The new government’s campaign pledges will bring considerable changes: an end - from June - to Malaysia’s new, 2015-implemented, 6% VAT; a review of foreign-financed projects, including those in China’s Belt and Road initiative, on grounds of national interest; a reintroduction of retail fuel subsidies; and the abolition of road tolls. The zero-rating of VAT from June will cut 2018 revenue by approximately 1.8% of GDP. The cost will be mitigated by positive effects from the fiscal stimulus and any replacement sales tax. However, the timing for the cut is also benign as given the direction of oil prices past USD70/barrel, public oil revenues will rise to help offset most of the 2018 losses to tax revenue, and at least half the effect in 2019.

On economic growth, we are not certain of the net benefits of opposition victory. Where anti-corruption institutions have been suddenly empowered in Asia, the result has typically been a long-lasting slowdown in both public and private investment as the wheels of graft are stilled for fear of judicial investigation. This could offset the short-term rise in consumption, and, accordingly, our growth forecast for 2018 is unchanged.

Given the shock to the currency and stock markets after the vote, Prime Minister Mahathir Mohamad’s appointment of a council of experts of prominent business people and financial officials from the 1990s, should be helpful in stabilising sentiment and reassuring markets. The financial system seems likely to be resilient to shocks from the political sphere. In March, the central bank’s financial stability committee stated that bank funding and liquidity indicators were

in safe territory, and household and corporate debt were unlikely to witness any deterioration in credit quality.

Please click here to view the full report via your D&B subscription.

Country Headlines– Hong Kong - The Monetary Authority

intervenes to support the HKD’s peg.

– Japan - Corporate and household earnings pull ahead of demand growth.

– Korea - Shipyard and automotive exports suffered as sales declined.

– New Zealand - The 2018 budget unveils targeted shifts in expenditure.

– Singapore - Spillover effect from China export affects slower growth.

– Thailand - Thailand displays resilience amid emerging market stresses.

A New Dawn For The Better Or Worse

ASIA NEWSFLASH

June 2018

COUNTRY SPOTLIGHT

Whether you are involved in strategic investment decisioning; financial risk analysis; or supply chain management, understanding the operational landscape in the countries where you do business is crucial. Dun & Bradstreet Country Insight Services provide analysis, ratings, and forecasting for over 130 countries. To find out more about our country insight reports and services please click here.

MALAYSIA

ASIA NEWSFLASH

COUNTRY SPOTLIGHT | WEST EDITION

The US economy remains in solid shape, and will continue to extend its second-longest recorded expansion. Additionally, US growth is outpacing its peers significantly and is likely to maintain this for the next several quarters, as strong fundamentals are beefed up by the full effects of corporate tax cuts rippling through the economy. At the same time, rising protectionist measures from the US government are creating significant uncertainty for global businesses and adding to cross-border risks.

The UK’s rating outlook has been downgraded from ‘stable’ to ‘deteriorating’. The reason for the action lies in the exceptionally poor real GDP growth figures for Q1 2018 which were released by the Office for National Statistics (ONS) in late April. Overall, the economy only grew by 0.1% against the previous quarter (and 1.2% against Q1 2017), down from the 0.4% recorded in Q4 2017 (a figure that was also revised downwards by the ONS).

The announcement in this regard came from President Trump on 22 June, when he threatened to impose new tariffs of 20% on EU auto imports unless the EU removed tariffs on US goods. It should be noted that some of these EU tariffs on US exports went into effect earlier the same day; these were retaliatory tariffs in response to US tariffs already. Of course, the biggest risk of disruption comes from the US-China spat.

Worryingly for progress in the Brexit talks between the British government and the EU, the Irish border issue remains unresolved. Recent proposals put forward by the British government were deemed unworkable by the EU. The issue remains the biggest short-term obstacle to reaching an agreement on the UK’s withdrawal from the EU (which needs to be decided by October 2018). At the same time, the question about the UK-EU’s long-term relations also remains unanswered.

– Spain - Robust retail sales hints at domestic demand as growth engine.

– Netherlands - 15% withholding tax on dividends abolished.

– Switzerland - Forward-looking indicators bounce back after a period of weakness.

Country Headlines

– Germany - Market environment outlook set to deteriorating.

– France - Supply chain risks persist as strikes continue.

– Italy - Severe material deprivation increases.

