Most U.S. firms in SE Asia don't see eEcon Rebound Until '04

Most U.S. firms in SE Asia don't see eEcon Rebound Until '04

Dow Jones Singapore

A majority of U.S. business executives based in Southeast Asia said they believe it will take until late 2004 for Asia to recover from its economic slump, according to a survey published on Friday by the American Chamber of Commerce in Singapore.

Only 36 percent of the 313 business leaders surveyed said they expect the region's economies to rebound by the end of 2003. Some 65 percent said it would take until mid-2004 for a recovery to take hold, while 81 percent didn't see a recovery until the end of 2004.

The Internet-based survey, conducted by the Gallup Organization between Feb. 18 and March 11, doesn't include businesses' perception of the impact of severe acute respiratory syndrome (SARS).

The business leaders are also doubtful over the chances of a global economic recovery this year, with only 24 percent saying they felt it was likely.

Some 69 percent said they believe the global economy would recover by mid-2004, while 91 percent said it would likely happen by the end of 2004.

Despite the cautious view over the economic situation in 2003, a full 75 percent of those surveyed said they plan to expand their operations this year, up from 73 percent in 2002. Only 18 percent said they planned a reduction in 2003, unchanged from last year.

SARS will likely have only a short-term impact on businesses' expansion plans, said Nicholas de Boursac, AmCham's executive director.

"Three quarters of them expect to expand this year. SARS will have affected their planning temporarily, but we see an intention to expand ultimately," he said.

China continued to lead with respect to business expansion, with 57 percent saying they planned to expand operations there, down from 64 percent in 2002. Vietnam was next at 38 percent, up from 23 percent in 2002. Thailand was third at 31 percent, down from 39 percent in 2002.

Indonesia topped the list for planned business reductions, with 22 percent of those surveyed saying they expect to cut operations there, down from 28 percent in 2002. Singapore followed at 21 percent, down from 36 percent last year. The Philippines was third at 19 percent, down from 27 percent in 2002.

Although Singapore was rated highly in a number of categories, such as security, governance and infrastructure, AmCham officials speculated that the high cost of housing and labor in the city- state had some bearing on plans to reduce operations there.

Even with deteriorating economic conditions in Asia this year, businesses are still relatively optimistic over the prospects of profit growth.

Some 53 percent of those surveyed said they expected profits to expand in the current year, down from 57 percent in 2002. Some 83 percent predicted profit growth in the coming year, up from 80 percent in 2002.

Regarding hiring, 36 percent of the respondents said they planned to boost their work force this year, up from 32 percent in 2002.

Asia also was viewed as an increasingly important part of the global economy. Some 70 percent of those surveyed said Asia would play a more important role in their worldwide operations over the next two years, compared with 63 percent in 2002.

The Gallup Organization contacted 1,465 members of American chambers of commerce in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam via e-mail. A total of 313, or 21 percent, responded.