Foreign investors more critical of Asia: Survey

Foreign investors more critical of Asia: Survey

SINGAPORE (AFP): Expatriate business executives in Asia have become more critical of the region in the past year, with Vietnam seen as the riskiest place and South Korea suffering the worst decline in image, according to a survey.

Indonesia was perceived as the most corrupt country, Thailand's woes were seen as cyclical and the Philippines stood out for optimism, said a Political and Economic Risk Consultancy Ltd. (PERC) report received here yesterday.

"Expatriate businessmen in Asia are, in general, more critical of Asia this year than they were a year ago," the report said.

"This could be because the economies of most Asian countries have slowed, making businessmen more conscious of the region's socio-political shortcomings."

PERC's 1997 comparative country risk report graded Singapore as the nation with the lowest economic and socio-political risks among 12 countries where business executives were polled, with Vietnam at the other end of the scale.

The Hong-Kong based PERC said perception of socio-political risks among foreign investors rose the highest in South Korea in the past year, reflecting the sharpest deterioration in sentiment among countries surveyed.

Although Thailand's economy, currently hit by a property-led financial crisis, suffered a similar image setback, the perception among foreign businesses was that many of its problems were cyclical in nature, PERC said.

Hong Kong received positive scores despite its impending July 1 transition to Chinese rule, with most investors impressed with the quality of the business environment, it added.

Despite concerns over the trend of corruption and the integrity of the judicial system in the colony, the survey grades indicated that those fears have yet to be realized in any meaningful way.

"Hong Kong has the most open environment for foreign investment of any economy in Asia, if not the world," PERC remarked. Vietnam received the worst marks for openness to foreign investment.

Among the four countries normally associated with the worst sociopolitical scenarios, China and Vietnam received slightly better grades this year but ratings for India and Indonesia deteriorated, PERC said.

"Indonesia's success in attracting foreign investment in recent years has resulted in a big increase in the number of expatriates who are still low on the learning curve in terms of navigating the Indonesian system," it said.

Indonesia, India and China were seen as the most corrupt countries for business, with companies forced to offer bribes or "other improper inducements" to bureaucrats to secure approvals.

PERC said there was a "perception that relatives of President Soeharto are taking the practice of patronage to new extremes" in Indonesia, and that foreign companies were finding it increasingly difficult to develop their businesses "without bumping into these well-connected people."

The survey singled out the Philippines as the place where foreign businesses were becoming more optimistic that the country was heading in the right direction despite domestic problems.

"President (Fidel) Ramos seems not only to have caused the economy to shift into a higher gear, he also seems to have made headway in reducing a range of socio-political problems including corruption, bureaucracy and discriminatory policies against foreign companies," PERC said.