.

American businesses continued to see the Asean as an important business location, with 73 percent saying they saw the region gaining increasing importance over the next two years. As many as 85 percent of those polled said they would expand their operations in the Asean.

The Asean Free Trade Area was cited as a vital factor in US businesses’ investment decisions, with 80 percent of the respondents saying they would use tariff benefits to their advantage.
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By: Abigail L. Ho
Source: Philippine Daily Inquirer, Sept. 9, 2011
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