Click here to read the rest of the report if you have a subscription with us or contact your local D&B office

Click here to read the rest of the report if you have a subscription with us or contact your local D&B office

To read the full analysis on these countries click here or contact your local D&B office

Trade Worries Surge

Outlook Worsened As Growth Figures Dipped

UNITED STATES OF AMERICA

UNITED KINGDOM

June 2018

BETTER TARGETING | SMARTER CONVERSATIONS | GREATER PRODUCTIVITY

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For Your Business’s Other Needs:

Sales Prospecting Business ResearchMarketing Segmentation Procurement Insurance

CASE STUDY

PART 2

FORTUNE 500 COMPUTER HARDWARE COMPANY CHOOSES D&B AS ITS PARTNER IN INNOVATION

Challenge

With a strategic focus on developing quality relationships with customers and prospects, this company turned to Dun & Bradstreet to help:

– More effectively identify and target prospects

– Improve accuracy of contact-level customer data

– Serve as enterprise master data

The SolutionThe company relies on a suite of Dun & Bradstreet solutions namely Hoover’s Sales Intelligence Solution, for marketing contacts, standard matching capabilities, and data exchange third party data purchases.

Result“Hoovers gives reps more ammunition to tailor engagements; using D-U-N-S as the customer master enables building 360 view and collaboration across US and Europe.”IT Manager, Fortune 500 Computer Hardware Company

Thanks to its partnership with Dun & Bradstreet, the company more accurately identified target markets and improved the size of its lead funnel up to 24%.

ENTERPRISE TECHNOLOGY HARDWARE LEADER DRIVES DOUBLE-DIGIT GROWTH WITH DUN & BRADSTREET

ChallengeTo maintain its marketplace edge, the technology company needed additional insight about its market, inspiring it to work withDun & Bradstreet to more effectively identify and target prospective customers as it developed programs that cut across the buyer’s journey.

The Solution– D&B Market Insight marketing analytics and

targeting solution

– Hoover’s Sales Intelligence Solution

ResultWorking with Dun & Bradstreet, the Silicon Valley-based company managed very impressive results across its sales and marketing initiatives:

– The company improved the size of its lead funnelmore than 60%

– It improved campaign response rates more than 60%

– It improved sales close rates more than 60%

– It increased sales growth by between 11% and 25%

FUN FACT 2

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1 2

The Composite CFO Optimism Index declined by 17.8% to 96.2 during Q2 2018 (q-o-q), the lowest in 4 years. According to Dun & Bradstreet India, Overall Optimism levels decreased for both financial performance of the company and macroeconomic scenario. The financial performance optimism level is at the lowest in 17 quarters since Q2 2014) while macroeconomic scenario suffered steeper drop (-20%; q-o-q) than the former (-16.2%; q-o-q).

Optimism level amongst CFOs in the services and industrial sectors are at the historical low since Q2 2014 and Q4 2017 respectively. Diving deep into company level, 35% of CFOs indicated a need for raising long term funds – the highest in 3 years while only 36% of CFOs expected availability of funds in the market to increase – the lowest in 4 years. Finally, 25% of CFOs expected cost of raising funds to increase - highest in 4 years.

26% of CFOs in the industrial sector have indicated need for raising short term funds - lowest since Q2 2012 * 31% of CFOs expect level of financial risks on company’s

Optimism In Services Sector Plummeted

balance sheet to increase, highest in 17 quarters * 34% of CFOs in the services sector expect availability of funds in the market to increase - lowest since Q2 2012

CFO PRIORIT IES IN THE NEXT 6 MONTHS

Since Q2 2017, CFOs have stated that Reducing Costs has been their top priority while Dividend Declaration being their least priority. 45% of CFOs in the industrial sector have stated Risk Management to be their priority in the next six months compared to 30% of CFOs in the services sector. Meanwhile, percentage of CFOs stating reducing leverage (16%) as their priority is the lowest since Q4 2015.

Effective recovery system has been the most preferred risk management tool by CFOs for 5 consecutive quarters. 47% of CFOs have indicated an increase in close monitoring of strategic accounts in the next six months, highest since Q2 2017. Only 21% of CFOs have stated to adopt hedging as their risk management tool for the next six months, lowest since Q2 2012.

