Government and the Global CEO: confidence leaps globally but worries about over-regulation and response to fiscal deficit as high as ever

Singapore taking steps in right direction

SINGAPORE, 10 March 2014 – Confidence amongst the business leaders who responded to the PwC Annual Global CEO Survey is up, with 44% believing that the global economy will improve over the next 12 months – this compares to only 18% last year.

But government action - or the lack of it - on key business priorities tops the list of CEO worries. The levels of concern about over-regulation at 72% and government responses to fiscal deficits and debt burdens at 71% are as high as they have ever been in our Survey. Countries where CEOs are particularly worried about over-regulation include France (88%), Australia (85%), India (82%), the UK and Switzerland (both 77%) and Germany (76%). In the US it is fiscal deficit that has CEOs most worried with 92% CEOs expressing concern, followed by Argentina at 90%, Brazil at 85% and France at 84%.

In addition, CEOs say they are worried almost as much about a slowdown in growth in emerging economies, 65%, as they are about sluggish growth in developed markets, 71%. Other top concerns include increasing tax burdens (70%) and the lack of availability of key skills (63%).

Drawing on the results of the CEO Survey of 1,344 business leaders in 68 countries worldwide, and adding to it with valuable insights from 45 government representatives and state backed CEOs, PwC’s Public Sector Research Centre has published its latest report entitled Fit for their futures: Government and the Global CEO. 

Says Yee Chen Fah, Government and Public Services Leader, PwC Singapore, 

“As the world seeks to put the financial crisis in the rear view mirror, we asked CEOs to look to the future and see how fundamental external forces of change such as technology and demographics will reshape their businesses and how they are making their organisations fit for the future.

“In turn, with the public sector interviews, we have looked both at what governments could do to help businesses get fit for the future and how public sector organisations themselves can get ready for tomorrow’s challenges by becoming more innovative, agile, connected and transparent.

The recently announced Singapore Budget addresses many of the concerns raised by CEOs in the Survey and interviews, and this is a positive sign that the Singapore government is taking steps in the right direction to address these concerns. The continued push for productivity and innovation, backed by a focus on technological investment and development, in particular, are laudable.”

In response to the findings of the Annual Global CEO Survey, governments and public sector organisations need to respond in three key ways:

1. Get fit for the future through (digital) transformation

Affordable government is the new reality. If government and public sector organisations around the world are to put the fiscal deficit issue finally to bed, the challenge is to adjust to this new reality by becoming more productive - ‘doing more for less’ (or ‘doing less for less’) - and get fit for the future while focusing on the outcomes that society needs and wants.

In this respect, technology is the next big enabler. In the private sector, technological advances are seen as the most important global trend which will transform business, with 81% of CEOs surveyed naming this as a top-three trend. And its transformative impact ranks even higher with CEOs running organisations with state backing (86% of state backed CEOs surveyed).

Says Yee Chen Fah, Government and Public Services Leader, PwC Singapore,

 “In our view, globally, public bodies need to embrace digital technology as a tool to drive innovation, transform how they engage with citizens, foster the interaction of citizens with each other and explore how outcomes can be better secured. Public bodies also need to learn from private sector digitally orientated companies and explore whether more innovative business models can be developed.

In Singapore, we are fortunate that the government is leading the way. The recently announced ICT for Productivity and Growth programme is an excellent example of how the authorities are paving the way for businesses in Singapore to take a step up the productivity ladder. What remains to be done is that the authorities should continue to support businesses to take continued steps in this direction.”

2. Deliver growth through collaboration. 

To reduce deficits, globally, governments at all levels must balance public service reform and cost cutting with investments to create growth. The financial crisis demonstrated the risk of economic imbalances and ‘going for growth at any cost’, and the need to drive growth which is financially, socially and environmentally sustainable - good growth.

Says Yee Chen Fah, Government and Public Services Leader, PwC Singapore, 

“In the post-crisis world it is clear that more needs to be done globally to build a platform for growth and competitiveness through collaboration across the public and private sectors. This is needed in order to address businesses’ priorities which include infrastructure, an issue for 50% of CEOs surveyed globally, particularly those in emerging markets, and skills, an issue for 41%.

In Singapore, more is being done to help both citizens and businesses, which will result in increased public spending. Increasing revenue through higher taxation may not be the most sustainable approach; but the government can further develop the Singapore economy through collaboration with the private sector by helping them expand overseas. This has the dual effect of also growing the reach of the Singapore brand. ”

This requires public leadership to facilitate collaboration across public, private and not-for-profit organisations as well as universities to create a platform for growth, with a focus on the three key levers of skills, infrastructure and innovation:

  • Brokering the right skills in the right places. Acquiring the right skills is an essential pre-requisite to the desired outcomes for citizens of getting a job and earning a decent income and is a top priority for businesses too.
  • Developing investor-ready infrastructure projects. Infrastructure delivery will not be achieved without being joined up at the critical points, being intelligently phased and sequenced and addressing the underlying governance, legal and financing requirements.
  • Creating an innovation ecosystem. Public bodies need to identify a place's competitive advantages and mobilising stakeholders (including business, universities, the not-for-profit sector and the public) around an inspirational vision for the future.

3. Restore trust through engagement. 

While the CEOs surveyed this year think most stakeholders trust their industry more now, the one major exception globally is government and regulators. About a third (31%) of CEOs surveyed globally stated they perceive that the level of trust government and regulators have in their sector has deteriorated over the last five years (although for a net balance of CEOs surveyed it has actually improved in the Middle East and Asia).

Says Yee Chen Fah, Government and Public Services Leader, PwC Singapore, 

“In our view, Singapore differs significantly from the international results. However, many Singapore-based companies are trying to cope with the lack of available talent exacerbated by the tightening control on foreign labour. Businesses are being forced to rethink the way they operate, and extensive measures have been introduced to help them restructure to improve productivity and to innovate. The public sector should continue to engage and inform businesses on how these measures can benefit them.”

ENDS

Notes

  1. The research for Fit for their futures: Government and the Global CEO involved a series of interviews with 45 government representatives and state-backed CEOs. The findings from this qualitative research were used to supplement the quantitative survey comprising 1,344 interviews with CEOs in 68 countries during the last quarter of 2013. A full copy of the report can be found at www.psrc.pwc.com
  2. The Public Sector Research Centre (PSRC) is PwC’s online community for insight and research into the most pressing issues and challenges facing government and public sector organisations, today and in the future. The PSRC enables the collaborative exchange of ideas between policymakers, opinion formers, market experts, academics and practitioners internationally. Please visit: www.psrc.pwc.com


Media Contacts
Candy Li, PwC LLP Singapore (Tel: +65 6236 7429 Email: candy.yt.li@sg.pwc.com or pwcpress.sg@sg.pwc.com)
Alan Lee, PwC LLP Singapore (Tel:+65 6236 3961 Email: alan.ec.lee@sg.pwc.com)