PwC APEC CEO Survey 2013

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www.pwc.com

Towards resilienceand growth Asia Paci c business in transition

PwC 2013 APEC CEO Survey


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The PwC 2013 APEC CEO Survey report is a unique toolto better understand the views of business leaders acrossthe APEC economies as they assess the forces changingthe world and their business growth strategies.

While overall con dence in growth from Asia Paci c operationsremains undiminished, we see many of the uncertaintiesassociated with slow growth, previously limited to the moredeveloped markets, now challenging developing economiesas well. APEC business executives are also bracing for a majortransformation within the Asia Paci c regionone driven by thegradual but steady rise in incomes and economic opportunitiesfor millions of people. Resilience will likely be a continualtheme as companies look to adapt their business strategiesto maximise the opportunities associated with the rise indomestic consumption, rapid urbanisation, increasing mobilepenetration, and much-needed investment in infrastructure.

Not surprisingly, business leaders have again identi edinconsistent regulations and standards as the single biggestbarrier to their companys growth in the Asia Paci c region.Different rules for products and services in differenteconomies greatly increase the complexity of scalingoperations across national borders. Achieving progress onnumerous fronts across APECs diverse group of economiesis no easy task, but given the urgency of the transformationcited above, it is essential that we nd common ground.

As business and government leaders convene this yearin Indonesia to discuss issues and share priorities, whathappens with APEC economies will hold profoundimplications for the wider world. I hope this report willhelp advance productive dialogue between the businessand government participants of the APEC CEO Summit.

This effort would not have been possible without theparticipation of nearly 500 business leaders. Thank you for taking the time to share your opinions andinsights in the PwC 2013 APEC CEO Survey .

About this report Dennis Nally PricewaterhouseCoopers International Limited, Chairman


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Trends that favour future investment Asia Paci c economies that CEOs believe could surprise and why

Note: CEOs were asked to select rom a list o 35 Asia Paci c economies, which included 21 APEC economies and those seeking APECmembership, as well as others. Business leaders whose primary responsibility is Indonesia represent 12% o the total respondent pool.While many in this subset did indeed vote or Indonesia, some also chose Myanmar, Macau, Mexico, or Viet Nam as the dark horse mostlikely to surprise.

Source: PwC 2013 APEC CEO Survey Q: Which o the ollowing Asia Paci c economies do you believe will be the dark horse in the next 35 years? | Base: 478 (excludesnone o the above and no answer responses)

Si ting or uture business opportunities can be a complexexercise in a region as diverse as Asia Paci c, whichin this report spans to economies on either side o thePaci c Ocean. Expanding middle classes were an obviousattraction; ample natural resources drew others. But thesearent the only qualities that can set the stage or businessinvestment. Increasing transparency; youth ul populations;relative wage costs; in rastructure plans; and political

stability were requently cited as important qualities thatcreate room to grow.We asked 478 business leaders with operations in AsiaPaci c to share their dark horsethat is, to tell us aboutthe one economy in the region they believe could surprisewith more opportunity than is currently expected. Indonesialeads the pack, but many others were o ered. This is asample o what they said.


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2 | PwC 2013 APEC CEO Survey

Asia Paci c business intransition

Say we found a crystal ball thatactually could see into the future.What would a CEO want to know?Take someone in charge of investingmillions of dollars today for growthin operations in the region tomorrow.Would she ask about the outcomeof Chinas economic rebalancing orthe shale gas boom in the US? Whatabout the fruits of structural reformand trade pact efforts in Japan?Each is potentially momentous onits own; remarkably, all three arein play as 2013 draws to a close.

China, the US, and Japan are thethree largest economies in APEC. Yet despite the manifest uncertaintiescreated throughout the entireregion as they transition, mostbusiness leaders we surveyedclose to 70%are planning toincrease their investments overthe next year. Rapid urbanisation,rising middle-class demands,near-total mobile penetration,and a burgeoning demand for

infrastructure are all potentialsources of new growth for local andglobal businesses in many sectors.

We polled 478 executives withoperations in at least one of the21 economies in APEC between11 June and 9 August 2013 fortheir perspectives on Asia Paci c.

More (42%) are very con dent inrevenue growth for their company over the next 12 months than they were at this time in 2012 (36%).

