AmCham Singapore ASEAN Business Outlook Survey

2010ASEAN BuSiNESS OutlOOk SurvEy

Report compiled by

The American Chamber of Commerce in Singapore

In cooperation with

The American Cambodian Business Council

The American Chamber of Commerce in Indonesia

The American Chamber of Commerce of the Philippines

The American Chamber of Commerce in Thailand

The American Chamber of Commerce in Vietnam

The American Malaysian Chamber of Commerce

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CONTENTS


02 iNtrODuCtiON & MEtHODOlOGy

02 BuSiNESS OutlOOk

04 ASEAN iNtEGrAtiON & iMPOrtANCE

06 StrENGtHS & CHAllENGES

07 WOrkFOrCE EXPANSiON

08 u.S. EXPAt iSSuES

10 COrPOrAtE SOCiAl rESPONSiBility iNvOlvEMENt

11 COMMENtS FrOM rESPONDENtS ACrOSS ASEAN

12 CAMBODiA rEPOrt HiGHliGHtS

14 iNDONESiA rEPOrt HiGHliGHtS

16 MAlAySiA rEPOrt HiGHliGHtS

18 PHilliPiNES rEPOrt HiGHliGHtS

20 SiNGAPOrE rEPOrt HiGHliGHtS

22 tHAilAND rEPOrt HiGHliGHtS

24 viEtNAM rEPOrt HiGHliGHtS

ASEAN Business Outlook Survey 2010

02

INTrOduCTION & METhOdOlOgyThe American Chamber of Commerce in Singapore (AmCham Singapore), in cooperation with other AmChams in the ASEAN region, conducted a study among u.S. companies in seven Southeast Asian countries: Cambodia, Indonesia, Malaysia, Singapore, The Philippines, Thailand and Vietnam.

The purpose of the study, now in its ninth year, is to understand members’ outlook on business growth and their perceptions about a series of local factors. The members surveyed were senior executives, working with a company held by or with an American majority interest. AmCham developed a survey design using a web-based instrument.

This regional report presents collective feedback received from members of: The American Chamber of Commerce in Singapore, The American Cambodian Business Council, The American Chamber of Commerce in Indonesia, The American Chamber of Commerce of the Philippines, The American Chamber of Commerce in Thailand, The American Chamber of Commerce in Vietnam amd The American Malaysian Chamber of Commerce.

The 2010 ASEAN Outlook Survey marks the first time that a survey of Cambodia members was included. As a result, there is no comparative data for Cambodia.

Survey Methodology

Table 1.1

Sample Size: A list of AmCham members from u.S. companies with e-mail contacts was provided by each AmCham:

Cambodia: list of • 55 members, response rate was 31% (17)

Indonesia: list of • 125 members, response rate was 14% (18)

Malaysia: list of • 139 members, response rate was 14% (20)

Philippines: list of • 241 members, response rate was 21% (51)

Singapore: list of • 378 members, response rate was 21% (81)

Thailand: list of • 258 members, response rate was 33% (84)

Vietnam: list of • 213 members, response rate was 27% (57)

Overall:• list of 1,409 members, response rate was 23% (328)

Data Collection Method: Web-based, self-administered survey. No enforcement on participation.

Data Collection Period: May 12—June 1, 2010


03

Profit outlook

The majority of respondents expect companies’ profits to increase in 2010 and 82% expect a profit increase in 2011.

BuSINESS OuTlOOkWorld econoMic outlook

As the world shows signs of economic recovery, the ASEAN economic outlook appears much more positive in 2010 than in 2009. 73% of respondents expect the economy to do better or much better in 2010, as opposed to only 25% of respondents who felt the same way in 2009.

No country shows this turnaround in attitude to a greater extent than Singapore, which shifted from having the most pessimistic outlook in 2009 to having the most optimistic one in the region in 2010. In 2010, a regional high of 73% of respondents expect the world economy to perform better or much better. Vietnam, the Philippines, and Thailand have the next most optimistic outlooks with 76%, 74%, and 70% respectively predicting better or much better world economic conditions in 2010.

CambodiaindonesiathailandPhilippinesvietnamMalaysiaSingaporeregional

2010 Decrease 2011 Decrease2010 remain 2011 remain2010 increase 2011 increase

0%

20%

60%

100%

40%

80%

120%

4%

26%

66%

1%

13%

82%

3%

24%

73%

14%

85%

60%

20%

40%

80%

62%

29%

2%

11%

2%

20%26%

72%79%

76%

10%

23%

63%

10% 11%

28%

50%

22%

6% 7%

27%

61%67%

100%

0% 0%0%0%0%0%0%0%

88%

Profit Expectations for the Next Two YearsCompared to 2009, do you expect your profits in ASEAN to Increase, Decrease, or

Remain the Same in 2010 and 2011?