ASIA NEWSFLASH

MARKET INSIGHT

FOLLOW HONG KONG THE PHILIPPINES SINGAPORE THAILAND TAIWAN

By Dun & Bradstreet India | Dun & Bradstreet WWN partner

June 2018

– OPTIMISM LEVELS FOR FINANCIAL PERFORMANCE OF THE COMPANY IS THE LOWEST IN 17 QUARTERS

– OPTIMISM LEVEL AMONGST CFOS IN THE SERVICES SECTOR IS THE LOWEST IN 17 QUARTERS

– 31% OF CFOS EXPECT LEVEL OF FINANCIAL RISKS ON COMPANY’S BALANCE SHEET TO INCREASE, HIGHEST IN 17 QUARTERS

– 35% OF CFOS INDICATED NEED FOR RAISING LONG TERM FUNDS - HIGHEST IN 3 YEARS

– 25% OF CFOS EXPECT COST OF RAISING FUNDS TO INCREASE - HIGHEST IN 4 YEARS

Q3

2012

0 10 20 30 40 50 60 70

Q3

2013

Q3

2014

Q3

2015

Q3

2016

Q3

2017

Q4

2012

Q4

2013

Q4

2014

Q4

2015

Q4

2016

Q4

2017

Q1

2013

Q1

2014

Q1

2015

Q1

2016

Q1

2017

Q1

2018

Q2

2013

Q2

2014

Q2

2015

Q2

2016

Q2

2017

Q2

2018

130

140

DIVED EN DECLARATION

EXPANSION THROUGH M&A

ORGANIC EXPANSIONS

BUSINESS RESTRUCTURING

REDUCING LEVERAGE

RISK MANAGEMENT

CASH FLOW MANAGEMENT

REDUCING COST

CAPEX PLAN

120

110

100

70

90

80

Note: Values represent index level

Note: % of CFO who rated each of the parameters as their strong priority

Q1 2018 Q4 2017

ASIA NEWSFLASH

ASIA PERSPECTIVES

FOLLOW HONG KONG THE PHILIPPINES SINGAPORE THAILAND TAIWAN

Our newfound anti-plastic activism: Can the China-ban change hearts & minds?By Barnil Bhattacharjee | Dun & Bradstreet Business Editor

Plastic has suddenly become an ugly word. YouTube videos of Great Pacific Garbage Patch have garnered millions of views. In elementary schools, frowning kids are learning about sea turtles entrapped in fish nets. Darwin’s Galapagos is now home to more than exotic iguanas—soda cans to combs, refuse shows up on its shores every day.

The trend of denouncing plastic has gone mainstream, uniting the likes of David Attenborough and the Church of England. Entire countries are joining in. The UK government is considering banning plastic straws, drink stirrers and plastic cotton swabs. Bangladesh and Kenya have recently taken measures to ban single-use plastic bags.

The EU, never one to shy away from making environmental headlines, took up the ambitious task

of making 100% of its plastics recyclable by 2030. Currently only 30% of the EU’s 58 million tons of plastic produced annually gets recycled. For the world, the stat is depressingly low—only 9% make their way to recycling centers.

This newfound urgency is fueled not be Earth Day activism, but by the Chinese decision in late 2017 to ban imports of 36 varieties of solid waste. Among other materials, China accepted 7 million tons of plastic scrap in 2016. In 2019 that figure shall be zero-- for all plastic waste imports.

Ironically, the ban disproportionately affects the most advances countries as most of them export their scrap. According to Institute of Scrap Recycling Industries, more than 30% of America’s scrap commodity and almost all of UK’s recycled plastic were sent to China.

June 2018

ASIA NEWSFLASH

ASIA PERSPECTIVES

June 2018

Fearing towering trash pile-ups reminiscent of Greek strikes, local councils are investing millions on waste crisis. Several are considering imposing plastic taxes.

Some middle-income countries like India, Vietnam and Indonesia have provided partial relief by buying more of the West’s scraps. But a wider solution has to go beyond frantically finding partners to dump wastes on. There must be an immediate emphasis on investment in low-grade recycling right at home. A farm-to-table and back to farm approach is a good place to start.

Big manufacturers will have to pull their own weight. Immediate cuts to the volume of waste produced should be considered. The good news is, many companies are promising to do more. Behemoths like Coca Cola, Unilever and Proctor & Gamble plan to use more biodegradable products and implement projects to capture more of their own wastes to ensure higher recycling practices. Home-owners will have to do their part, starting with better segregation of waste.