Building the right model for achanging Asia Paci c is at theheart of the matter for businesses.This involves making a number of decisions, including which economies(and customers) to concentrate on, where to innovate, how much toinvest, and how to allocate thosefunds. This report explores someof the approaches that businessleaders in the region are taking.

Asia Paci c economies have shown

remarkable resiliency to globaldisruptions over the past ve years.But which trade and developmentmodels will support regional growthin the future? This is at the heart of the matter for policymakers. Thesurge in potential trade pacts in theregion over the past year shows theissue is far f rom settled. For their part,business leaders overwhelmingly welcome the momentum in tradenegotiations, even as one in ve

recognise that the alternative trackscreate administrative costs orincrease the complexities involved with operating across the region.

Building the right model to prosper in achanging region


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Towards resilience and growth Asia Paci c business in transition | 3

We are most impressed with Americas energy revolution, and it is very important to America. We can see that from our own industry.

Dr. Zhang Xiaogang, General Manager, Angang Group

Chinas the engine that drives things, and itsthe market that we focus on the most.

Shane D. Fleming, Chairman, President and CEO,Cytec Industries Inc.

Most CEOs increasing investments in Asia Pacifc operationsIn 2013, more are con dent in revenue growth prospects over the next year.

Source: PwC 2 013 APEC CEO Survey ; 2012 APEC CEO Survey Q: Consider ing your organisations investments in APEC economies over the next 12 months, are you planning on? | Base: 478(excludes dont know and no answer responses)Q: How con dent are you about your organisations prospects or revenue growth Over the next 12 months? Over the next 35 years? |

Base: 2013: 478; 2012: 356


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One of the key drivers for growth in Asia Paci c inthe next three to ve years will be the political systems

in Asia. Asia is becoming a democratic region.

Jin Roy Ryu, Chairman & CEO, Poongsan Group

We believe in Indonesias potential, with its young population The challenge for Indonesia is losing its growth momentum. Theres aneed to address things like the

current account de cit andinfrastructure development so we can be more ef cient.

Wishnu Wardhana, President Directorand Group CEO, PT Indika Energy Tbk

Asia Pacifc: Where are CEOs increasing investments?Investments are selective as businesses tune allocations or domestic-market growth potential over the next 3 5 years.

Note: An overall rank was scored rom responses ranked in order rom economy with mostincreased investment.Source: PwC 2013 APEC CEO Survey Q: Please select the top 5 APEC economies where your organisation is increasinginvestments over the next 35 years. | Base: 443 (excludes none o the above and notanswered responses)


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Innovation and services capabilitiescapture new investments

The promise of business growth from

rising middle-income consumershas been clear for a decade. Nowbusinesses are actively investingfor a future of consumption-driven growth in Asia Paci c. Thusproduct development, servicesand distribution capabilities, andtalent development are capturingover half of all increases ininvestment over the next year.

Nearly half of CEOs surveyed say

middle-income consumers in uencetheir growth strategies to a greatextent. This includes 36% of

executives in industrial businesses. As Shane D. Fleming, Chairmanand CEO of Cytec Industries Inc., aUS-based specialty chemicals andmaterials company, puts it: Were

one step back from that trend. Butits a very important trend becauseas consumerism grows, as themiddle class grows in countries likeChina, the demand for productsthat require our materials grows.

Expanding manufacturing capacity remains importantbut its notthe investment driver of the pastfor businesses operating in theregion. For example, just 13% of the total increase in investmentsby CEOs focused on China is forexpanding manufacturing over the

next 12 months. Like their peerselsewhere in APEC economies,business leaders responsible forgrowth in China operations aremore likely to invest towards new

products or expanding services.

One event spells out the importantchanges in the region: ve selected APEC economies that grew more than5% in 2012 have also experiencedsteep declines in exports relative totheir GDP since the global nancialcrisis. In 2012, they also saw a risein private consumption. One viewof the data over one year does notmake a trend, but for a region whosedynamism has been largely de nedby its exports, its a startling shif t.

Decoupling rom export-led growth in Asia PacifcResilience must come rom within.

Source: Ox ord Economics; PwC analysis


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Middle-income consumers in Asia Pacifc driving new business investmentThe promise o business growth rom rising middle-income consumers has been clear or a decade.Now businesses are actively investing or a uture o domestic consumption-driven growth in Asia Paci c.