Note: Percentages may not add up to 100% due to respondents selecting “Don’t know.”

In 2010 what are your expectations for performance of the world economy in comparison with 2009?


15% 17% 10% 16% 14% 16% 17% 6%

60%

29%

6%

44%

33%

6%

54%

22%

8%

60%

24%

2%0%

60%

19%

7%

50%

40%

64%

12%

5%

58%

21%

6%

Worse About the Same Better Much Better

ASEAN INTEgrATION & IMPOrTANCEASEAN integration is clearly valuable to most respondents with 73% finding it important to helping their companies do business in the region.

ASeAn’S contribution to globAl buSineSS

Most respondents (70%) expect that ASEAN’s contribution to global business will continue to increase over the next two years.

Note: No past data available for Cambodia.


04

yes No


40%

0%

50%

10%

70%

30%

90%

60%

20%

80%

100%

27%

73%79%

21%

56%

42%

70%

30%

67%

33%

25%

75%71%

29%

14%

86%

The Importance of ASEAN IntegrationIs ASEAN integration important to helping your company do business in the region?

ASEAN’s Contribution to Global Business Over the Next Two Years(Country Outlook)

indonesia CambodiathailandPhilippinesvietnamMalaysiaSingaporeregional

40%

0%

50%

10%

70%

30%

90%

60%

20%

80%

More important 2007 More important 2008 More important 2009 More important 2010

62%66%

65%70% 72%

64%

58%

65%

51%

59%

67%70%

72%70%

65%69%

66%67%

53%

67%

60%

71% 69%

83%

72%77%

0% 0% 0%0%

56%55%

buSineSS exPAnSion in ASeAn

80% of respondents’ companies plan to expand or expand significantly in ASEAN over the next two years. These numbers remain similar to 2009 data, showing a continued trend of ASEAN expansion.

For every country, more than half of respondents plan to expand in ASEAN.

ASeAn trAde AgreeMentS

77% of respondents said their companies use the tariff benefits of the ASEAN FTA. Those using the ASEAN FTAs with other trading partners range from 48% (ASEAN-China) to 21% (ASEAN-Japan).


05

Vietnam and Indonesia are key focuses for expansion in ASEAN

indonesia

vietnam

Myanmarlaos

Cambodia

Philippines

Singapore

Malaysia

thailand

31%

15%

13%

11%

10%

7%

7%4%

4%

Contract Significantly Contract remain About the Same Expand Expand Significantly

Business Expansion in the Next Two Years


0%0%2%

15%

55%

25%

4%

10%

31%

10%

60%

30%

11%

53%

28%24%

2%

16% 16%

57%

24%

6%

22%

17%

56%

29%

47%

18%

59%

1%1%

53%

0%0% 0%0% 0% 0% 0%0%

ASEAN Trade AgreementsDoes your company use the tariff benefits of the following ASEAN Free Trade Agreements?

ASEANFtA

ASEAN-China

ASEAN-Australia-New

ASEAN-india

ASEAN-korea

ASEAN-Japan

40%

0%

50%

10%

70%

30%

90%

60%

20%

80%

2010

77%

48%

27%24% 22% 21%

STrENgThS ANd ChAllENgESlocAl buSineSS environMent

Excluding respondents from Singapore, corruption continues to be a top source of dissatisfaction for respondents, similar to findings in 2008 and 2009. Corruption was the highest source of dissatisfaction for all countries except Singapore and Thailand. For Thailand, political stability ranked higher than corruption as a source of dissatisfaction.

Sentiment towards the u.S. remains highly positive across the ASEAN region. however, sentiment towards the u.S. decreased appreciably in Malaysia (from 66% in 2009 to 53% satisfaction in 2010) and particularly in Indonesia, where it dropped from 50% satisfied in 2009 to 35% satisfied in 2010.

factors Malaysia Philippines Singapore thailand vietnam indonesia cambodia

infrastructure 70% 46% 98% 64% 73% 65% 41%

Availability of raw materials 44%

Availability of low cost labor 76% 68% 63% 65% 69%

Availability of trained personnel 70% 58% 45% 53%

office lease cost 63% 43% 60% 42%

housing cost 53% 78% 61% 50%

laws & regulations 85% 48% 82%

corruption (or lack of) 63% 84% 90% 66% 74% 82% 65%

local Protectionism (or lack of) 47% 61% 47% 40% 41%

tax structure 42% 81% 48% 53%

Personal security 40% 96% 61% 76%

Stable government & Political system 90% 77% 63%

new business incentives by government 77% 59%

ease of moving products through customs 65% 71%

free Movement of goods within the region 57%

Sentiment towards the uS 53% 70% 87% 73% 72% 77%


06

finAncing And coStS of borroWing

The number of respondents experiencing significant financing constraints decreased considerably from 42% in 2009 to 24% in 2010. Experiences with costs of borrowing remained similar to those of 2009 with some variance across the region.

