Archive for November, 2015

What Next for Business in Asia?

November 14th, 2015

mapHow optimistic are Asian businesspeople today about the future of economic conditions?

According to the Asia Business Council Survey, 59% expect conditions to remain at their current pace. In 2014 that figure was 35%, potentially indicating a less optimistic view now.

What they do believe is good for Asia is the region’s “solid economic fundamentals and pro-growth policies.” For example, India is seen as having an inviting economic environment.

But those who felt like nothing would change much (or would deteriorate) spoke of the potential of economic slowdown and uncertainties within China due to its seemingly open-ended reforms. As well, throughout Asia there seems to be a lot of infrastructure development which may not be a good enough environment to back up an escalated level of foreign investment growth.

This China issue can be seen perhaps with the most recent announcement from Australia’s IAG (Income Insurance Australia Group) that its Asia strategy is steering clear of China. However, in a more optimistic note, it added that that fact will not stop it from it expanding in India, Malaysia, Thailand, Indonesia and Vietnam.

Further, if Rohini Kappadath is to be believed, if Australia hides from making real investments in Asia, it is a mistake. He said: “More focus must be invested on the opportunity that is passing us by each day because of under investment in Asia by Australian businesses. There is more at stake by not considering the outsized returns we are foregoing by not taking some risk. This means taking an equity position by making a direct investment and working (as other Asian business leaders do each day) with balancing the risks and volatilities that are part of the terrain in any economic value capture opportunity.”

So yes, there are risks to making investments in Asia. But it is simultaneously the case that ultimately there may be more risks by not making such investments.