INDONESIA REPORT. Compiled by: The American Chamber of Commerce (AmCham) in Singapore 1 Scotts Road #23-03/04/05 Shaw Centre Singapore AND

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1 INDONESIA REPORT Compiled by: The American Chamber of Commerce (AmCham) in Singapore 1 Scotts Road #23-03/04/05 Shaw Centre Singapore AND The United States Chamber of Commerce 1615 H St NW Washington DC

2 Copyright Standards This document contains proprietary research, copyrighted materials, and literary property of the American Chamber of Commerce in Singapore, the U.S. Chamber of Commerce, and AmCham Indonesia. It is for the guidance of your company only, and is not to be copied, quoted, published, or divulged to others outside of your organization without the permission of the American Chamber of Commerce in Singapore, the U.S. Chamber of Commerce, and AmCham Indonesia. This document is of great value to the American Chamber of Commerce in Singapore, the U.S. Chamber of Commerce, and AmCham Indonesia. Accordingly, international and domestic laws and penalties guaranteeing patent, copyright, trademark, and trade secret protection secure the ideas, concepts, and recommendations related within this document. No changes may be made to this document without the permission of The American Chamber of Commerce in Singapore, the U.S. Chamber of Commerce, and AmCham Indonesia. 2

3 TABLE OF CONTENTS 1. Introduction 4 Research Background & Objectives 4 Survey Methodology 4 Brief Outline of Results 5 2. Business Outlook 6 Current Business Climate 6 Importance of ASEAN Markets in Global Business 6 Trade and Investment in ASEAN 8 Business Direction and Movement in ASEAN 10 ASEAN Integration 11 ASEAN Free Trade Agreements 12 Profit Outlook 13 Workforce Expansion 13 Expatriate Satisfaction Factors Impacting Business in Indonesia 15 Local Business Environment Factors 15 Major Strengths 15 Major Concerns 15 Other Local Business Environment Factors 16 International Schools Conclusion 17 Appendices 18 (A) Sample Profile 18 Table A-1: Workforce and Turnover Table A-2: ASEAN Turnover Table A-3: Primary Responsibility (B) Local Factors Impacting Business 20 Table B-1: Satisfaction with Factors Table B-2: Satisfaction with Local Government (C) Expansion in ASEAN over the Next Two Years 21 Table C-1: Top 3 Reasons for ASEAN Expansion Table C-2: Top Reasons for ASEAN Importance over Next Two Years 3

4 1. INTRODUCTION Research Background & Objectives The American Chamber of Commerce in Singapore (AmCham Singapore) and the United States Chamber of Commerce, in cooperation with other AmChams in the ASEAN region, conducted a study among U.S. companies based in seven Southeast Asian countries: Cambodia, Indonesia, Malaysia, Singapore, the Philippines, Thailand, and Vietnam. This study is now in its 11 th year. The purpose of the study is to understand members outlook on business growth in Southeast Asia and their perceptions about a series of local factors. The members surveyed were senior executives, working with a company held by or with an American majority interest. For the first time in 2012, multiple senior executives from each company were surveyed. AmCham Singapore and the U.S. Chamber of Commerce developed a survey design using a web-based instrument. This report presents the feedback received from executives of U.S. companies in INDONESIA. Survey Methodology Survey Scope: Senior Executives of U.S. Companies based in Indonesia Sample Size: A list of 130 AmCham members with contacts was provided by AmCham Indonesia. Response rate was about 24% (31) at the end of the data collection period. Data Collection Method: Web-based, self-administered survey. No enforcement on participation. Data Collection Period: June 15, 2012 to July 3, 2012 Note 1: Percentages may not add up to 100% due to respondents choosing I don t know or Not applicable. Note 2: For the first time in 2012, multiple senior members from each U.S. company were asked to complete the survey. Sample Profile (See Appendix A) 42% of respondents in Indonesia are responsible for multiple countries the highest rate in the history of the survey. The percentage of respondent member companies in the services sector and manufacturing sector were 36% and 37%, respectively. 26% of respondents designated themselves as other. 58% of respondents surveyed have a workforce of between 50 and 500 employees in the region, and an additional 16% of respondents had fewer than 50 employees in the region. The largest portion of respondents (45%) had a turnover of between $1 million and $50 million in Indonesia in Indonesian turnover accounted for less than 5% of global turnover for 68% of respondents and between 5% and 25% of ASEAN turnover for 48% of respondents. Other ASEAN countries with significant turnover for Indonesia respondents are Thailand (23%) and Singapore (23%). 4