Sustainable progress will also rely upon new technological breakthroughs. Promising developments need to be well funded--like the polymer organic energy treatment technology that turns plastic into energy for power consumption. A joint Australian-Chinese

venturealready aims to turn 200 tons of trash per day into 70 million liters of road-ready fuel each year. Other discoveries include mutant enzymes, waxworms and mealworm larvae—to break down polystyrene.

Ultimately though, the global plastic problem will not be solved by the developed world. A big challenge is the low impact of plastic pollution on actual human lives. For example, the Economist notes that while filthy air may kill as many as 9 million people a year, plastic does not kill any (plastics kill some 100,000 sea mammals per year; on land more than 400 species of animal have been reported to have ingested plastic). Similarly, on land the damage of plastic litter is minuscule compared to the ills of water and air pollution.

An alarming study by the German institute Helmholtz Centre for Environmental Research found that only ten rivers accounted for 90% of all plastic marine debris. Two were in Africa and the rest in Asia. In low-income countries, recycling practices remain poor, and most sewage ends up in the rivers, sometimes by institutional design. Therefore, much of the ills afflicting these developing countries and producing huge amounts of plastic waste remain beyond the scope of the current flurry of activism.

While banning, recycling and reusing plastics as a response to the Chinese ban is a good start for developed countries, a global pollution reversal will only come when rivers like Yangtze, Ganges, Niger, and Kapuas flow with clean water once again.

You can ban plastic cappuccino stirrers in London, New York and Adelaide. But beyond the local council’s recycling load, it wouldn’t stir much else.

FOLLOW HONG KONG THE PHILIPPINES SINGAPORE THAILAND TAIWAN

STATESIDE

ASIA NEWSFLASH

To get the full report, kindly contact your local D&B office now

TITLE: TRAIN TO PUT ECONOMY RIGHT ON TRACK

Businesses in the Philippines turn out to be more optimistic for Q2 of 2018. Dun & Bradstreet Philippines’ Business Optimism Index stands at 59.32%, an increase of 1.68% compared to the previous quarter.

The “Build, Build, Build” program has led to optimism across construction, services and wholesale trade sectors whereas agriculture and mining reported the least optimism after holidays and the doubling of excise tax respectively.

FOLLOW HONG KONG THE PHILIPPINES SINGAPORE THAILAND TAIWAN

D&B’s U.S. Economic Health Tracker Reveals Continued Challenges for Small Businesses Balanced by Positive Job Growth

– The Small Business Health Index fell by 0.2 points to 86.4, back to its lowest level since Q3 2011.The Manufacturing and Construction verticals showed some improvement on a sequential basis, but all other verticals declined.

– Dun & Bradstreet forecasts that the labor market will continue to expand at a solid pace. After a couple of months of big swings (up & down), payrolls will approach the 2017 average of 182,000 in April and manufacturing is expected to lead job creation.

– The U.S. Overall Business Health Index was unchanged in March (51.31%), remaining at the best level since the inception of the index in November of 2010. A high level of business health and a low level of risk indicates that firms remain fundamentally strong.

Click here to read the latest report.

June 2018

OVERALL BOI SCORE CHART

Q1

Q3

Q2

90

80

8

7

6

60

70

505

440

30

0 0

20

3

2

110

Q2

Q4

Q2

Q4

Q3

Q1

Q2

Q3

Q4

Q1

Q1

2016 2017 20182015

BO

I

SC

OR

E

GD

P

GR

OW

TH

(

%)

Composite BOI GDP Growth (y-o-y %)

POOR PAYMENT BEHAVIOUR, A LACK OF INFORMATION ABOUT THE BUSINESS OR PAYMENT

PERFORMANCE OF CUSTOMERS, AND ECONOMIC AND POLITICAL RISKS HAVE LED TO

A REDUCTION IN THE PROPORTION OF B2B SALES IN THE ASIA PACIFIC REGION BEING

MADE ON CREDIT TERMS. HOWEVER, THE FREQUENCY OF LATE PAYMENTS SEEMS TO HAVE

DECLINED AS HAS THE PROPORTION OF OVERDUE B2B INVOICES. STILL, THE IMPACT OF

LATE PAYMENTS CANNOT BE DENIED AND IT IS TAKING BUSINESSES IN THE REGION MORE

TIME TO CONVERT B2B INVOICES INTO CASH. WHILE 2018 BROUGHT SMALL CHANGES IN THE

AVERAGE PROPORTION OF UNCOLLECTABLE B2B RECEIVABLES, SOME THINGS REMAIN THE

SAME – THE MAIN REASON FOR WRITING OFF B2B RECEIVABLES AS UNCOLLECTABLE IS THE

CUSTOMER GOING BANKRUPT OR OUT OF BUSINESS.