WOrkFOrCE ExPANSIONoverAll Workforce by country

Along with the profit increase predicted across the region in 2010, 60% predict an increase in the overall workforce. Only 5% expect a decrease in the workforce, while 34% expect it to remain about the same. These numbers represent a significant change in attitude since the 2009 survey, when only 37% anticipated an increase in the workforce and 47% expected it to remain about the same.


07

2009 “yes” response 2009 “yes” response2010 “yes” response 2010 “yes” response

42%

24%

37%

24% 24%

15%

30%

47%

39%

10%

27%

48%

55%

29%

41%

28%26% 26%25% 25%

30% 30%

48%

29%

8%

26%27%

50%

6%

18%

Financing Constraints by Country “Yes” ResponsesIs your company facing significant financing contraints

Is your company facing higher costs of borrowing?

indonesia indonesiaCambodia Cambodiathailand thailandPhilippines Philippinesvietnam vietnamMalaysia MalaysiaSingapore Singaporeregional regional

40%

0%

50%

10%

70%

30%

60%

20%

80%


Decrease Same increase

60%

73%

24%

3%0%

5%

34%

45%

55%

2%

25%

72%

51% 49%

38%

13%

6%

43%

6%

50%

44%

35%

0%

65%

Do you expect your total number of employees in the response locationto increase, decrease, or remain about the same in 2010?

exPAt Workforce

Most respondents (65%) predict that the number of expatriates working for their companies will remain about the same in 2010. 16% expect the number of expatriates will increase, slightly outpacing the 14% that believe that the expatriate workforce will decrease.

In every country besides Cambodia, 59% or more of the respondents predict that the size of the expatriate workforce will remain about the same.

u.S. ExPAT ISSuESexPAt ASSignMent SAtiSfAction

The percentage of respondents that stated their companies regularly receive requests from employees based in other locations to work in their response locations increased from 37% in 2009 to 39% in 2010.

Satisfaction rates remain at a high rate of 92%—the same rate as in 2009. results show that increasing numbers of expatriate employees attempt to extend their time in their response location within ASEAN. respondents stating that their expatriate employees attempt to extend their assignments rose from 79% in 2009 to 82% in 2010.


08

40%

0%

50%

10%

70%

30%

60%

20%

80%

90%


Decrease Same increase

14%

65%

16% 15%

59%

21%

5%

65%

20%12%

68%

14% 16%

63%

14% 17%

69%

13%6%

11%

24% 24%

47%

78%

2010 Change in Expatriate Workforce by CountryWill the number of expatriates working for your company in your response

location increase, decrease, or remain about the same in 2010?

*Note: The question on Expatriate Concerns was an optional question on the survey for the first time this year, and thus have a significantly smaller sample size. Of the 327 total respondents that took the 2010 survey, 148 answered the optional question. results may have been affected by this change.

exPAtriAte concernS

The percentage of respondents who have experienced an increase in the amount of income tax that they must pay to the u.S. on their foreign earned income grew in 2010 from 36% in 2009 to 47% in 2010.


09

Have you experienced a significant increase in the amount you must pay toward U.S. income tax on your foreign earned income since the legislative changes in 2006?

36% 47%

64% 53%

2009 2010

yes No

receive Assignment requests Happy with Assignments Ask to Extend Assignments


61%

39%

96%92% 89%

82%

93%

69%

39%

29%

82%

71%

15%

86%

71%

44%

99%

89%

24%

94%

81% 85% 87%

24%

COrPOrATE SOCIAl rESPONSIBIlITy INVOlVEMENTIn 2010, the percentage of respondents who stated their companies are involved with CSr increased (from 72% in 2009 to 78% in 2010), as did the percentage that plans to increase CSr efforts in the future (from 36% in 2009 to 57% in 2010).

The highest rate of respondents (79% stated that their efforts include employee volunteering.

While Malaysia has taken the lead, other countries were not far behind - every country surveyed has rates of 72% or more involved with CSr.