5 BRIEF OUTLINE OF RESULTS BUSINESS OUTLOOK ASEAN Economic Outlook: All of respondents maintain a positive or very positive outlook for the ASEAN region as an investment opportunity for their companies. Figure 2: Economic Outlook for Investment Opportunities in ASEAN Current Business Climate: Respondents facing significant financing constraints decreased from 22% in 2011 to 13% in There has been a steady increase in the number of respondents facing higher costs of borrowing from (26% in 2012), but this number is still well below the 2009 figure of 50%. Importance of ASEAN Markets in Global Business: 84% of respondents report that ASEAN markets have increased in importance to their companies in the past two years. Most respondents (84%) also expect ASEAN importance to increase in the next two years. Business Direction and Movement in ASEAN: 81% of respondents companies plan to expand in ASEAN Figure 3: Location of Expansion in ASEAN Profit Outlook: 77% expect a profit increase in % expect a profit increase in 2012 Workforce Expansion: 58% expect a workforce increase in % expect an increase of 20 to 50%. Figure 1: Profit Outlook for 2013 Major Strengths (% Satisfied) Major Concerns (% Dissatisfied) Availability of low cost labor (71%) Corruption (87%) Office lease costs (58%) Infrastructure (74%) Sentiment towards U.S. (58%) Local protectionism (71%) Housing costs (55%) Laws and Regulations (61%) Ease of moving products through customs (52%) 5

6 2.1 Current Business Climate 2. BUSINESS OUTLOOK Table 2.1 Financing Constraints and Costs of Borrowing Is your company facing significant financing constraints? Yes 55% 29% 22% 13% No 45% 71% 78% 87% Is your company facing higher costs of borrowing? Yes 50% 6% 14% 26% No 50% 94% 86% 74% The percentage of businesses facing significant financing constraints continues to decrease in 2012, reaching a low of 13%, down from 22% in 2011 and 29% in In contrast, the percentage of businesses facing higher costs of borrowing grew in 2012, reaching 26% this year, compared with 14% in This figure is still significantly lower than the 2009 figure of 50%. 2.2 Importance of ASEAN Markets in Global Business Table Importance of ASEAN over past two years Have ASEAN markets become more important or less important, in terms of worldwide revenue, to your company in the past two years? More Important 82% 53% 62% 84% Remained the Same 14% 18% 30% 16% Less Important 4% 24% 5% 0% ASEAN markets reached an all-time high in importance with 84% of respondents stating that ASEAN markets became more important in terms of worldwide revenue to their company in the last two years. For the first time, no respondents in Indonesia believe ASEAN markets have become less important in the past two years. Table Importance of ASEAN over next two years Does your company feel that ASEAN markets will be more important, less important, or have the same importance for your company s worldwide revenues in the next two years? More Important 69% 83% 72% 71% 84% Remain the Same 28% 10% 17% 24% 16% Less Important 2% 7% 6% 0% 0% Most respondents (84%) believe that ASEAN markets will be more important in the next two years, an alltime high for the survey. No respondents believe that ASEAN markets will be less important in the next two years, consistent with

7 Table Reasons why ASEAN markets will be more important in worldwide operations and revenues in the next two years Economic Recovery 61% 92% 75% 0% Improvement in Infrastructure 30% 46% 33% 4% Increased Availability of Trained Personnel 26% 0% 17% 0% Favorable Government Policies 17% 17% 8% 0% Limited Growth Opportunities in Other Regions 70% 62% 62% 15% Stable Political Conditions 35% 31% 29% 35% Change in Business Strategy 26% 31% 21% 23% Other 26% 15% 33% 23% *Respondents were allowed to select up to 3 answers but, in 2012, data was tabulated to add up to 100%. Stable political conditions replaced economic recovery as the top reason why ASEAN markets will be more important in terms of worldwide operations and revenues in the next two years. Economic recovery, increased availability of trained personnel, and favorable government policies all received a 0% response rate. Other factors (23%) continue to influence the way companies view the ASEAN market. 7

