Southeast Asia Capital Confidence Barometer April – October 2013


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Appetite to grow is driving corporate focus

Stable growth in the economy in local markets is also influencing the corporate focus in Southeast Asia. When asked about their companies’ focus over the next 12 months, 39% expressed that growth still remains their top priority.

However the percentage of respondents who see growth as their top priority has steadily declined when one compares the results from the past three surveys.

In contrast, there is a sharp increase in the number of Southeast Asia respondents who have expressed that maintaining stability is a growing focus for them. Despite the bullish sentiment about the region’s overall economic prospects, Southeast Asia corporates will continue to exercise caution in their organizational focus over the next 12 months.

What is your organization focus for the next 12 months?

Organic growth continues to be at the core of the growth agenda for companies

Companies that exercised prudent measures through volatile times over the past few years are now focusing on efficiency and organic growth, given their cash reserves. Striking a balance between investing these resources wisely and distributing them to shareholders will be the key to success.

44%   of SEA respondents expect to invest excess cash to drive organic growth over the next 12 months.

Adopting safe strategies to drive growth

A majority of Southeast Asia respondents, echoing the sentiments expressed globally, have opted to focus more on core products and existing markets than to invest into newer markets.

Perhaps it is recognition that there is a lot more scope to consolidate and grow their core businesses as these markets mature or it is a defensive strategy to meet with stiffer competition and newer entrants.

Governance is an important priority

Firmly having growth on their agenda, Southeast Asia respondents have also expressed the significance of governance issues such as risk management, capital allocation, efficiency and cost controls and meeting regulatory obligations as important priorities.

Interestingly, issues such as investment into innovation and research and development activities, attracting and retaining talent and investment into new markets are at the lower end of the Boardroom priorities.

Capital optimization continues to dominate the capital agenda

Balance sheet structures have evolved and now play a substantial and more strategic role not only in business planning, but also in enabling access to capital for future growth and expansion. With capital allocation decisions becoming an important Boardroom focus, Southeast Asia respondents are seeking to focus more on capital optimization strategies.

Once again similar to the stance adopted in managing organic growth, capital decisions too seem to be driven by a more cautious attitude as investing capital continues to occupy a secondary priority, even though there is a slight improvement compared with six months ago.

Having a balanced focus on capital optimization and investing activities seems to be the right strategy in doing business in a region that is dominated by several emerging economies with diverse growth opportunities.

59%   of SEA respondents believe that slowdown in growth in the emerging markets is their greatest economic risk for growth.