Atradius Payment Practice Barometer

FORWARD

THE PAYMENT PRACTICE BAROMETER EXPLORES THE DECLINE IN THE USE OF TRADE CREDIT IN B2B TRANSACTIONS AS LATE PAYMENT PERSISTS, COURTESY OF ATRADIUS

SPECIAL REPORT

ASIA NEWSFLASH

Atradius Payment Practice Barometer May 2018

June 2018

TRADING ON CREDIT – ST ILL AN IMPORTANT ASPECT OF DOING BUSINESS

With the exception of Australia and Singapore the use of trade credit in B2B transactions in the Asia Pacific countries surveyed is lower in 2018 than it was in 2017. As a result, the proportion of B2B credit sales in the region decreased from an average of 45.9% in 2017 to 43.6% in 2018. This marks the third consecutive

of decline. This was mainly due to an almost five percentage point decrease in transactions on credit with foreign B2B customers. By country, respondents in Japan (with an average of 49.1% of B2B sales on credit terms) seem to be the most inclined to offer credit terms; respondents in China are the least inclined (on average, 39.8% of B2B sales on credit terms).

ASIA NEWSFLASH

SPECIAL REPORT

June 2018

GRANTING TRADE CREDIT TO BUILD TRUST BUT NOT ALWAYS THE BEST PRACTICE

Respondents in Asia Pacific are more likely to sell on credit terms to their domestic B2B customers than to their foreign B2B customers. Domestic credit terms seem to be granted mainly to facilitate business and local expansion, because credit sales are common practice and because respondents feel that this payment method is more convenient. There is also a shared belief that selling on credit domestically builds trust, supports trading relationships and helps attract new customers. These reasons point to important benefits for trading on credit, so why would respondents in the region refuse to grant credit terms? 35.8% of respondents said that this is due to the poor payment behaviour of their domestic B2B customers and 34.6% that it’s a decision based on the lack of information on their customers’ business or payment performance.

Businesses in Asia Pacific seem to grant trade credit to foreign B2B customers mainly because of the same reasons, common practice, convenience, to build trust and relationships and to attract new customers. There

are, however, different explanations for refusing credit sales. More specifically, 45.5% of respondents in Asia Pacific said that they refuse to grant credit terms to their B2B customers abroad because there’s a high economic or political risk in the customers’ country, 38.8% due to high currency risk and 32.8% because they lack information on their customers’ business or payment performance.

LATE PAYMENT – ST ILL THE NORM

In Asia Pacific, the frequency of late payment has declined from an average of 89.2% in 2017 to 87.9% this year. This improvement occurred because respondents from all countries surveyed in the region – with the exception of Indonesia and India - reported payment delays less frequently than one year ago. Similarly to what has been observed in previous surveys, late payments seemed to occur almost as frequently with domestic and foreign B2B customers.

The proportion of overdue B2B invoices in Asia Pacific declined from an average of 45.4% in 2017 to 44.5% this year. Marked decreases in the proportion of past due B2B invoices in Australia, Singapore and Taiwan contributed to the regional decrease. The average proportion of foreign past due B2B invoices was higher than that of domestic past due B2B invoices.

In 2018, the average Days Sales Outstanding (DSO) figure recorded in Asia Pacific is 40 days, showing no changes from last year. Similarly to 2017, the majority of respondents in the region (50.3%) do not expect to see any changes in their company’s DSO figure and 22.2% expect a slight increase over the coming 12 months.

THE ASIA PACIF IC COUNTRIES MOST IMPACTED BY LATE PAYMENT

In 2018, the average frequency of late payment was highest in Indonesia, Singapore and India (91.0%, 91.1% and 94.7% respectively). In contrast, and despite a minor increase observed in 2018, Japan remains the country with the lowest frequency of payment delays (on average, 70.2% of respondents reported payment delays).