8 2.3 Trade and Investment in ASEAN Figure Outlook on ASEAN as an investment opportunity Thinking about the ASEAN region, what is your outlook for the entire region as an investment opportunity for your company. Very Positive, 68% Positive, 32% Figure Trade and investment in ASEAN over the past two years Level of trade and investment in the ASEAN region over the past two years Remained the Same, 10% Increased, 52% Increased Significantly, 39% 100% of respondents in Indonesia have a positive or very positive outlook on the ASEAN region as an investment opportunity. Over the past two years, 91% of respondents indicated that their company has increased or significantly increased their level of trade and investment in the ASEAN region. 8

9 Figure Trade and investment in ASEAN over the next 5 years Do you expect your company's activity to increase or decrease in the ASEAN region over the next 5 years? Decrease, 3% Increase, 74% Increase Significantly, 23% Table Trade and investment percentage growth over next 5 years By about what percentage do you believe trade and investment will grow in the ASEAN region over the next 5 years? Percentage Growth 0-10% 11-20% 21-40% % Average Percentage Respondents 24% 24% 38% 14% 29 TOP THREE REASONS WHY YOUR COMPANY S TRADE AND INVESTMENT WILL INCREASE IN THE ASEAN REGION: Stable Government and Political System (30%) Diversification of Customer Base (17%) Increasing Market Share (13%) The overwhelming majority of respondent expect trade and investment in the ASEAN region to increase or increase significantly over the next 5 years (97%). 38% of respondents predicted the growth of trade and investment in ASEAN to be about 21-40% over the next 5 years. The average predicted growth is 29%. Respondents indicated that the top reason for their company increasing trade and investment in ASEAN was the stable government and political system (30%), followed by diversification of customer base (17%). 9

10 2.4 Business Direction and Movement in ASEAN Table Expansion in Indonesia 2012 In Indonesia, does your company plan to expand or contract? Expand Significantly 26% Expand 55% Remain the Same 13% Contract 0% Contract Significantly 3% Table Reasons for expansion in Indonesia Reasons why companies plan for business expansion in Indonesia Reasonable Production Costs 6% Availability of Raw Materials 17% Increasing Market Share 28% Diversification of Customer Base 33% Lack of Growth in Current Market/Countries 17% The majority of respondents indicated that their companies plan to expand in Indonesia (81%). Only 3% indicated that they plan to contract. The top three reasons for expansion in Indonesia are increasing market share, diversification of customer base, and availability of raw materials. Past data can be found in Appendix C, Table C-1. Table Location of ASEAN Expansion Into which specific ASEAN country or countries does your company plan to expand? Brunei 0% 0% 4% 0% Cambodia 0% 0% 0% 0% Indonesia 60% 69% 72% 25% Laos 0% 0% 0% 0% Malaysia 0% 0% 4% 0% Myanmar 0% 0% 0% 4% Philippines 0% 0% 0% 0% Singapore 10% 8% 0% 4% Thailand 10% 0% 4% 0% Vietnam 20% 23% 16% 67% Vietnam received 67% of responses, replacing Indonesia as the most popular location for expansion. Indonesia is the second most popular site for ASEAN expansion at 25%. For the first time, Myanmar was cited as a site for expansion, receiving 4% of responses. 10

11 Table Diversification from China into ASEAN Does your company plan to diversify some investments or business from China into ASEAN over the next two years? Yes 14% 23% No 71% 45% Not Sure 15% 32% Many more respondents plan to diversify investment away from China and into ASEAN in 2012 (23%) compared to 14% who planned to do so in ASEAN Integration Table Importance of ASEAN Integration Is ASEAN integration important to helping your company do business in the region? Yes 68% 71% 69% 71% No 32% 29% 31% 10% Not Sure The option Not Sure was offered for the first time in % ASEAN integration continues to be important in 2012, with 71% of respondents believing it to be important to helping their companies do business. Table ASEAN Regional Strategies ASEAN is seeking to develop the region as a single market and production base. Does your company have an ASEAN regional strategy based on these goals? Yes 32% No 48% Not Sure 19% Only 32% of respondents in Indonesia have an ASEAN regional strategy based off of these goals. The majority of respondents (67%) are unsure or do not have a strategy based on these goals. 11