10

80%

0%

100%

20%

60%

120%

40%

Fundraising Employee volunteering Cash Donations

Cambodia indonesia thailandPhilippines vietnamMalaysia Singaporeregional

40%

80%80%

25%

75% 75%77%79%

53%

83% 83%

100%

50%

72%

89%

56%

82%

62%

48%

78%82%

56%61%

100%

80%

0%

100%

20%

60%

120%

40%

Decrease remain the Same increase

2%

41%

57%

20%

40% 40%

0%

25%

75%

0% 0% 0% 0% 0%5%

37%

58%61%

39%

54%46%45%

56%

100%

Cambodia indonesia thailandPhilippines vietnamMalaysia Singaporeregional

CSR Increase/DecreaseDo you expect your company’s CSR efforts to increase or decrease in 2010 compared with 2009

Form of Company’s CSR EffortsWhat form does your company’s CSR efforts take?

*Note: The questions on Corporate Social responsibility were optional questions on the survey for the first time this year, and thus have a significantly smaller sample size. Of the 327 total respondents that took the 2010 survey, 148 answered the optional question. results may have been affected by this change.


11

respondents were given an option to contribute additional comments to some of the questions. Below are some of their comments.

Q: Top 3 reasons why your company plans for business expansion in ASEAN?

Q: What does your company see as the most significant barrier to conducting business within ASEAN?

Q: Top 3 reasons why your company feels that ASEAN markets will be more important for its worldwide operations and revenues in the next two years?

Opportunities for growth.

Consumers’ Ability to afford FMCG Products.

Corruption! Where it may not be a direct link it affects everything and everybody, no matter if your company is small or large.

lack of experienced middle management.

increasing sophistication of customer base.

Slow economic recovery in the u.S.

increased spending power.

Growth of Asian economies, less reliance on economic growth of u.S. and Europe

Barriers created by respective governments to protect local and quasi governmental companies or state enterprises.

Comments From respondents Across ASEAN

BUSINESS OUTLOOK

World Economic Outlook:

65% predict a better or much better performing economy in • 2010 than in 2009.

Current Business Climate:

41% face significant financing constraints in 2010. •

18% face higher costs of borrowing in 2010•

Importance of ASEAN Markets in Global Business:

53% of respondents feel that ASEAN markets have • increased in importance in the past two years.

76% of respondents expect ASEAN importance to increase • in the next two years.

Effectiveness of ASEAN:

86% of respondents find ASEAN integration important to • helping their companies do business in the region.

67% of respondents use the ASEAN FTA.•

33% of respondents use the ASEAN-China and the ASEAN-• Australia-New Zealand agreements.

Business Direction and Movement in ASEAN:

38% of respondents’ companies expanded in ASEAN in the • past two years. 65% plan to expand in ASEAN in the next two years.

The largest rate (33%) of respondents plan to expand in • Cambodia and laos.

Profit Outlook:

100% expect a profit increase in 2011.•

67% expect a profit increase in 2010. •

Workforce Expansion:

65% of respondents expect a workforce increase in the • coming year.

FACTORS IMPACTING BUSINESS

Economic Conditions:

59% expect the overall Cambodian economy to expand.•

44% expect an increase in cost of living. •

38% expect an increase in housing cost.•

12% expect the Cambodian riel to appreciate against the • u.S. dollar.

6% expect an increase in the interest rate. •

Other Local Business Environment Factors:

50% are neutral with regard to the clarity of government • guidelines on payment of IPr royalties.

47% are neutral with regard to the clarity of transfer pricing • regulations.

47% are neutral with regard to the clarity of government • guidelines on reverse logistics.

GRAPHS AND CHARTSFigure 1: World Economic Outlook in 2010

Figure 2: reasons for ASEAN Importance

Figure 3: Expectations of Expansion of the Cambodian Economy

CAMBOdIA rEPOrT hIghlIghTS

40%

0%

50%

10%

70%

0%6%

29%

59%

6%

30%

60%

20%

Much Worse Worse About the Same Better Much Better

World Economic OutlookDo you expect the world economy this year to perform much better, better,

about the same, worse, or much worse than last year?

2010

Neutral, 41%

Expand, 59%


12

40%

0%

50%

10%

70%

80%

90%

30%

60%

20%

Reasons for saying ASEAN markets will be more important

2010

85%

Economicrecovery

77%

improvementin

infrastructure

31%

increasedavailability of

trainedpersonnel

46%

Favorablegovernment

policies

31%

limited growthopportunities

in otherregions

15%

Stable politicalconditions

15%

Change inbusinessstrategy

8%

Other


Q: What hinders your business in using trade agreements?

Q: What kind of impact will further ASEAN integration have on your business’ activities in the region?

