A mix of global and local political and economic uncertainties, inconstancy in policies and regulations, inflation and a deteriorating peso, insecurity over internet connectivity and a worrisome cybersecurity, a lack of skills in the future workforce and the intrusion of Artificial Intelligence are among the factors causing jitters and anxiety for the next 10 years among 54 percent of business Chief Executives surveyed recently. Any and all of these forces makes business viability questionable.
The Philippine report of “PwC’s 27” Global CEO Survey showed that 54 percent of CEOs believe their companies “will not be economically viable in the next decade if they continue on their current path.” This is even lower than the Asia-Pacific average of 63 percent.
On the question of long-term business viability, 46 percent of Philippine-based CEOs showed concern, which is higher than the 34 percent average in the Asia-Pacific region. The study was held from October to November 2023 among 1,774 CeOs in the region, including 35 CEOs in the Philippines.
However, 57 percent of Philippine-based CEOs showed optimism that the global economy will improve in the next 12 months, higher than the regional average of 40 percent with 77 percent of Philippine-based CEOs saying that the US is most important for their growth prospects and 40 percent pointed to China.
“The Philippines has undertaken efforts to improve its investment climate and attract foreign direct investment. This sustained growth and the positive investment climate could have promoted optimism among CEOs regarding both local and global economies,” PwC Philippines Deals and Corporate Finance Managing Partner Mary Jade Roxas-Divinagracia said in a statement furnished to business papers.
For the next 12 months, 40 percent of Philippine-based CEOs identified geopolitical conflict as a key threat, while 37 percent cited inflation and 29 percent saying macroeconomic volatility and cyber risks as major threats.
PwC Philippines Chairman and Senior Partner Roderick M. Danao said that there is growing push to reinvent among Philippine business leaders.
“Many of our country’s business leaders are now working on accelerating the transformation of their business models, investing in technology and their workforce, and managing the risks and opportunities related to climate change,” Danao stated.
“In this era of continuous reinvention, CEOs have vast opportunities to reshape their organizations and themselves, to thrive on disruption, and to transform aspirations into realities,” he added.
The report cited that 97 percent of the Philippine respondents said they have already taken steps to change “how they create, deliver, and capture value over the past five years. while 86 percent said they at least took one action that largely impacted their company’s business models.
But for 71 percent of the Philippine CEOs the lack of workforce skills is a barrier to reinventthe business models of their companies.
The other top challenges cited by business leaders are the lack of technological capabilities (69 percent) and competing operational priorities (65 percent).
Economist Michael L. Ricafort of the Rizal Commercial Banking Corp., said businesses must digitize and adopt the best technologies globally to drive growth.
My take
I agree with the views of bank economists that businesses to be viable must digitize, adopt to new technologies and reinvent themselves by adjusting to the current environment. Being relevant to current realities would improve their profitability and resilience.
At least 60 percent of CeOs are expecting generative AI (GenAI) with heightened interest and 80 percent are expecting to reap the “transformative benefits” of GenAI over the past years.
Still, 69 percent are concerned about cybersecurity risks and 57 percent are concerned about misinformation.
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