India continues to be the country with the highest proportion of domestic and foreign past due B2B invoices. Additionally, the proportion of overdue B2B invoices here increased from an already high average of 53.4% in 2017 to 56.7% this year. This is also reflected in the country’s DSO figure, which increased by three days in 2018 and, at an average of 52 days, is the

Atradius Payment Practice Barometer May 2018

PROPORTION OF TOTAL B2B SALESMADE ON CREDIT (AVG. %)

ASIA PACIFIC 45.9%

43.8%

40.7%

50.3%

53.7%

44.4%

45.1%

46.4%

44.5%

43.8%

39.8%

46.1%

49.1%

42.5%

40.3%

42.7%

43.6%

AUSTRALIA

CHINA

HONG KONG

JAPAN

INDIA

INDONESIA

TAIWAN

SINGAPORE

100 20 30 5040 60

Sample: companies interviewed (active in domestic and foreign markets)Source: Atradius Payment Practices Barometer – May 2018

46.4%

ASIA NEWSFLASH

SPECIAL REPORTSPECIAL REPORT

June 2018

highest in the region. After India, one of the countries most impacted by late payments in 2018 is Indonesia (on average, 47.1%) – which has seen an increase of almost four percentage points in the proportion of past due B2B invoices. In 2017 Indonesia had one of the lowest averages in Asia Pacific. With 26.3%, Japan had the lowest average proportion of domestic and foreign past due B2B invoices in 2018.

A LONGER T IME TO CONVERT B2B INVOICES INTO CASH

Domestic B2B customers of respondents in Asia Pacific are given, on average, 32 days to fulfil their payment obligations. This is three days longer than in 2017. Significant increases were recorded in India and Australia. Foreign B2B customers are given, on average, 31 days to settle their invoices (30 days in 2017). In 2018, payment terms to foreign B2B customers decreased significantly in China and increased significantly in Australia and Singapore.

Despite these changes, respondents in Japan and Taiwan offered the most lenient payment terms to their domestic and foreign B2B customers (on average, 46 days and 45 days respectively). In contrast, respondents in Indonesia set the shortest payment terms in the region (on average, 23 days).

When asked if their companies differentiate payment terms between domestic and foreign B2B customers, Australia, Singapore and Japan had the highest percentages for countries least likely to differentiate; in contrast, India and China are most likely to differentiate payment terms by customer type. The main reasons for differentiation mentioned in all countries surveyed are internal policies and local industry practices. Secondary reasons noted are that domestic payment terms are directed by law (mentioned in Australia and Japan) and due to the economic situation (mentioned in China, Hong Kong and Singapore).

THE IMPACT OF AND REASONS FORPAYMENT DELAYS

Payment delays in Asia Pacific have remained largely stable in 2018, with no changes reported in respect to domestic B2B customers (on average, 24 days) and an increase of one day in regards to foreign B2B customers (on average, 26 days). Australia and Singapore reported decreases in payment delays from both their domestic and foreign B2B customers. In contrast, and despite already reporting the longest delays in the region, respondents in India declared further increases.

Respondents in Asia Pacific said that the main reason for payment delays by their domestic B2B customers is insufficient availability of funds. This was stated by 49.8% of respondents and is the same key payment delay factor as in 2017. The percentage of respondents reporting insufficient availability of funds at regional

Atradius Payment Practice Barometer May 2018

PAST DUE B2B RECEIVABLES IN ASIA PACIF IC (AVG. %)

2014

43%45% 45% 46%

42%45% 44% 45%

2015 2016 2017 2018

70

60

50

40

30

20

10

foreign

46%

domestic

43%

Sample: companies interviewed (active in domestic and foreign markets)Source: Atradius Payment Practices Barometer – May 2018

ASI

A P

AC

IFIC

AU

STR

ALI

A

CH

INA

HO

NG

KO

NG

JAPA

N

IND

IA

IND

ON

ESI

A

TAIW

AN

SIN

GA

POR

E

ASIA NEWSFLASH

SPECIAL REPORTSPECIAL REPORT

June 2018

level increased following increases in all countries surveyed. The biggest increases have been reported in Indonesia and Australia – with Indonesia also being the country most impacted (as stated by 64.8% of respondents). Domestic B2B customers of respondents in Asia Pacific also delayed payments because the goods delivered or services provided did not correspond to what was agreed in the contract. This second most often cited reason was reported by 29.4% of respondents in Asia Pacific.