Stronger competition with lower margins.

local companies have little knowledge of business services.

General indifference to ASEAN.

time consuming, as we need to follow the standards of these trade agreements.

More cross-borderinvestment.

Our business is medical equipment, and it is not part of the agreements ASEAN has with india and China.

More ASEAN companies willenter this market.


13

Major Strengths (% Satisfied) Major concerns (% dissatisfied)

Sentiment towards the u.S. (76%) Corruption (64%)

Availability of low cost labor (68%) Availability of trained personnel (53%)

Availability of raw materials (43%)

Infrastructure (41%)

Business Environment: Strengths and Concerns

Comments from respondents in Cambodia

BUSINESS OUTLOOK World Economic Outlook:

61% predict a better or much better performing economy in • 2010 than in 2009. 24% of respondents predicted a better or much better economy in 2009 than in 2008.


respondents facing significant financing constraints • decreased from 55% in 2009 to 29% in 2010.

respondents facing higher costs of borrowing decreased • from 50% in 2009 to 6% in 2010.



53% of respondents feel that ASEAN markets have increased • in importance to their companies in the past two years.




33% of respondents use the ASEAN-China agreement.•



The largest rate of respondents (69%) plan to expand in • Indonesia.

Profit Outlook:




The rate of respondents expecting a workforce increase in • the coming year rose from 21% in 2009 to 44% in 2010.

FACTORS IMPACTING BUSINESS Economic Conditions:

76% expect the overall Indonesian economy to expand. •


76% expect the interest rate to remain the same. •


47% expect the Indonesian rupiah to appreciate against the • u.S. dollar.


75% find importing goods into Indonesia a significant • problem

44% are dissatisfied with regard to the clarity of government • guidelines on reverse logistics.

36% are dissatisfied with regard to the clarity of government • guidelines on payment of IPr royalties.

With regard to the clarity of transfer pricing regulations, both • the “neutral” and “satisfied” options received response rates of 24%.

GRAPHS AND CHARTSFigure 1: World Economic Outlook in 2010 in Comparison With 2009 Economy

Figure 2: growth of ASEAN Importance over Next Two years

Figure 3: Profit Outlook 2010 Figure 4: Expectations of Expansion

of Indonesian Economy

INdONESIA rEPOrT hIghlIghTS

Better, 44%

About theSame, 33%

Worse, 6%Much Better, 17%

Neutral, 24%

remain, 28%

decrease, 11%Increase, 50%

Expand, 76%

40%

0%

50%

10%

83%

72%69%

28%

10%17%

2%7% 6%

70%

80%

90%

30%

60%

20%

less importantremain the SameMore important

20102007 2009


14


Availability of low cost labor (65%) Corruption (82%)

laws and regulations (82%)

Ease of moving products through customs (71%)

Infrastructure (65%)

New business incentives offered by government (59%)

Tax structure (53%)

local protectionism (41%)


Q: What hinders your business in using these trade agreements?

Q: reasons why your company feels that ASEAN markets will be more important for its worldwide operations and revenues in the next two years?

lack of government regulatory processes … even if there are processes, they are not being implemented.

Many ASEAN countries are perceived as highly-corrupt with high hidden cost and lack of laws and regulations to attract foreign investment.

lack of understanding by relevant authorities. lack of coordination by ministries concerned.

real market potential varies across countries in ASEAN and may seem lower in an emerging market like indonesia.

Companies will improve their supply chains.

No clear local government policies and regulations on the implementation resulting many ‘guessing games’ in how that has changed the previous trade barriers.

Corruption, unprofessional civil servants, lack of education.

Consumer confidence and purchasing power of the middle class.


15Business Environment: Strengths and Concerns

Comments from respondents in Indonesia

BUSINESS OUTLOOK





respondents facing higher costs of borrowing increased • from 25% in 2009 to 30% in 2010.





58% of respondents said ASEAN integration important to • helping their companies do business in the region.


33% of respondents use the ASEAN-China and the ASEAN-• Australia-New Zealand agreements.


55% of respondents’ companies expanded in ASEAN in the • next two years.

90% plan to expand in ASEAN in the next two years.•

The largest rate (44%) of respondents plan to expand in • Malaysia.

Profit Outlook:







89% expect the overall Malaysian economy to expand. •



68% expect an increase in the interest rate.•

67% expect the Malaysian ringgit to appreciate against the • u.S. dollar.