Source: PwC 2013 APEC CEO Survey Q: Thinking o those APEC economies where your organisation is increasing investment over the next 12 months, what proportion will beallocated to the ollowing areas? | Base: 443Q: Expanding middle-income consumption across much o Asia Paci c is expected to increasingly drive uture economic growth or theregion. To what extent is this trend infuencing your organisations growth strategies or the region? | Base: 478 (excludes not applicable,dont know, and no answer responses)


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We are restructuring, and were moving now to muchmore of a commercial pro le in our business in Asia.We still have manufacturing there, but were probably doing more outsourcing today and spending more of our effort in the distribution part of the supply chain, working with customers and understanding their needs.

Tony Nowell CNZM, Chairman, Wellington Drive Technologies and

New Zealand Forest Research

Can you imagine how many new nancial products will be created in the process leading to Renminbi (RMB) internationalisation?

Dr. Jih-Chu Lee, Chairperson, Taiwan Financial Holdings Co., Ltd. and Bank of Taiwan Co., Ltd.

We want to create an experience attainable by most peopleeven if they may have to save in order to achieve it. But thats better than it being something out of reach for most people. We nd that our approach has allowed us to engage with the growing af uence of the growing middle class.

Claire Chiang, Senior Vice President, Banyan Tree Holdings Ltd.

Services sectors projected to beneft as Asia Pacifcincomes rise

Source: Ox ord Economics; PwC analysis


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Asia Paci c CEO

Thus distribution channels andpartners are evolving in different ways. Over half of CEOs are changingstrategies related to partnerships,recognising that going in with anestablished base in the local marketand having local partners to work with in many of these markets isimportant. While more businessleaders believe their chief competitorsare multinational companies fromdeveloped economies, more wouldalso rather partner with localcompanies than international onesto capitalise on local middle-incomedemand. In part, these partnershipscan assuage skills shortages thatCEOs say are concentrated at the topof the organisation. And partnershipsin R&D can help ll technical gaps.

While CEOs orient their companiesto stay relevant in a transitioning Asia Paci c, there are pressures within the organisation. R&D andHR operations are seen as amongthe least prepared, an apparentreluctance to rely on the talent poolfor all that innovation. Separately, while customer service and marketing

are two of the top areas aggedfor strategic re-direction, moreCEOs are con dent in the ability of these operations to adjust.

Agent of change

Putting middle-income demand at thecentre of business expansion plansis leading to different distribution

strategies and new partnerships inmany sectors. Retailerslocal andglobalknow this best. Consumermarkets in Asia are not completely liberalised and remain highly fragmented. Strong survivors aretransforming operating models andproduct offers in order to adapt. 1

Add to this the imperative to reach younger, urban consumersthesource of much business optimismand per capita income growth infaster-growing centres in Asia andLatin America. Personal networkscarry huge weight in terms of whom to trust and what to buy. Af uent shoppers in developing Asia are twice as likely to seek helpfrom their networks of friends andfamily compared to shoppers indeveloped countries. 2 Companiesneed to factor these differences in asthey think about adapting existingmarketing strategies to new areas.

1 2013 Outlook for the Retail and ConsumerProducts Sector in Asia, PwC, 2013

2 Experience Radar 2013: Lessons from GlobalRetail Apparel Industry, PwC (forthcoming)

The winners in this industry,in any industry, will bethe ones who really start to think end to end, all the way from their supply basethrough their company, out to their distributor networkand to their end users.

Ed Rapp, Group President,Construction Industries,Caterpillar Inc.


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Asia Pacifc CEOs change strategies to sync with new consumersPutting middle-income demand at the centre o business expansion strategies will likely lead to di erentdistribution channels, new partnerships, and more innovation.

Source: PwC 2013 APEC CEO Survey Q: To what extent are you making, or will make, changes in the ollowing areas to capitalise on this development (expanding middle-

income consumption across much o Asia Paci c)? | Base: 412, CEOs who cite middle-income infuence on growth strategy (excludesnot applicable, dont know, and no answer responses)


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Stress points in R&D and HR as CEOs pivot or consumer demand As CEOs orient or relevance in a changing Asia Paci c, R&D and HR are seen as among the least prepared.

