Almost all foreign companies with operations in the Association of Southeast Asian Nations (Asean) have been adversely affected by the coronavirus disease pandemic, with most anticipating business activities to stabilize in the second quarter of 2021 or beyond.
This is among the key findings of a survey on the impact of the Covid-19 disruption on foreign firms in Southeast Asia as well as on their plans moving forward.
Some 264 foreign firms from 24 chambers and business organizations responded to the survey conducted by the American Chamber of Commerce in Indonesia and think tank Economic Research Institute for ASEAN and East Asia.
Majority of the respondent companies had Indonesia as their principal domicile, followed by the Philippines and the United States. Other countries of operation included Singapore, Malaysia and Thailand.
The report found that almost all foreign firms in Southeast Asia felt the negative impact of the pandemic on their output, revenue, and/or sales across all countries of operation, mainly due to lack of demand. On average, companies experienced a “moderately adverse” impact, noted the survey report.
Overall, the dairy and meat sector was hit the hardest with 100 percent reporting some degree of negative impact, followed by electronics and healthcare. The trade and logistics sector was the least negatively impacted (50 percent) with 28 percent of firms experiencing some positive impact.
At the same time, 72 percent of firms experienced supply chain interruptions to some degree, with most reporting difficulties obtaining imported inputs.
Measures taken in response to the pandemic included the introduction of remote working or working from home (the most common), hiring freezes, and reductions in the number of employees and in wages and salaries.
Up to 43 percent of firms said they have already reduced operations or production or are considering doing this, and up to 27 percent said they may reshore operations due to the pandemic.
Up to 48 percent may move operations from China to another country, with Vietnam as the most frequently cited alternative. Other countries eyed were Thailand, Malaysia and the Philippines.
The pandemic has also prompted swifter adoption of new technologies, with 46 percent of respondents saying they plan to make new investments in Fourth Industrial Revolution technology.