61% find importing goods into Malaysia a significant problem • in 2010.







of the Malaysian Economy

MAlAySIA rEPOrT hIghlIghTS

About the Same, 40%

Much Better, 10%

Better, 50%

Neutral, 11%remain, 40%

Expand, 89%Increase, 60%

0%

10%

59%56% 55%

36% 33%

40%

5% 3% 5%

70%

60%

50%

40%

30%

20%


20102008 2009


16


Infrastructure (70%) Corruption (63%)

Sentiment towards the u.S. (53%) local Protectionism (47%)

Personal Security (40%)


Q: Is ASEAN integration important to helping your company do business in the region?

Q: What kind of impact will further ASEAN integration have on your businesses’ activities in the region?

Availability of talent and local employment legislation.

the limited availability of trained, skilled human capital.

A borderless ASEAN will help efficiency in terms of resources and supply chain.

Government policy uncertainty, racial biases, corruption, low levels of employee productivity, excessive bureaucracy, uncertain regulations.

Efficient supply chain.

Expanded global linkages, relationships and opportunities.

Better movement of human resources.

integration and cooperation within the region is essential to countries like Malaysia. Country leaders seem to be responding in words only, with little tangible results. Abundant opportunities will not be realized until real integration is achieved and leveraged.



Comments from respondents in Malaysia


18

BUSINESS OUTLOOK





respondents facing higher costs of borrowing decreased as • well from 29% in 2009 to 8% in 2010.










The largest rate of respondents (43%) plan to expand in the • Philippines.

Profit Outlook:







86% expect the overall Philippines economy to expand.•



49% expect the Philippine peso to appreciate against the • u.S. dollar.

45% expect an increase in the interest rate. •


64% find importing goods into the Philippines a significant • problem in 2010.




GRAPHS AND CHARTSFigure 1: World Economic Outlook in 2010 in Comparison with 2009 Economy



of the Philippine Economy

Better, 60%

About theSame, 24%


remain, 26%

Increase, 72%

Neutral, 14%

Expand, 86%

0%

10%2%4%

8%

29%30%23%

67%66%69%

80%

70%

60%

50%

40%

30%

20%


20102008 2009

PhIlIPPINES rEPOrT hIghlIghTS


19


Availability of low cost labor (76%) Corruption (84%)

Sentiment towards the u.S. (70%) Infrastructure (46%)

Availability of trained personnel (70%) Tax structure (42%)

Office lease costs (63%)

housing costs (53%)


Q: describe a personal experience with an increase in u.S. taxation on your foreign-earned income.

Q: describe your company’s experience with regards to the issue of space constraints at international education institutions.

it has increased my tax bill and impacted my bottom line.

Our employees’ assignments are delayed until their children get off the waiting list …

the situation is expected to get worse before it gets better.

i’ve seen a drastic decrease in the amount of u.S. expats versus other nationalities …. u.S. companies must pay a significantly higher amount to send a u.S. citizen, so they send Europeans/British/Australians to fill these positions. in the future, u.S. business leaders will have less international experience …

Political conditions.

too much red tape in most countries.

in the Philippines, foreign direct investment and corruption.


Comments from respondents in The Phillipines

BUSINESS OUTLOOK

World Economic Outlook: 81% predict a better or much better performing economy in • 2010 than in 2009. 16% of respondents predicted a better economy in 2009 than in 2008.

Current Business Climate:respondents facing significant financing constraints • decreased from 37% in 2009 to 24% in 2010.

Most respondents (75%) do not face higher costs of • borrowing.

Importance of ASEAN Markets in Global Business:79% of respondents find ASEAN integration important to • helping their companies do business in the region.

58% of respondents feel that ASEAN markets have • increased in importance to their companies in the past two years.

respondents expecting ASEAN importance to increase in • the next two years rose from 64% in 2009 to 72% in 2010.

Effectiveness of ASEAN:57% of respondents use the ASEAN FTA. •


Business Direction and Movement in ASEAN:70% of respondents’ companies expanded in ASEAN in the • past two years. 84% of respondents plan to expand in the next two years.

The largest rate (27%) of respondents plan to expand in • Singapore.

Profit Outlook:85% expect a profit increase in 2011.•


Workforce Expansion:73% expect a workforce increase in 2010.•

Only 33% expected such an increase in 2009.•

FACTORS IMPACTING BUSINESS IN SINGAPORE

Economic Conditions:94% expect the overall Singapore economy to expand.•


89% expect an increase in housing cost. •

61% expect the Singapore dollar to appreciate against the • u.S dollar.

49% expect an increase in interest rate. •

Other Local Business Environment Factors:60% do not find importing goods into Singapore a significant • problem.

50% are satisfied with the clarity of transfer pricing • regulations.

46% are satisfied with the clarity of government guidelines • on payment of IPr royalties.

