Indonesia, Malaysia, Thailand top spots

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Indonesia, Malaysia and Thailand are among the five most popular investment destinations for multinational companies in Asia, a new survey on investment trends shows. The three ASEAN countries rank third, fourth and fifth, respectively, after China and India.

The survey entitled 2013 Asia Business Outlook by the Economist Network released on January 8 is based on opinions of business leaders of multinational companies that are investing in and managing their operations in the Asia Pacific region.

The paper suggest that executives are buoyant about Asia in general, with almost half of respondents (47 per cent) saying expectations for their business in the region have risen over the past 12 months (as against 15 per cent for whom they have fallen). Companies are predicting that sales will grow at a faster rate in 2013 than in 2012 for every market in the region, excluding Japan.

China at the top

The 2013 survey shows that China continues to be Asia’s top investment destination for Western multinationals, by a large and increasing margin. International business is predicting considerably higher sales growth in emerging Tier 2, 3 and 4 cities than in established Tier 1 markets.

The survey also shows that the entire region is rapidly gaining importance in the portfolio of operations at most global multinationals. For the 170 non-Asian companies in the survey (those with headquarters outside the region), Asia’s share of global revenues rose from 19 per cent in 2011 to 22 per cent in 2012. Companies expect this figure to reach 32 per cent by 2017.

Indonesia is the most attractive ASEAN country for multinationals. The archipelago nation continues to attract investment – coming a close third behind China and India – but corruption remains a major concern for most businesses operating in the country, the survey revealed.

Malaysia is seeing its level of investment rise, with executives of Western firms saying they are concerned they are “investing too little” in the country. 40 per cent of global multinational companies plan to raise their investment in Malaysia in 2013, the report noted.

For Thailand, 38.6 per cent of executives stated they planned to increase their levels of investment in the country during 2013. Just 2.4 per cent said they planned to reduce their investment in Thailand.

Hong Kong, Singapore “overheating”

On the other hand, the role of Hong Kong and Singapore as the region’s traditional management hubs for global multinationals is under threat of overheating, the survey said.

While Singapore generally remains an attractive investment destination for multinational companies, its role as a host for corporate regional headquarters is increasingly being undermined by concerns. The survey showed 52 per cent of respondents with regional headquarters in Singapore citing cost of living as a major issue or a cause for them to relocate. Rising property prices were the second-biggest issue, drawing concerns from 38 per cent of respondents, while 34 per cent said staff shortages would hurt their operations or force them to relocate.

Only 34.8 per cent of multinationals in Singapore plan to increase their investment here in 2013. As a result, Singapore dropped two places to seventh in the survey’s investment priority ranking this year, behind Vietnam’s 37.7 per cent.

Cautious on emerging markets

Despite much talk of the importance of frontier markets, the business community remains cautious.  Between 30 and 40 per cent  of companies say they have no interest in Myanmar, Laos, Cambodia and Mongolia.

The survey was completed by 207 senior executives of multinational companies with management responsibility for businesses across Asia, operating in a wide spread of industries.

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Reading Time: 3 minutes

Indonesia, Malaysia and Thailand are among the five most popular investment destinations for multinational companies in Asia, a new survey on investment trends shows. The three ASEAN countries rank third, fourth and fifth, respectively, after China and India.

Reading Time: 3 minutes

Indonesia, Malaysia and Thailand are among the five most popular investment destinations for multinational companies in Asia, a new survey on investment trends shows. The three ASEAN countries rank third, fourth and fifth, respectively, after China and India.

The survey entitled 2013 Asia Business Outlook by the Economist Network released on January 8 is based on opinions of business leaders of multinational companies that are investing in and managing their operations in the Asia Pacific region.

The paper suggest that executives are buoyant about Asia in general, with almost half of respondents (47 per cent) saying expectations for their business in the region have risen over the past 12 months (as against 15 per cent for whom they have fallen). Companies are predicting that sales will grow at a faster rate in 2013 than in 2012 for every market in the region, excluding Japan.

China at the top

The 2013 survey shows that China continues to be Asia’s top investment destination for Western multinationals, by a large and increasing margin. International business is predicting considerably higher sales growth in emerging Tier 2, 3 and 4 cities than in established Tier 1 markets.

The survey also shows that the entire region is rapidly gaining importance in the portfolio of operations at most global multinationals. For the 170 non-Asian companies in the survey (those with headquarters outside the region), Asia’s share of global revenues rose from 19 per cent in 2011 to 22 per cent in 2012. Companies expect this figure to reach 32 per cent by 2017.

Indonesia is the most attractive ASEAN country for multinationals. The archipelago nation continues to attract investment – coming a close third behind China and India – but corruption remains a major concern for most businesses operating in the country, the survey revealed.

Malaysia is seeing its level of investment rise, with executives of Western firms saying they are concerned they are “investing too little” in the country. 40 per cent of global multinational companies plan to raise their investment in Malaysia in 2013, the report noted.

For Thailand, 38.6 per cent of executives stated they planned to increase their levels of investment in the country during 2013. Just 2.4 per cent said they planned to reduce their investment in Thailand.

Hong Kong, Singapore “overheating”

On the other hand, the role of Hong Kong and Singapore as the region’s traditional management hubs for global multinationals is under threat of overheating, the survey said.

While Singapore generally remains an attractive investment destination for multinational companies, its role as a host for corporate regional headquarters is increasingly being undermined by concerns. The survey showed 52 per cent of respondents with regional headquarters in Singapore citing cost of living as a major issue or a cause for them to relocate. Rising property prices were the second-biggest issue, drawing concerns from 38 per cent of respondents, while 34 per cent said staff shortages would hurt their operations or force them to relocate.

Only 34.8 per cent of multinationals in Singapore plan to increase their investment here in 2013. As a result, Singapore dropped two places to seventh in the survey’s investment priority ranking this year, behind Vietnam’s 37.7 per cent.

Cautious on emerging markets

Despite much talk of the importance of frontier markets, the business community remains cautious.  Between 30 and 40 per cent  of companies say they have no interest in Myanmar, Laos, Cambodia and Mongolia.

The survey was completed by 207 senior executives of multinational companies with management responsibility for businesses across Asia, operating in a wide spread of industries.

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