Source: PwC 2013 APEC CEO Survey Q: To what degree are the ollowing areas o your organisation prepared to adjust to capitalise on the rise in middle-income consumers in

Asia Paci c? | Base: 397, CEOs who cite middle-income infuence on growth strategy (excludes not applicable, dont know, and noanswer responses)


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Sizing up mobileopportunities and digitalrealities in Asia Paci c

With a growing share of globalinternet users in Asiaandsmartphone penetration of over60% in Korea and climbing in other APEC economies 3the region as a whole will play an important part inthe evolution of digital business.

Asia Paci c is on the cusp of signi cant mobile disruption.PwC identi es mobile computingas one of four market forces thatare individually and collectively rede ning customer demand andbusiness opportunity over the nextve years. 4 The others are cloudcomputing, social technology andthe emergence of intelligent devices.New capabilities could change howusers interact with these devicesand how these devices interact with the environment. Think of

smartphones offering alternativesto credit cards or wearing sensorsthat can remotely monitor long-termhealth conditions, for instance.

Data is at the heart of much of theinnovation around applications andthus, the emerging opportunities. By now every business is aware of the value their data assets can generatein the big data environment. Asmore businesses consider collectingdata and seek to apply them fornew uses, inconsistencies in rulesguiding data privacy and sharingcan act as an impediment. Some15% of business leaders identify current legal frameworks for cross-border data ows as an emergingbarrier for their company to bene tmore from the digital economy.

Data control and sovereignty issues are not just a concern fortechnology companies. In fact,business leaders from this subsetof CEOs surveyed were the leastlikely to believe the standardsin place today around customer

3 eMarketer, May 2013, based on survey and traf c data from research rms andregulatory agencies, historical trends,company-speci c data, and countryspeci c factors.

4 Mobile Innovations Forecast, PwC, 2013

privacy are an emerging barrier totheir business (6%) compared withleaders in nancial services (31%)or the industrial sector (14%).

Mobile-savvy employees are asource of pride and potential asCEOs navigate new digital markets.Most CEOs surveyed believe theircompanys culture can open vir tualdoors for business growth. And with39% viewing the integration of digitalchannels in their organisation asan emerging opportunity, expectmore emphasis on tools and practicesthat bring employees and partnerstogether to collaborate in the digital world. Rapid growth in mobiledevices in many emerging marketsin APEC is providing an impetusfor organisations to nd new waysof engaging with each other andimportantly, with consumers, saidGreg Unsworth, Technology, Mediaand Telecommunications Leader,PwC Singapore. This will alsoenable many parts of the populationto access services that were notpreviously available to them.


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Youre seeing a lot of innovation in the way people get things done ona computer, the emergence now of the ability to talk to the computerand even have it talk back to you, the ability for it to understandcontext from, for example, geographic localisation. All of these thingsare making a qualitative change in what people expect from thesedevices and the kinds of applications they can create for them.

Craig Mundie, Senior Advisor to the CEO, Microsoft Corporation

Uncertainties around standards or data sharing slowing digital expansionOpportunities centre around connecting more closely within the company and with partners.

Source: PwC 2013 APEC CEO Survey

Q: Do you consider each o the ollowing to be chiefy an opportunity or a barrier or your organisation to bene t rom the digital economy?| Base: 478 (excludes neither / nor, dont know, and no answer responses)


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People are becoming more responsive than in previous years when we didn't have any of these gadgets.

Karen Agustiawan, President Director and CEO, PT Pertamina (Persero)

Our customers want to access us anytime and from anywhere. They want to be able to book a ticket from any place through any medium at

any time, and this requires a restructure of our IT architecture to makeit possible. This is a good thing though as it opens up opportunities.

John Slosar, Chief Execut ive, Cathay Paci c Airways Ltd.

Smartphone penetration: The number to watch in mobile innovationWhat happens as smartphone use hits critical mass? Mobile disruption in the orm o new business models inhealth, automotive, and more.

Source: eMarketer (20132017 projected), based on survey and tra c data rom research rms and regulatory agencies, historical trends,companyspeci c data, and countryspeci c actors


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How to nanceinfrastructure development?

Of all the different types of businessinvestments, arguably the mostimportant is the money thatgoes into inf rastructure. Power,transport, communications, water,and sanitation are the foundationsupon which an economy grows.

