2015 was no doubt a year marked by volatility, but as the world looks towards a new year amid uncertainties, top management of companies here says that there are cornerstones - chief of all the ASEAN Economic Community (AEC) - in place to prime the domestic, regional and global economies for better growth ahead.
And as economies strengthen co-operation to stabilise growth, these industry leaders are looking towards strengthening certain capabilities to help their companies take advantage of new growth opportunities.
About 100 leaders representing companies from different sectors shared with The Business Times what they view as opportunities and challenges in 2016.
"While the Asia-Pacific region has seen its share of ups and downs in the last year, milestones like the Trans-Pacific Partnership and formation of the AEC leave 2016 with much to look forward to," said Mike Ansley, president of Avaya in Asia-Pacific.
Markets were shaken by uncertainty throughout much of 2015. The Monetary Authority of Singapore stated in its latest Financial Stability Review, released last Friday, that anticipation of the United States Federal Reserve's first rate hike in nearly a decade is causing asset prices and capital flows to start reversing.
Singapore's deputy prime minister Tharman Shanmugaratnam had also previously made a strong comment on how uncertainty over when the Fed would be raising rates was detrimental to markets.
"We've got to that point where the benefits of near zero interest rates for economic growth will be increasingly outweighed by the costs," he said at a forum here last month.
The central bank also noted that weak commodity prices in 2015 have put strains on commodity-related firms, with knock-on effects on banks, financial markets, sovereign balance sheets, and the economy. Recent geopolitical developments could fuel further uncertainty, it added.
China's economic performance was another destabilising factor in the past year, as it noted that "strong financial linkages between China and the rest of Asia could increase the risk of contagion in the event of a China-related shock".
The latest quarterly Business Times-UniSIM Business Climate Survey, released earlier this month, which covered 179 firms of various sizes across different economic sectors, also noted that "China devalued the yuan on Aug 11, 2015, sending shock waves across stock markets worldwide". This resulted in the steep slide in net balances in Q3 2015 of the companies' sentiments polled.
But there are signs pointing towards a less volatile year ahead.
"In China ... policy stimulus will kick in and hard-landing fears will not be the overhang they were this year," wrote Tim Cordon, chief Asia economist at ING Bank.
Some also commented that an interest rate hike in the US was likely, and this is good news for the global economy.
After the expected first hike by the US Federal Reserve in December, "the subsequent hike is only expected to be in June next year. Such a gradual and managed normalisation by the Fed bodes well for the US and global economy".
The AEC was the most talked about among the views shared.
When fully operational, the AEC will create a single market and a single production base of more than 625 million people within South-east Asia.
While opportunities will abound with the AEC, corporate leaders see challenges ahead for Singapore companies. They said that firms should be cognizant of how they can remain more competitive within the AEC.
"To develop a talented workforce while maintaining business continuity in this context, businesses could consider employee demands for broadening development opportunities by including deployments across the ASEAN region in their employee value propositions," said Scott Burnett, managing director for South-east Asia for Towers Watson.
But even as businesses here look beyond Singapore for growth, they are also mindful that they should tap into the opportunities and challenges presented by the country's Smart Nation initiative.
"While the digital enterprise wave will open new markets and create new revenue streams, businesses need to be aware of the challenges that may arise in the transition to the digital economy. Security and data protection will remain a key challenge," wrote Gavin Selkirk, president of the Asia-Pacific region at BMC.
This article was first published on November 30, 2015.
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