12 2.6 ASEAN Free Trade Agreements (FTAs) Figure Utilizing FTA s 80% 70% 60% 50% 40% 30% 20% 10% 0% Can your company utilize the provisions of the agreement to export goods or services from ASEAN to each specified country, import from those countries into ASEAN, or expand investment from ASEAN into each specified country? 32% 45% 48% 32% 36% 26% 26% 23% Australia and New Zealand 32% 29% China India Japan Korea Yes No Figure Importance of FTA s 120% How important is the agreement with each specified country to your company s investment plans in ASEAN? 100% 80% 60% 40% 20% 0% 43% 29% 29% Australia and New Zealand 25% 50% 43% 67% 50% 30% 43% 22% 13% 11% 20% 13% 14% China India Japan Korea Not at all Important Somewhat Unimportant Neutral Somewhat Important Extremely Important The ASEAN Free Trade Agreement with India can be utilized by the largest percent of respondents in Indonesia (48%). The ASEAN FTA with Australia and New Zealand and the FTA with Japan can be utilized by the smallest percent of respondents (32%). 89% of respondents who can utilize the FTA feel that the FTA with China is either important or extremely important the highest importance rating of all FTAs. 12

13 2.7 Profit Outlook Compared to the past year, do you expect your profits in ASEAN in the current and coming years to increase, decrease, or remain the same? Figure 2.7 ASEAN profit outlook Year of Survey Current Increase 60% 63% 65% 25% 50% 59% 77% Year Remain 24% 26% 25% 39% 28% 27% 19% Profit Expectation Coming Year Decrease 14% 9% 10% 36% 11% 11% 3% Increase 71% 75% 78% 78% 61% 70% 90% Remain 14% 16% 20% 7% 22% 24% 10% Decrease 9% 5% 2% 11% 6% 0% 0% Profit outlook is increasingly positive, with the large majority of respondents (77%) expecting profits to increase for the current year, and 90% expecting profits to increase in the coming year. This represents an increase from last year, in which 59% of respondents expected profits to increase for the current year, and 70% expected this for the coming year. A lower percentage of respondents this year expect profits to decrease in the current year (3% in 2012 vs. 11% in 2011). No respondents expect profits to decrease in the coming year, consistent with 2011 results. 2.8 Workforce Expansion Table Workforce Expansion in 2012 Do you expect your company s total number of employees to increase, decrease, or remain the same in 2012? Year Increase 51% 51% 50% 21% 44% 58% 58% Same 40% 37% 47% 69% 50% 32% 39% Decrease 15% 11% 3% 10% 6% 8% 3% Table Percentage of Employee Increase Year of Survey Workplace 0 to less than 5% 5% 0% 43% 36% 50% 50% 25% Expansion 5 to less than 10% 45% 22% 10 to less than 15% 32% 22% 48% 54% 33% 17% 75% 15 to less than 20% 0% 22% 20 to less than 50% 5% 3% 17% 0% 0% 5% 28% >50% 5% 6% 0% 17% 0% 10% 6% In 2011 for the first time 0-10% was further split into 0-5% and 5-10%, and 10-20% was split into 10-15% and 15-20%. 13

14 The majority of respondents (58%) expect the number of employees to increase, which is consistent with the figure from However, out of these respondents, 22% expect an increase of 5% to 10%, and 44% expect an increase of 10% to 20%, which are significantly higher than expected rates of expansion in The percentage of respondents who expect the number of employees to decrease decreased to 3% in 2012, from 8% in Only one respondent expects a decrease in workforce in Expatriate Satisfaction Table 2.9 Expatriate Satisfaction Year of Survey Does your company regularly receive requests from employees based in other locations to work in Indonesia? Yes 14% 24% 19% 32% No 86% 76% 81% 68% Are your expatriate employees generally satisfied with their assignments in Indonesia? Yes 78% 94% 94% 90% No 22% 6% 6% 10% Do your expatriate employees attempt to extend their time in Indonesia? Yes 70% 81% 69% 74% No 30% 19% 31% 26% Nearly a third of respondents said that their companies regularly receive requests for assignments in Indonesia the highest level recorded. Expatriate employee satisfaction remains high at 90%, only a slight decrease from 2011 (94%). There is an increase in the percentage of respondents who had expatriate employees attempt to extend their time in Indonesia, from 69% in 2011 to 74% in