Mature economies like Australia,the US and Japan face demands asexisting infrastructure starts to ageand needs upgrading. Developing Asia has an infrastructure de cit. The Asian Development Bank estimatesthat the region needs to invest

around US$8 trillion in infrastructurebetween 2010 and 2020 tomaintain economic growth rates.

And yet, the Asia Paci c region hasbeen under-investing in these assets. 5 Economic growth has been running ata faster speed than new investment ininfrastructure, and many parts of Asianow struggle with gridlocked roads,clogged ports, unreliable power,and unsafe water. Public nancingalone likely cannot meet the needs.

Asia generates an enormous amountof savings which could be funneledback into infrastructure development.So what is holding back private

5 Foundations of the Future, 2013, preparedfor the APEC Business Advisory Council(ABAC) by PwC in its capacity as theKnowledge Partner of the APEC CEOSummit 2013

Bridging the infrastructure gaps in Asia Paci c

investors? Regulatory and legalregimes in many economies area clear barrier. These range fromuncertainties around tariff regimesto delays with land acquisition anda lack of transparency around thebidding process. Governments canalso assist by working to developand facilitate nancial productsthat are suited to investment inlong-term infrastructure assets.

Open to new ways o investing and developing in rastructure Asia Paci c has a great need or direct investment into in rastructure.Public nancing alone likely cannot meet the demand.

Source: PwC 2013 APEC CEO Survey

Q: To what extent is your organisation pursuing business relationships in the ollowing areas, because they are important to yourorganisations growth over the next 35 years? Private-publ ic in rastructure models | Base: 478 (excludes not app licable, dont know,and no answer responses)Q: Do you consider each o the ollowing to be chiefy an opportunity or a barrier or your organisation to bene t rom the digitaleconomy?Existing IT in rastructure | Base: 478 (excludes neither / nor, dont know, and no answer responses)


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The region is developing a largeamount of savings every year. Quitea lot of those savings are leaving the region, being intermediated

away into Europe or America. Weneed mechanisms to make sure that those funds can be accumulated well in Asia and used inside Asia for infrastructure projects.

Anthony Nightingale , Director, Jardine Matheson Holdings Limited

Peru requires US$200 billion of infrastructure over the next few yearsin order to face the challenges that the

future will bring. This is almost twicethe countrys gross domestic product.

Juan Francisco Raffo, Honorary Chairman, Raffo Group

Room to invest in in rastructure in Asia PacifcIn rastructure development is needed to support rising prosperity.

Source: Economist Intelligence Unit, based on research rom World Bank, McKinseyGlobal Institute; PwC estimates


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CEO priorities for infrastructure development

There are clear cases where furtherimprovements in infrastructures willfuel business growth. CEOs identify power supplies as an area wheredevelopment translates into greateropportunities for more businesses. Above all, more CEOs believe lif tingregulatory barriers that raise costsand uncertainties around tradeand long-term investments candirectly support business growth.

Yet no business operates in isolation.When asked where improvementscould create opportunities for theeconomies where they are based,more CEOs pointed to cloggedtransit networks in many AsiaPaci c urban centres as a priority.They also expect the extending of broadband access (and lowering

the costs) to more people will createsigni cant opportunities for growthin their countries. Note the gapbetween the percentage of CEOs who believe further development of the tech grids will create signi cantopportunity for their companies(26%) and for the economies wherethey operate (44%). This is thedigital divide: for the most part,businesses have satisfactory accessbut worry not enough people do.

Believing that cellular technologies

are going to provide progress is notenough, says Craig Mundie, senioradvisor to the CEO at MicrosoftCorporation. As broadband becomesmore of an imperative, particularly ineducation and small businesses, andas cloud service connectivity becomesthe way people access these facilities,the pressure is going to becomeintense on connectivity and its cost.

We cannot ignore the current economic growth, whichmeans more of our people will be able to access energy. And as Pertamina is an energy company, we have to supply efficient and sufficient energy to the people.

Karen Agust iawan, President Director and CEO, PT Pertamina (Persero)

Governments in APEC need to improve infrastructuredevelopment, and infrastructure investment, as regionalconnectivity is very important for APEC members. With the political stability in the region, we can improve the investmentsand connections between each member of the region.

