In an extended two-month poll beginning in early December 2020, we have put together the top 8 priority concerns in 2021 of 125 CFOs across publicly listed companies in Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam.
1. Economic Recovery
CFOs across the region expect their companies’ revenue to rise by an average of 7.3 percent in 2021, up from 2020, assuming no further major disruptive curve balls surface. In any case, most CFOs will continue to monitor potential risks that could cause major setbacks to the economic recovery plan, especially in industries severely affected by the pandemic, such as travel, hospitality and bricks-and-mortar retail industries.
2. Regulation
CFO, finance and treasury executives are preparing for potential regulatory changes, including in areas such as accounting and audit.
3. Trade
Executives are closely watching for potential changes to the U.S.’s trade policies in relation to China, the European Union (EU) and other countries whose goods currently incur tariffs. Companies also will be dissecting the details of the new trade agreement between the Britain and the EU, which was agreed in late December after years of Brexit negotiations.
4. Liquidity and Capital Expenditures
A large number of companies did set aside substantial sums (cash liquidity) during the first quarter of 2020, or as the scale of the C19 pandemic emerged. CFOs are likely to reallocate some of these funds amid low interest rates, use them to pay for M&As or reduce deb. In some industries, CFOs will review their spending plans for capital expenditures, especially in industries that have benefited from changing consumer tastes in recent months.
5. Remote Working
A high number of employees are expected to work from home for a part of 2021 as the pandemic drags on. CFOs will continue to examine how ongoing changes and flexible work options can help boost the bottom-line.
6. Dividends and Share Buybacks
Many companies paused paying dividends or buying back shares at the onset of the pandemic. While some companies resumed those payments and programs during the second half of 2020, some companies continue to hold back. In 2021, CFOs will be weighing dividend payments and share-repurchase programs against other uses of corporate cash.
7. ESG Disclosures
CFOs are reporting increasing pressure from shareholders regarding their businesses’ performance in terms of environmental, social and governance issues, as investors pay more attention to these topics. In coming years, companies could be required to disclose more information on carbon emissions, diversity and other social and sustainability metrics as markets advance.
8. Libor Transition
Global regulators decided to phase out the London interbank offered rate, the interest-rate benchmark underpinning trillions of dollars worth of financial instruments—after concluding it was prone to manipulation. Many banks and companies face a Dec. 31, 2021, deadline to replace Libor with alternative rates for new contracts, followed by another deadline in June 2023 for existing or so-called legacy contracts.