15 3. FACTORS IMPACTING BUSINESS IN INDONESIA Respondents were asked to rate their satisfaction with a series of local factors that could affect their business. The percentage of respondents who are satisfied or extremely satisfied with a given factor can be used to identify factors of strength. Conversely, the percentage of respondents dissatisfied or extremely dissatisfied with a particular factor can be used to identify areas held as concerns. 3.1 Local Business Environment Factors Major Strengths (Responded Satisfied or Extremely Satisfied at a considerable rate in the 2012 survey) Table 3.1.1: Time Comparison of satisfaction with major strengths. Factors Availability of Low Cost Labor 58% 60% 65% 68% 71% Office Lease Cost 49% 58% Housing Cost 57% 55% Sentiment towards U.S. 58% (See Appendix B, Table B -1 for responses on all listed factors). *Empty boxes indicate areas that were neither strengths nor concerns for the year indicated. Responses bolded represent that year s response with the highest rate of satisfaction. Indonesia gained sentiment towards U.S. as a major strength in the 2012 survey. The availability of low cost labor remains the factor with the highest rate of satisfaction. Stable government and political system and personal security both received 52% satisfaction. Major Concerns (Responded Dissatisfied or Extremely Dissatisfied at a considerable rate) Table 3.1.2: Time Comparison of dissatisfaction with major concerns Factors Corruption 94% 95% 83% 86% 78% 82% 89% 87% Local Protectionism 44% 59% 59% 41% 61% 71% Infrastructure 65% 76% 50% 63% 86% 65% 70% 74% Laws and regulations 77% 75% 69% 80% 74% 83% 68% 61% Ease of moving products through customs 52% (See Appendix B, Table B-1 for responses on all listed factors). *Empty boxes indicate areas that are neither strengths nor concerns. Responses bolded represent that year s response with the highest rate of dissatisfaction. Respondents are most dissatisfied with corruption (87%), infrastructure (74%), local protectionism (71%), and laws and regulations (61%) in Moving products through customs emerged as a major concern in Dissatisfaction grew significantly in local protectionism (from 41% in 2010 to 61% in 2011 to 71% in 2012). New business incentives offered by government and the availability of trained personnel ceased to be major concerns in

16 3.2 Other Local Business Environment Factors Government Institutions Overall, respondents are satisfied or neutral in regards to government institutions. The agency to promote/develop investment, immigration, central bank, and ministry of finance all received 36% satisfaction. See Appendix B, Table B-2 for more details. Importing Goods Table 3.2 Importing Goods into Indonesia Is importing goods into Indonesia a significant problem for your company? Yes 39% No 61% The majority of respondents believe that importing goods into Indonesia is not a significant problem. 3.3 International Schools Table 3.3: International schools Will the ability to find adequate space at international educational institutions in Indonesia be a significant problem in the next 1-3 years? Yes 17% 60% 40% 23% No 83% 40% 60% 36% Do you feel that the government of Indonesia is actively pursuing solutions to correct the space constraint at international educational institutions? Yes 20% 33% 0% 13% No 80% 67% 100% 50% Will the lack of adequate space at international educational institutions in Indonesia affect your company s decision to hire more local employees over foreign employees? Yes 20% 0% 17% 50% No 80% 100% 83% 38% *The option Not Sure was available for the first time in In 2012, a significant percentage of respondents selected not sure in response to these questions. Respondents are fairly split on the problem of space in international schools. 23% of respondents in Indonesia believe that the ability to find adequate space at international educational institutions will be a significant problem in the next 1-3 years, while 36% do not believe that it will be a problem. Half of respondents believed that the Indonesian government is not actively pursuing solutions to correct the space constraint at international education institutions. 37% of respondents are not sure if the Indonesian government is pursuing solutions. Half of respondents feel that the lack of adequate space at international educational institutions will not affect the company s decision to hire more local employees over foreign employees. 16

