57% of CEOs see better days ahead
Majority of Philippine corporate chief executives are upbeat on the performance of their companies this 2017 but compared to the last two years, overall optimism is tempered by a string of perceived business risks, including the threat of terrorism.
Based on the 2017 Management Association of the Philippines (MAP)-Isla Lipana & Co./PwC CEO survey report, 57 percent of respondents expressed high confidence when it comes to their companies’ prospects. This was down compared to 69 percent last year and 62 percent in 2015.
Asked about their outlook on their respective industries, 55 percent of CEOs said they were very confident about prospects for the next 12 months while 54 percent feel the good news will continue in the next three years.
In a press briefing Monday, PwC managing partner Mary Jade Roxas-Divinagracia said: “55 percent (of CEO respondents who are optimistic on industry prospects) is still a very positive number. You have to remember that there are also several threats that our businessmen are thinking about and while they are optimistic, they are cautiously optimistic.”
Apart from external factors like uncertainty on what’s happening in the Korean peninsula and rising protectionism, Divinagracia said there were some internal threats as well such as terrorism and inadequacy in infrastructure.
Asked whether political noise may have had an impact on the decline in optimism, Divinagracia said it was a “combination of everything,” referring to both external and internal factors.
Aldie Garcia, a partner at PwC, added terrorism was perceived as a top threat in this year’s survey. He noted this was likely because this year’s survey had been conducted at a time when the Marawi siege was unfolding. Concerns on rising tax burden and inadequate basic infrastructure also topped concerns.
From the business standpoint, CEOs view bribery and corruption, technological changes including cybersecurity, and the ability to respond to crisis as the main risks that may hinder growth.
Garcia said while CEOs’ level of optimism on their own business prospects had reached a three-year low, the profile of respondents must be considered. Last year’s survey included more emerging entrepreneurs and focused on small and medium enterprises, while 69 percent of respondents this year came from large corporations, he said.
There were 114 respondents in this year’s MAP-PwC CEO survey, 82 percent of which are privately held while 18 percent are publicly listed. Of total respondents, 39 percent are large corporations, 30 percent are medium enterprises (with less than 250 employees), 21 percent are small enterprises (with less than 50 employees) and 10 percent are microenterprises (with less than 10 employees.)
The CEOs also believed these are the key things that the government should prioritize: good governance, adequate physical infrastructure and maintaining peace and order.
About 75 percent of respondents said they would enter into a strategic alliance or partnership in the next 12 months. Majority of these (52 percent) are keen on venturing into new territories. These are the top six preferred industries: consumer and retail; healthcare, pharmaceutical and life sciences; retail and wholesale distribution; technology; food and beverage; and real estate.
Some 45 percent of the CEOs are also keen on exploring overseas, taking advantage of opportunities offered by the Southeast Asian economic integration.