Erwin Aksa, CEO, Bosowa Corporation


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Towards resilience an d growth Asia Paci c business in transition | 19

Japan is willing to help with infrastructure improvements in Asia Paci c, but how to nance them is a huge issue. We are promoting the idea of establishing a bond market as well as using Public Private Partnerships for ASEAN infrastructure development.

Hiromasa Yonekura, Chairman, Keidanren and Sumitomo Chemical Co., Ltd.

Where is in rastructure needed most?CEOs believe changes to regulatory and trade in rastructures are most crucial or business. When it comes totheir economies, developing the tech grids and urban transport are the paths to growth.

Source: PwC 2013 APEC CEO Survey Q: To what degree would urther development in the ollowing in rastructure categories in the APEC region create growth opportunities oryour organisation? | Base: 478 (excludes not applicable, dont know, and no answer responses)Q: To what degree would urther investment in the ollowing in rastructure categories create growth opportunities or your principaleconomy? | Base: 478 (excludes not applicable, dont know, and no answer responses)


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Post-WTO world in two wordsValue chain

For the third year in a row, businessleaders have agged inconsistent

regulations and standards as thesingle biggest barrier to theircompanys growth in Asia Paci c.Different rules for products andservices in different economiesraise the cost of doing business andgreatly increase the complexity of scaling operations across nationalborders to a great extent forclose to a third of respondents.

Services are an integral part of todays global supply chains. Think of a freight forwarder or back of ceprocesses or trade nance. Servicesin intermediate inputs representover 30% of the total value addedin manufactured goods, accordingto OECD estimates. 6 Yet while tradedeals have effectively reducedtariffs on many goods, services

are less impacted. For example,consider an equipment maker who wants to extend nancingto customers but cannot as thosetypes of services are restricted tobanks in certain economies.

As services become more intensive,the more coherent and transparentregulations matter for businesses.Regulatory consistency aroundintellectual property and corporategovernance in particular couldunlock further investment in APEC economies, CEOs say.

Where business and regional policy priorities intersect in Asia Paci c

6 Trade Policy Implications of Global ValueChains, OECD, 2013

We have our own port in Indonesia We also haverail, barge and our ownhauling roads. So what weneed to invest more in, interms of expansion, is betterutilisation or synchronisationas well as optimisation.

Chanin Vongkusolkit, CEO, Banpu Public Company Limited

Many relatively small sellersare engaging withinternational customersin a way thats much more

straightforward, withmuch lower costs and much safer and more reliabletransactions than everbefore. Thats been a hugebenefit, where the technology got ahead and the policiesare waiting to catch up.

Scott Miller, Senior Advisor and SchollChair in International Business, Center for Strategic and Internat ional Studies(CSIS)


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If youve got regionalagreements that cover 10 or12 or hopefully one day, 21economies, you take a great deal of complexity away.That reduces costs. It reduces waste. It makes things moreavailable because companies will make the productsmore available if theres lesscomplexity to deal with.

Tony Nowell CNZM, Chairman,Wellington Drive Technologies and New Zealand Forest Research

Harmonised regulations would help us access marketsmore easily. Basically, we would know what we need to do to get our products across borders.

Dr. Vijaya Rajendram, Founder& Managing Director, Neptune Bio-Innovations

Whats holding back more business investment in AsiaPacifc economies?Regulatory consistency could unleash more investment in the region.Corporate governance, intellectual property protection, and services topthe list.

Source: PwC 2013 APEC CEO Survey Q: How likely or unlikely would your organisation be to invest more in the APEC region ithe ollowing regulations or standards were harmonised across the region? | Base: 478(excludes not applicable, dont know, and no answer responses)Q: And o these, where is the goal o uni orm standards or regulations across the regionmost important to your organisations growth prospects, i at all? | Base: 478 (excludesnot applicable, dont know, and no answer responses)


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What qualities makean economyor aregionresilient?

With global trade talks in idle,regional and bilateral tradenegotiations are lling the void.These alternate pathways to deepereconomic integration have stepped upnotably in Asia Paci c. In 2012 alone,Trans-Paci c Partnership (TPP)negotiations expanded; negotiationscommenced between China, Japanand Korea; and ASEAN set its plansfor a Regional ComprehensiveEconomic Partnership (RCEP).