17 4. CONCLUSION Outlook All of the respondents from Indonesia indicated a positive or very positive outlook for the ASEAN region as an investment opportunity for their company. Financing constraints continue to decrease and borrowing costs have only increased for one quarter of the respondents. Profit outlook is for both 2012 and 2013 is positive, and the majority of companies plan to expand their workforce in the coming year. Although expat worker satisfaction remains high, the lack of adequate space in international schools is playing an increasing role in pushing companies to look towards domestic workers for new hires in ASEAN ASEAN markets remain important for respondents in Indonesia because of stable political systems, increasing market share and the diversity of the region s customer base in the region. 91% of companies expanded in ASEAN over the past two years, and 81% plan to do so in the next two years because of the potential for business growth due to low cost of labor. The majority of the planned expansion, 67%, will take place in Vietnam. Respondents, however, face many barriers when conducting business within ASEAN. Corruption, lack of infrastructure, local protectionism, and unclear regulations are cited as the main issues hindering their business. The ASEAN s free trade agreements, particularly the ASEAN-China FTA, are of great importance to respondents and continue to attract investment. Location Specific Indonesia s strength lies in its low cost business environment. Respondents are most satisfied with low labor cost as well as low housing and office lease costs. 87% are dissatisfied with corruption levels and only 10% of the respondents are satisfied with the country s infrastructure. Major concerns also include local protectionism and unevenly applied laws and regulations. Economic growth is projected to be strong, but with this increase in growth has driven up living and housing costs. Although there has been an increase in the cost of living in Indonesia, possibly removing one of the country s major strengths, it has coincided with an increase in satisfaction with government stability in Altogether, profit outlook is increasingly positive and most companies still plan expanding in Indonesia. 17

18 APPENDIX A: Sample Profile APPENDICES Table A-1: Workforce and Turnover Survey Year Scope of Responsibility Only one country 75% 78% 81% 67% 90% 88% 86% 58% Multiple countries 25% 22% 19% 33% 10% 12% 14% 42% Size of Current Workforce in Region Company s Past Year Turnover in Indonesia (USD) Below 50 employees 10% 10% 11% 30% 29% 25% 16% 16% 50 to <500 employees 52% 51% 58% 40% 50% 62% 54% 58% 500 to <1000 employees 10% 15% 11% 8% 11% 12% 14% 10% 1000 to <1500 employees 6% 5% 11% 5% 7% 0% 3% 7% 1500 to <2000 employees 3% 7% 0% 2% 4% 0% 5% 0% 2000 employees or above 19% 12% 8% 16% 0% 0% 8% 7% Below $1 million 3% 5% 3% 13% 11% 0% 3% 3% $1 to <$50 million 53% 46% 6% 44% 44% 62% 40% 45% $50 to <$100 million 3% 13% 14% 19% 19% 12% 20% 10% $100 to <$500 million 20% 23% 11% 15% 19% 12% 17% 19% $500 to <$1 billion 10% 3% 8% 5% 0% 6% 3% 7% $1 billion or above 10% 10% 0% 3% 4% 0% 6% 10% Past Year s Turnover As Percentage of Company s Global Turnover Below 5% 62% 87% 73% 68% 5 to <25% 15% 13% 18% 19% 25 to <50% 4% 0% 3% 3% 50 to <75% 4% 0% 0% 0% 75 to <100% 0% 0% 3% 3% 100% 15% 0% 3% 7% Past Year s Turnover as Percentage of Company s Total ASEAN Turnover ASEAN Country That Holds the Next Largest Turnover for Company Table A-2:ASEAN Turnover Below 5% 4% 20% 19% 3% 5 to less than 25% 46% 60% 48% 48% 25 to less than 50% 27% 13% 10% 26% 50 to less than 75% 0% 0% 10% 7% 75 to less than 100% 8% 7% 6% 3% 100% 15% 0% 6% 13% Vietnam 8% 7% 3% 7% Cambodia 0% 0% 0% 0% Indonesia 19% 13% 16% 26% Laos 0% 0% Malaysia 0% 20% 29% 7% Thailand 27% 27% 32% 23% Philippines 15% 13% 3% 3% Singapore 31% 20% 16% 23% Brunei 0% Myanmar 0% 18

19 Table A-3: Primary Responsibility Primary Activity Services Accounting 7% 0% 0% 0% Architecture and Engineering Services 3% 0% 3% 0% Banking 0% 0% 0% 0% Consulting 10% 17% 5% 13% Education 0% 0% 0% 0% Healthcare 0% 0% 0% 0% HR Services 0% 0% 3% 0% Insurance Brokers 0% 0% 0% 0% Legal 3% 0% 0% 0% Marketing & Communications Services 3% 0% 3% 3% Other Financial Services 3% 0% 0% 3% Software, IT, Telecommunications Services 0% 6% 3% 10% Transportation & Logistics 21% 0% 5% 7% Wholesale & Retail 0% 6% 0% 0% Business Process Outsourcing/ Shares 0% 0% 0% Services Other 10% 6% 8% 3% Total Services 60% 35% 30% 36% Manufacturing Consumer Goods 14% 6% 8% 0% Electronics 0% 0% 0% 0% Food & Food Products 0% 0% 5% 3% Oil & Petrochemical 0% 0% 16% 10% Pharmaceuticals/Medical 0% 11% 5% 7% Machinery & Equipment 3% 6% 3% 10% Other 7% 6% 3% 7% Total Manufacturing 24% 29% 40% 37% Other 14% 39% 30% 26% 19

