Wed, Dec 26, 2012 - Page 13 News List

CEOs bearish about global economic outlook: survey

By Crystal Hsu  /  Staff reporter

An overwhelming majority of business executives from top Taiwanese enterprises are bearish about the global economy next year, weighed by lingering concern over tepid external demand in the US and Europe while growth in China slows, an annual poll by a local magazine showed yesterday.

While seeing a ray of hope at the end of the tunnel, 72 percent of CEOs hold a negative view about the world’s economic outlook, although the number of optimistic responses increased 13 percent from a year earlier, according to the survey, which was conducted by the Chinese-language CommonWealth Magazine between Nov. 16 and Dec. 17.

Eighty-four percent of CEOs questioned expect Taiwan’s GDP growth to be lower than the government’s estimate of 3.15 percent next year, with 41 percent putting the gauge at below 2 percent, the survey said.

As visibility remains poor in the US and Europe, 58 percent of the executives surveyed plan to increase investments or operations in Asia, notably China, Indonesia and Vietnam, attracted by their fast-growing domestic markets, followed by cheaper labor costs, the poll found.

For example, Apparel provider Makalot Industrial Co (聚陽實業) sees Indonesia as its top choice if the company needs to set up new manufacturing facilities abroad next year.

INDONESIA

“For brand operators, Indonesia poses strong growth potential for the coming year, given its robust domestic market over the past few years,” Makalot chairman and CEO Chou Li-ping (周理平) said.

An increasing number of CEOs share this view and plan investments in other Asian markets rather than focusing on China alone, the survey said. Indonesia and Vietnam are becoming as popular as China, with support of 30 percent each, for Taiwanese investors.

Acer Inc (宏碁) founder and ID SoftCapital Inc (智融集團) chairman Stan Shih (施振榮) said ASEAN’s emerging markets provide an important stage for companies to exercise their muscle and local brands should take advantage of the opportunity to boost their international profile.

More than 35 percent of CEOs asked expect their companies to lose money this year, but nearly 50 percent forecast a 5 percent pickup in both sales and profits next year, the survey said. Also, 56 percent said they would consider raising salaries next year, while 45 percent would take on new workers in Taiwan, the survey said.

Although political uncertainty is settling in China, 60 percent of the CEOs polled believe the business environment would deteriorate in light of increasing labor costs and a development bottleneck, the survey showed.

NEGATIVE ON TAIWAN

About 70 percent of the respondents have a negative view about the business environment in Taiwan, citing government efficiency and a need to upgrade industry as the biggest challenges facing local firms, according to the survey.

Consequently, 25.21 percent of CEOs questioned do not plan to invest in Taiwan next year, while 70 percent intend to invest between NT$50 million (US$1.71 million) and NT$5 billion, the survey said.

A tiny 2.27 percent expect to invest NT$10 billon and more, the survey said, suggesting the government should take bolder steps to improve the business environment.

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