When it comes to trade deals, thedefault position of many CEOshas long been that 100 are betterthan none. This still holds: theproliferating number of tradenegotiation tracks in the region arentdampening their enthusiasm for tradetalks. Most CEOs (69%) believe theevolving trade paths create moreopportunities even as one in ve seeshigher administrative costs or morecomplexities with operating across

borders in Asia Paci c as a result.

The potential con gurations forgreater market access arent easy for business leaders to follow. Yetthe impact on economies could besizable, particularly for the smallerdeveloping economies in the region

with fewer bilateral agreementsalready in place, such as Viet Nam.

If any (or all) come to fruition, thelargest gains in GDP would likely accrue to smaller ASEAN economies.Bene ts would also increase asmore economies join either the TPPor ASEAN tracks, a recent analysison the TPP and RCEP negotiationsshows. 7 Interestingly, China(a RCEP participant) and the US(TPP talks) stand to gain the leastfrom these two major tracks. Chinaand the US would likely bene t farmore by greater access to each othersmarkets through a free trade pactthat encompassed the entire region.

Whats less clear to CEOs is whethertodays evolving trade paths are a steptowards APECs goal of a region-widefree trade zone. A slight minority of those surveyed have strong views oneither side of the issue. Most CEOsare in the middle. Its a question of timing and, at this point, no one isquite sure where todays multipletrade talk paths are headed.

7 Peter Petri, Michael Plummer and FanZhai, The Trans-Paci c Partnership and Asia Paci c Integration: A Quantitative Assessment 2012, amended to add Japanand Korea to the study as signatories in thefollowing addendum: Peter Petri, MichaelPlummer and Fan Zhai, Adding Japan andKorea to the TPP, 7 March 2013.

What we need from national and international bodies iscommitment to sustainable growth. Our ability to create value for our guests and for our host communities will hingeupon the management of the overall destination, including

what is beyond our property line. Air pollution, oil spill s at sea, and the health of the host ecosystem are topics wider thanour resort property line, and require collective and alignedaction between business, communities, and regulators.

Claire Chiang, Senior Vice President, Banyan Tree Holdings Ltd.


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CEOs welcome momentum on Asia Pacifcs many evolving trade negotiation tracksEven as one in ve believe costs, complexity or their business are rising as a result.

Source: PwC 2013 APEC CEO Survey Q: To what extent do you agree or disagree Multiple regional trade tracks are creating more growth opportunities or our organisationin Asia Paci c? Multiple regional trade tracks are creating more uncertainty or administrative costs or our organisation in Asia Paci c?Multiple regional trade tracks will likely converge in a single Free Trade Area o the Asia Paci c? | Base: 478 (excludes not applicable,and no answer responses)


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Who benefts? Asias potential trade pathsGDP percentage gains by 2025 above business-as-usual baseline depending on the implementation oproposed trade paths.

Source: The data included is based on studies in The Trans-Paci c Partnership and Asia-Paci c Integration: A Quantitative Assessment

by Peter A. Petri, Michael G. Plummer, and Fan Zhai, Peterson Institute or International Economics, Policy Analyses in InternationalEconomics No. 98, November 2012. Please note that the authors amended the study to add Japan and Korea as signatories in theollowing addendum: Adding Japan and Korea to the TPP by Peter A. Petri, Michael G. Plummer, and Fan Zhai.http://www.asiapaci ctrade.org


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This is the PwC 2013 APEC CEO Survey .

We surveyed industry leaders from 11 June to

9 August 2013 for the PwC 2013 APEC CEO Survey . Wealso conducted 20 in-depth interviews with CEOs andother top corporate of cers and business specialists.

We used an online and paper methodology to achieve478 valid responses from CEOs and industry leadersacross 40 nations, including all 21 APEC economies.The 21 APEC member economies are: Australia,Brunei Darussalam, Canada, Chile, China; HongKong, China; Indonesia, Japan, Korea, Malaysia,Mexico, New Zealand, Papua New Guinea, Peru,The Philippines, Russia, Singapore, Chinese Taipei,

Thailand, US and Viet Nam. The questionnaire wastranslated from English into four languages: BahasaIndonesia, Simpli ed Chinese, Japanese and Korean.

Responses to the survey were given in privateand on an unattributable basis. In addition, weconducted in-depth face-to-face and on-camerainterviews with business leaders. Insights fromthese interviews are quoted in this report, and videoselections are available at www.pwc.com, as isfurther information on the data and the graphics.