40% are satisfied with the clarity of government guidelines • on reverse logistics.




of Singapore Economy

SINgAPOrE rEPOrT hIghlIghTS

Expand, 94%

decrease, 3%

remain, 24%

Increase, 73%

Better, 64%

About theSame, 12%

Worse, 5%

Much Better, 17%

0%

10% 6%8%5%

22%28%

37%

72%

64%59%

80%

70%

60%

50%

40%

30%

20%


20102008 2009


20

Neutral, 6%


Infrastructure (98%) housing Costs (78%)

Personal Security (96%) Availability of low Cost labor (29%)

Corruption levels (90%) Office lease Costs (43%)

Stable government & political system (90%)

Sentiment towards the u.S. (87%)

laws & regulations (85%)

Tax Structure (81%)

New Business Incentives offered by government (77%)

Ease of moving your products through customs (65%)

Availability of trained personnel (58%)


Q: have you experienced a significant increase in the amount you must pay toward u.S. income tax on your foreign-earned income since the legislative changes in 2006?

Q: Will the ability to find adequate space at international education institutions be a significant problem in the next 1 to 3 years?

ASEAN is not an integrated market and there are intra-ASEAN trade barriers.

lack of qualified staff.

u.S. tax makes hiring u.S. expats too expensive. the inclusion of tax on housing for expats living in Singapore is not realistic.

the Government of Singapore has undertaken a proactive program to encourage international schools to expand – which is happening.

Space seems to be available but there is limited space in premium schools.

yes, this will affect both the acceptance and timing of some personnel moves.

yes, u.S. income tax on foreign-earned income – including benefits – is a major discouragement to working outside the u.S. this needs to be looked at carefully by Congress, as u.S. companies benefit by having citizens abroad.



Comments from respondents in Singapore

BUSINESS OUTLOOK


70% predict a better or much better performing economy in • 2010 than in 2009. 30% of respondents predicted a better economy in 2009 than in 2008.



Most respondents (73%) do not face higher costs of • borrowing.



respondents expecting ASEAN importance to increase in • the next two years rose from 60% in 2009 to 71% in 2010.



78% of respondents use the ASEAN FTA. •



57%of respondents’ companies expanded in ASEAN in the • past two years. 81% of respondents plan to expand in the next two years.

The largest rate (33%) of respondents plans to expand in • Vietnam.

Profit Outlook:




49% expect a workforce increase in 2010. •

32% expected such an increase in 2009.•



57% expect the overall Thailand economy to expand.•


46% expect the Thai Baht to appreciate against the u.S. • dollar.

45% expect an increase in interest rate. •

42% expect an increase in housing cost. •


52% find importing goods into Thailand a significant problem.•







of Thailand Economy

ThAIlANd rEPOrT hIghlIghTS

Better, 54%

About theSame, 22%


remain theSame, 23%

decrease, 10%

Increase, 63%

reduce, 13%

Neutral, 30%

Expand, 57%

0%

10%1% 3% 4%

20%

36%32%

71%

60%67%

80%

70%

60%

50%

40%

30%

20%


20102008 2009


22


Sentiment Towards the u.S. (73%) Stable government & Political System (77%)

Availability of low Cost labor (68%) Corruption (66%)

Infrastructure (64%) local Protectionism (47%)

housing Cost (61%)

Personal Security (61%)

Office lease Cost (60%)


23


Q: Is ASEAN integration important to helping your company do business in the region?

Q: has this increase in the amount of u.S. taxes to be paid on foreign earned income affected your company’s decision to employ Americans abroad?

Cross-border trade barriers, including widely varying commercial rules and regulations and restrictions on foreign business activities.

Protectionism, uneven playing field.

lack of iPr protection, corruption.

Affected ministries and industries of ASEAN member countries not following their own AFtA Agreements. this is true in thailand right now.

they are a long way off from being an entity.

A healthy ASEAN economy will benefit thailand, and in turn, our business will benefit.

it would reduce red tape for getting workers to work in various ASEAN countries.

yes, we are eliminating as many American Expats as possible with a goal of zero.

No effect on hiring, but i am considering changing my nationality.

No, but it has affected the willingness of American employees to be located here and increased their salary expectations.


Comments from respondents in Thailand

BUSINESS OUTLOOK


74% predict a better or much better performing economy in • 2010 than in 2009. 23% of respondents predicted a better economy in 2009 than in 2008.



respondents facing higher costs of borrowing increased • from 30% in 2009 to 48% in 2010.


70% of respondents expect ASEAN importance to increase in • the next two years.



70% of respondents find ASEAN integration important to • helping their companies do business.