20 APPENDIX B: Local Factors Impacting Business Table B-1: Satisfaction with factors Total Extremely Extremely Total Satisfied Neutral Dissatisfied Satisfied Satisfied Dissatisfied Dissatisfied Infrastructure 10% 0% 10% 16% 29% 45% 74% Availability of raw materials 36% 7% 29% 36% 10% 3% 13% Availability of low cost labor 71% 1% 61% 26% 3% 0% 3% Availability of trained personnel 39% 3% 36% 23% 36% 3% 39% Office lease costs 58% 7% 52% 26% 13% 3% 16% Housing costs 55% 7% 48% 29% 13% 3% 16% Laws & regulations 16% 0% 16% 23% 45% 16% 61% Corruption 10% 0% 10% 3% 52% 36% 87% Local protectionism 7% 0% 7% 23% 58% 13% 71% Tax structure 32% 0% 32% 29% 23% 13% 36% Personal security 52% 3% 48% 32% 13% 3% 16% Stable government and political system 52% 7% 45% 29% 13% 7% 19% New business incentives by 13% 0% 13% 42% 32% 3% 36% government Sentiment towards the U.S. 58% 13% 45% 23% 16% 0% 16% Free movement of goods within the 29% 3% 26% 29% 16% 10% 26% region Ease of moving products through customs 26% 3% 23% 13% 39% 13% 52% Table B-2: Satisfaction with local government institutions Total Satisfied Extremely Satisfied Satisfied Neutral Dissatisfied Extremely Dissatisfied Total Dissatisfied Agency to promote/develop investment 36% 0% 36% 19% 23% 3% 26% Customs 13% 0% 13% 39% 36% 3% 39% Immigration 36% 0% 36% 23% 29% 3% 32% Taxation/Revenue 32% 0% 32% 16% 39% 7% 45% Central Bank 36% 3% 32% 29% 13% 0% 13% Ministry of Finance 36% 0% 36% 26% 16% 3% 19% Percentages may not add to 100 because Not Applicable and Don t Know were possible responses. 20

21 APPENDIX C: Expansion in ASEAN over the Next Two Years Table C-1: Top 3 Reasons for ASEAN Expansion Year of Survey Reasons for Expansion Economic recovery 83% 82% 53% 54% 39% 0% Potential for business growth 83% 82% 77% 100% 94% 0% Increasing market share 78% 60% 41% 54% 61% 29% Reasonable production cost 13% 22% 35% 15% 26% 6% Diversity of customer base 22% 32% 18% 23% 32% 33% Lack of growth in current market/countries 13% 14% 6% 15% 10% 17% Availability of trained personnel/efficient manpower 17% 14% 18% 15% 6% 0% Availability of raw materials 0% 3% 17% High level of personal security 0% 0% 0% Low level of corruption 0% 0% 0% Adequate laws and regulations to protect business 0% 0% 0% Adequate laws and regulations to encourage foreign investment 0% 0% 0% Stable government and political system 8% 16% 0% Low level of local protectionism 0% 0% 0% Weak competition in market/countries 8% 3% 0% Other 8% 16% 0% Empty boxes indicate that no comparative data is available for those years. Table C-2: Top Reasons for ASEAN Importance over Next Two Years Year of Survey Reason Economic recovery 84% 76% 61% 92% 75% 0% Limited growth opportunities in other regions 56% 47% 79% 62% 62% 15% Improvement in Infrastructure 44% 42% 30% 46% 33% 4% Increased availability of trained personnel 12% 13% 26% 0% 17% 0% Favorable government policies 32% 24% 17% 8% 0% 0% Stable political conditions 20% 33% 35% 31% 29% 35% Change in business strategy 26% 31% 21% 23% Other 33% 23% Empty boxes indicate that no comparative data is available for those years. In 2012, data was tabulated to sum to 100%. 21