The main reason for payment delays by foreign B2B customers is the complexity of the payment procedure, cited by 40.7% of respondents in Asia Pacific. This is the same as in 2017 (when it was cited by 34.9% of respondents). The percentage of respondents citing this as a reason for payment delays increased in all countries except Japan. Taiwan and Indonesia registered the most significant increases and were the most impacted with more than 50% of respondents citing it as a reason for payment delay. As was the case with domestic buyers, the second most frequently cited reason for payment delays is that the goods delivered or services provided did not correspond to what was agreed in the contract. This was reported by 31.9% of respondents in Asia Pacific.

28.2% of respondents in Asia Pacific said that payment delays did not have a significant impact on their businesses. However, 24.1% of respondents reported that they needed to take special measures to correct cash flow and 21.1% said that they needed to postpone payments to suppliers. For 15.9% of respondents, payment delays had a more significant impact as it led to revenue loss.

THE FASTEST/SLOWEST INVOICE TO CASH TURNAROUND IN ASIA PACIF IC

Based on the changes in payment terms and payment delays, the average payment duration in Asia Pacific increased from 55 days in 2017 to 57 days in 2018. All countries surveyed in Asia Pacific with the exception of China and Singapore, have experienced an increase in payment duration. The most severe deterioration in payment behaviour was reported in India where the average payment duration increased 11 days in 2018, to 74 days. Of the Asia Pacific countries surveyed, this is the country in which it takes the longest to convert B2B invoices into cash. In contrast, respondents in Singapore seem to have the shortest invoice to cash turnaround (on average, 43 days).

E- INVOICING: A F IRST STEP TOFASTER PAYMENTS?

60.2% of respondents in Asia Pacific said that they are already using e-invoicing when invoicing their domestic and foreign B2B customers. By country, respondents in India (with an average percentage of 79.3%) seem to make the most extensive use of e-invoicing. They are followed by their peers in Australia and China (with 72.6% and 62.8% respectively). In contrast, with a percentage of 31.9%, respondents in Japan are the most reluctant to invoice online. Despite having the second lowest percentage of respondents (53.3%) who invoiced digitally in 2017, Hong Kong is the country where the respondents are most willing to adopt e-invoicing this year.

Despite the differences in implementation, the Asia Pacific countries surveyed seem to have broadly migrated towards paperless invoicing. But has the change to the online environment accelerated payments? 68.2% of respondents in Asia Pacific said that after invoicing their B2B customers electronically, they received payments quicker. This compares to a low 4.9% who said that e-invoicing led to a slowdown in payment and 26.9% of respondents who said that e-invoicing had no noteworthy effect.

Despite the high percentage of respondents stating quicker payments after invoicing online, the average

Atradius Payment Practice Barometer May 2018

PAYMENT DURATION IN ASIA PACIF IC

25d

32d

100 20 30 50 7040 60 80

Payment delay

Payment durationAsia Pacific: 57 days

Payment duration Asia Pacific 2017 : 55 days

Payment terms

d = average daysSample: companies interviewed (active in domestic and foreign markets)Source: Atradius Payment Practices Barometer – May 2018

payment delays reported in Asia Pacific remained consistent to the previous year and – after the changes in the average payment terms given in the region – the average payment duration increased.

GLOBAL PROTECTIONIST MEASURES INCREASE FEAR OF TURNOVER LOSSES IN ASIA PACIF IC

In the context of growing insecurity due to global protectionist measures the fear of turnover losses is one that cannot be neglected when trading internationally. 25.5% of respondents in Asia Pacific expect as much as a 10% impact on their turnover due to uncertainty over and changes in trade agreements. A slightly lower percentage of 19.2% believe the impact on their businesses’ turnover will be more significant, between 10% and 20%.

In contrast, 35.1% of respondents in Asia Pacific do not expect that their businesses’ turnover will be negatively affected by the uncertain prospects for international trade. The increased percentage is mainly due to the high percentages of respondents in Australia and Japan who said that they are most likely to not be impacted (53.6% and 50.9% respectively).

While businesses trading internationally expect negative effects on their turnover, those focusing on only domestic B2B sales expect to see improvements. 29.0% of respondents in Indonesia and 19.0% of respondents in India expect the global protectionist measures to positively impact their businesses’ turnover in the coming 12 months.

