European business interest in Asean softens from 2019: Poll

FIRMS from Europe are souring on their prospects in South-east Asia, amid concerns over the trade and supply chain climate, a business sentiment survey has shown.

Roughly three-quarters of respondents (73 per cent) expect their trade and investment in Asean to grow over the next five years.

The outlook has softened since 2019, when 84 per cent had expansionary projections, according to the latest EU-ASEAN Business Council (EU-ABC) study.

The share of businesses who expected year-on-year profit growth in 2020 fell to 39 per cent, down sharply from 60 per cent before.

At the same time, just 53 per cent of companies surveyed named Asean as the region offering the best economic opportunity, down from 63 per cent in 2019.

Said EU-ABC chairman Donald Kanak in a statement: "Almost half (of respondents) expect supply chains to be reorganised following Covid-19. That makes the unfinished business on the Asean economic integration and progress on trade facilitation crucial to Asean's sustainable recovery from the economic downturn."

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South-east Asia was named as a potential destination for supply chain reorganisation, with the support of one-third (34 per cent) of survey respondents. But close to two-fifths of companies picked either Europe (20 per cent) or China (17 per cent) as top markets, too.

That's as 62 per cent of companies that rely on supply chains reported facing many barriers to the efficient use of supply chains in Asean.

Meanwhile, 4 per cent of European businesses described Asean customs procedures speedy and efficient - half the level of satisfaction in 2019 - and just 2 per cent were content with the pace of regional economic integration, down from 6 per cent the year before.

Some 680 services and manufacturing companies across Asean were polled from April to July.