Note: Not all gures add up to 100% due torounding and to the exclusion of neither/norand dont know responses. An overall rank order was produced for questions where respondents were asked to provide a ranked response inorder from high to low. The overall rank wasachieved by applying a score to each response.

Research methodology


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Acknowledgements

Our coverage of the trends shaping APEC economies and businesses would not have been possible without the insightsshared by industry leaders we interviewed. We are most grateful and would like to acknowledge their contribution.

Juan Francisco Ra o

Honorary ChairmanRa o Group

Hasnul SuhaimiCEOPT XL Axiata Tbk

Eduard Potapov

Chie Executive O cerManagement CompanyMETALLOINVEST LLC

Hiromasa YonekuraChairman

KeidanrenChairmanSumitomo Chemical Co.,Ltd.

Ed RappGroup President,Construction IndustriesCaterpillar Inc.

Dr. Zhang XiaogangGeneral Manager

Angang Group

Karen AgustiawanPresident Director andCEOPT Pertamina (Persero)

Erwin AksaCEOBosowa Corporation

John SlosarChie ExecutiveCathay Paci c AirwaysLtd.

Wishnu WardhanaPresident Directorand Group CEOPT Indika Energy TbkChair

ABAC 2013Chair

APEC CEO Summit 2013

Anthony NightingaleDirectorJardine MathesonHoldings Limited

Tony Nowell CNZMChairmanWellington DriveTechnologiesChairmanNew Zealand ForestResearch

Jin Roy RyuChairman & CEOPoongsan Group

Chanin VongkusolkitCEOBanpu Public CompanyLimited

Dr. Jih-Chu LeeChairpersonTaiwan Financial HoldingsCo., Ltd.ChairpersonBank o Taiwan Co., Ltd.

Claire ChiangSenior VicePresidentBanyan Tree HoldingsLtd.

Dr. Vijaya Rajendram

Founder & Managing DirectorNeptuneBio-Innovations

Scott MillerSenior Advisor and SchollChair in InternationalBusiness,Center or Strategic andInternational Studies(CSIS)

Shane D. FlemingChairman, President andCEOCytec Industries Inc.

Craig MundieSenior Advisor to theCEOMicroso t Corporation


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Acknowledgements

Advisory groupWishnu WardhanaChair, APEC CEO Summit 2013Chair, APEC Business Advisory Council (ABAC) 2013President Director and Group CEO, PT Indika Energy Tbk

Christopher AlbaniPrinciple, Global Health Industries, PwC US

Rodger G. HowellEnterprise Pro tability Strategy Practice Leader, PwC US

Frank LynMarkets Leader, PwC China and Hong Kong

Craig MundieSenior Advisor to the CEO, Microsoft Corporation

Eduardo PedrosaSecretary General, Paci c Economic CooperationCouncil

Yu Ping Vice Chairman, China Council for the Promotion of International Trade

Mark Rathbone Asia Paci c Leader, Capital Projects and Infrastructure,PwC Singapore

Irhoan TanudiredjaSenior Partner, PwC Indonesia

Greg UnsworthTechnology, Media and Telecommunications Leader,PwC Singapore

Monica Hardy Whaley President, National Center for APEC

Core editorial teamCristina AmpilEmily ChurchCraig ScaliseChristina SoonTJ Yen

Project management Cynara Tan Angela LangSuzanne Snowden

Representing APEC CEO Summit 2013Ricky SugiartoDirector, APEC CEO Summit 2013Executive, ABAC Indonesia

Amin SubektiExecutive Director, ABAC 2013

David ParsonsSenior Advisor, ABAC Indonesia

Allen LaiDirector, Asia Inc. Forum

Lucien OngManager, Asia Inc. Forum

DesignUS StudioPeggy FresenburgLudmela Heckel Amy KunzSamantha PattersonTatiana Pechenik

The following individuals and groups at PwC and elsewhere contributed to the production of this report.


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Cover image

The Perahu Jukung or Jukung Boat, a traditionalwooden boat widely used by the Balinese, hascontinued to adapt to its dynamic environment.Once a shermans tool and a means of transport,today it supports the vibrant local tourismequally well, bringing in income for community development and economic growth. Its ability to safely navigate the wind and waves hasenabled its resilience to changing times.


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PwC APEC CEO Survey 2013

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