| Azlan Othman |
BRUNEI Darussalam attained top spot in Administrative Costs for Business and second place in Ease of Importing Goods, Stable Government and Political System and Regulatory Regime in the EU-Asean Sentiment Survey 2017.
The annual survey aims to serve as a barometer for the business sentiment and outlook of European businesses in Southeast Asia and reflects European Union (EU) companies’ satisfaction on Asean on a number of doing business factors.
The Sultanate came third in Prevalence of Business Friendly Customs Procedures and fourth in Infrastructure. But it is lagging behind in Availability of Competitively Priced Labour, Availability of Skilled Labour and Ease of Recruiting Labour from Abroad.
The survey has asked respondents on the factors driving Asean’s importance to their bottom lines. In 2017, enhanced regional economic integration slipped down the order of importance from the number one slot (in both 2015 and 2016) to second position.
Improvement in infrastructure has moved up to the first position, maybe reflecting a sense that more investment is being made across the region in this area.
Perhaps more telling is that economic recovery also makes a first appearance in the top three this year, which should be a reflection of the relatively strong economic growth forecasts for Asean compared to other regions.
Respondents were again asked to rank the following factors that drive their decisions to invest in their response location, namely adequate laws and regulations to encourage foreign investment; availability of trained personnel/efficient manpower; diversification of customer base; reasonable production costs (including labour cost) and stable government and political system.
There was a slight change in the ordering of the various factors this year compared to 2016. While diversification of the customer base remained the primary reason and reasonable production costs remained in the top three, stable governments and political systems entered the top three in place of adequate laws and regulations to encourage foreign investment.
According to the third annual EU-Asean Business Sentiment Survey which polled more than 300 executives from European companies around Southeast Asia, European businesses continue to have a very positive outlook in Southeast Asia and expect to see Asean profits increase.
Three-quarters (75 per cent) of European businesses expect an increase in Asean profits for 2017 and almost three-quarters (71 per cent) said Asean has become more important in terms of global revenues over the last two years.
As a result, 94 per cent of European businesses plan to expand or maintain their current levels of operations and headcount in the Asean region. About 86 per cent of them expect their level of trade investment in Asean to increase over the next five years.
European businesses in the region are keen to see strengthened ties between the EU and Asean. More than four-fifths (88 per cent) of European companies believe the EU should pursue a region-to-region Free Trade Agreement (FTA) with Asean, a significant increase over the 66 per cent surveyed in 2016, and more than half (55 per cent) feel they are at a disadvantage in Asean without an EU-Asean FTA.
However, challenges for businesses remain, impeding Asean from reaching its maximum economic potential – almost two-thirds (61 per cent) of European businesses say that non-tariff barriers are hampering supply chain efficiency.
Based on the survey findings, the EU-Asean Business Council (EU-ABC) is calling for the acceleration in negotiation of FTAs between EU and Asean and to begin pursing a region-to-region FTA with Asean; more frequent and regular interactions between EU and Asean governments and the private sector; and further advances in economic integration within Asean.
Commenting on the results, EU-ABC Chairman Donald Kanak said, “Asean is becoming the next key driver of global economic growth. This survey shows that European businesses will continue to contribute to Asean by increased trade, investment and employment. Respondents strongly support a deep and comprehensive a region-to-region EU-Asean FTA to enable greater European investment in the region and continued collaboration on reducing trade barriers and trade frictions.”
Meanwhile, EU Ambassador to Asean Francisco Fontan said, “I want to again thank and congratulate the EU-ABC for this new Business sentiment survey and for the excellent partnership with the EU Mission to Asean. It is precisely this strong support and active engagement of the EU business community in the Asean region that lay behind all our institutional efforts in the economic field.”
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