The largest rate (71%) of respondents plan to expand in • Vietnam.


Profit Outlook:







82% expect the overall Vietnam economy to expand. •


67% expect the Vietnamese dong to depreciate against the • u.S. dollar.

64% expect an increase in the interest rate.•



66% find importing goods into Vietnam a significant problem.•




GRAPHS AND CHARTSFigure 1: World Economic Outlook in 2010 in Comparison with 2009 Economy



of Vietnam Economy

VIETNAM rEPOrT hIghlIghTS


24

0%

10%2% 2%0%

14%

28%28%

70%72%70%80%

70%

60%

50%

40%

30%

20%


20102008 2009

Better, 54%

About theSame, 22%


remain theSame, 29%

decrease, 2% reduce, 4%

Neutral, 14%

Expand, 82%Increase, 62%


Personal security (76%) Corruption (74%)

Sentiment towards the u.S. (72%) Infrastructure (73%)

Stable government & political system (63%) housing costs (50%)

Availability of low cost labor (63%) laws & regulations (48%)

Tax structure (48%)

Availability of trained personnel (45%)

Office lease costs (42%)


25


Q: Please describe your personal experience with an increase in American taxation on your foreign earned income.

Q: has this increase in the amount of u.S. taxes to be paid on foreign earned income affected your company’s decision to employ Americans abroad?

Corruption! Whether it may be a direct link, it affects everything.

the inability of government officials to understand the needs of the market and to respond positively.

lack of iPr protection, lack of quality enforcement on our competitors due to corruption, lack of proficient local senior managers.

yes - we don’t employ any and most of the expats in vietnam are Australian or Europeans.

yes, Americans inevitably require a higher income than professionals with equivalent skills coming from competing countries. the u.S.’ trade surplus in the services sector will erode if nothing is done to level the playing field.

Most companies i know are firing u.S. employees and hiring European & other nationalities to fill the positions because of this.

i have seen u.S.-based multinational clients cut their senior u.S. expatriate managers to replace them with Australians, British and Canadians who are not subject to home country tax. this means a net loss of tax revenue to the u.S., not to mention the erosion of u.S. sales and cultural influence abroad.


Comments from respondents in Vietnam

respondents are positive about world economic recovery. Financing constraints have improved, although concern over costs • of borrowing is similar to 2009.

Companies find ASEAN integration very important and make use of ASEAN trade agreements.•

ASEAN is predicted to continue to increase in importance and expansion is expected to continue region-wide.•

Companies are expecting much higher profits in 2010 and 2011 than they experienced in 2009.•

Outside of Singapore, corruption rated the highest business concern in ASEAN with the exception of Thailand, where political • instabiity ranked first and corruption second.

Many respondents have expanded significantly in ASEAN over the past two years and even more plan on doing so within the • next two years. This business expansion is directed most strongly towards Vietnam (31%), Indonesia (15%), Thailand (13%), and Singapore (10%).

The level of local protectionism also remains a concern in a range of countries — Malaysia, Thailand, Vietnam, and Indonesia.•

© Copyright The American Chamber of Commerce in Singapore 2010


26

kEy FINdINgS


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ACkNOWlEdgEMENTSThis report was compiled and published by The American Chamber of Commerce in Singapore.

Editor-In-Chief - laura deal, Executive director, AmCham Singapore

Contributing Editor – Anne Marie Brooks, government relations Manager, AmCham Singapore

Research and Analysis – Carolyn Brown, research Assistant, AmCham Singapore

For media enquiries, please contact liyana Othman, Corporate Communications Manager, AmCham Singapore at: [email protected].

AmCham Singapore would like to thank the leadership of the following AmChams in the region for their support and contribution to this report:

Judy Benn, Executive director, The American Chamber of Commerce in Thailand

herb Cochran, Executive director, The American Chamber of Commerce in Vietnam

Sarah howe, Executive director, The American Chamber of Commerce in Indonesia

rob Sears, Executive director, The American Chamber of Commerce of the Philippines

Fui Soong, Executive director, The American Malaysian Chamber of Commerce

Jim Swander, Executive director, The American Cambodian Business Council

For more details on survey findings, please visit www.amcham.org.sg/aseanbusinessoutlook.

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Report compiled by

The American Chamber of Commerce in Singapore

In cooperation with

The American Cambodian Business Council

The American Chamber of Commerce in Indonesia

The American Chamber of Commerce of the Philippines

The American Chamber of Commerce in Thailand

The American Chamber of Commerce in Vietnam

The American Malaysian Chamber of Commerce

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AmCham Singapore ASEAN Business Outlook Survey

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