BANKRUPTCY – THE MAIN REASON FOR UNCOLLECTABLE B2B RECEIVABLES INASIA PACIF IC

In 2018, all countries surveyed in Asia Pacific reported a decrease in the average proportion of uncollectable B2B receivables. This brought a decrease at regional level, from 2.1% in 2017 to 1.9% this year. With the exception of Japan, Australia and India, in 2018, uncollectable B2B receivables averaged around 2.0%. Similarly to 2017, and following another decrease in 2018, Japan and Australia had the lowest percentages of uncollectable B2B receivables in the region (on average, 1.2% and 1.3% respectively). India continued to be the country with the highest percentage of uncollectable B2B receivables in 2018. However, there was a small improvement, from an average of 2.6% in 2017 to 2.4% this year.

PAYMENT PRACTICES BY INDUSTRY

In 2018, respondents in Asia Pacific gave their customers 32 days, on average, to fulfil their payment

obligations. Looking at the average payment terms by sector, with the exception of the paper sector, respondents in Asia Pacific gave their B2B customers payment terms around the regional average or slightly above. B2B customers of respondents in the paper sector were given, on average 40 days to fulfil their payment obligations. In contrast, the shortest payment terms were given to B2B customers in the food sector – who were asked to pay within 24 days, on average.

B2B customers of respondents in the chemicals and construction sectors seem to have generated some of the longest payment delays. Domestic and foreign B2B customers in these sectors paid, on average, 31 and 27 days late respectively. Similarly to what was stated at regional level, the main reasons for payment delays were insufficient availability of funds and disputes over the quality of goods delivered and services provided.

Following the payment delays experienced this year, the majority of respondents in Asia Pacific reported that they do not expect any changes in the payment behaviour of their customers in the chemicals and construction sectors. This seems to be a shared belief in regards to B2B customers in all sectors. However, of those who do expect to see a change over the coming 12 months, 37.0% expect an improvement and 16.0% foresee a deterioration.

ASIA NEWSFLASH

SPECIAL REPORTSPECIAL REPORT

June 2018

Atradius Payment Practice Barometer May 2018

PAYMENT DURATION IN ASIA PACIF IC

Sample: companies interviewed (active in domestic and foreign markets)Source: Atradius Payment Practices Barometer – May 2018

2014 2015 2016 2017 2018

1

2

3

1.9%Uncollectable

2.2%2.0% 2.1% 2.1%

44%CREDIT SALES2017: 46%

45%PAST DUEB2B INVOICES

ASIA NEWSFLASH

DATA SHOWCASE

The Data You Need That We Have

11,494,041

8,528,862

4,699,840

3,128,333

1,756,170

1,001,340

176,347

383,402

2,662,974

1,819,001

399,075

540,501

1,568,282

1,524,562

319,601

520,196

1,834,717

1,707,366

378,167

530,434

3,403,501

1,410,214

3,326,242

8,478,777

4,699,787

5,669,441

3,407,379

328,768

11,345,715

10,996,165

10,932,045

10,577,186

8,132,498

6,469,137

GRAND TOTAL

GRAND TOTAL

GRAND TOTAL

BRANCHESTELEPHONE CITY ADDRESSCEO TOTAL EMPLOYEE SALES SIC

MARKET HIGHLIGHT

C H I N A

I N D I A

J A P A N

27%+

13%+

22%+

27%+

31%+

27%+

210%+

21%+

TAIWAN

HONG KONG

AUSTRALIA

KOREA

ASIA NEWSFLASH

DATA SHOWCASE

The Data You Need That We HaveMARKET HIGHLIGHT

1,074,471

641,554

650,093

180,770152,327

103,390

157,929

287,511

174,865

165,776

202,978

167,777

150,187

264,737

161,013

157,877

301,389

620,645

605,004

636,698

508,374

628,027

613,250

187,389

1,071,513

832,961

846,168

1,022,415

811,436

689,218

GRAND TOTAL

GRAND TOTAL

GRAND TOTAL

BRANCHESTELEPHONE CITY ADDRESSCEO TOTAL EMPLOYEE SALES SIC

T H A I L A N D

P H I L I P P I N E S

91%+

55%+

94%+

91%+

82%+

232%+

259%+

50%+

INDONESIA

MALAYSIA

SINGAPORE

V I E T N A M

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