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Asia (ex-Japan) Executive Team
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Inflation, rising cost of living, and geopolitical tensions have prompted Asia’s top executives to take a more cautious approach.
Take Auttapol Rerkpiboon, the top-rated executive in the oil and gas sector in Institutional Investor’s 2022 All-Asia Executive Team. His company PTT is based in Thailand, where the rise in energy and food prices has driven inflation up to 7.1 percent year-on-year as of May 2022, the highest level in nearly 14 years. Rerkpiboon said that while PTT, a national petroleum exploration and production company, is looking for new markets, the challenge of inflation means they are studying potential new projects more thoroughly before going ahead “to ensure that the investment will yield appropriate return at appropriate time and also fit to long-term strategy.” The firm is seeking “more opportunities in both domestic and overseas [markets] while the energy market is [in] an uptrend,” Rerkpiboon told II.
Likewise Hongbin Zhou, the top-rated chief executive in the property sector, said that his company is taking a more “intelligent” approach to investing, improving efficiency as they try to grow the company to ten times its current size in just five years. Zhou heads up property management company CIFI Ever Sunshine Services, which manages residential and non-residential properties, including sales assistance, housing repair, and pre-delivery inspection across China. Increasing labor costs are the main risk from inflation, Zhou said, as the business is in the service industry. “Regarding that, we think the increase of staff wages each period is fair and reasonable,” Zhou said. “Nevertheless, due to the weak macro-economic environment as well as Covid-19, the increasing unemployment rate increased supply in the labor market, relieving increases in wages in the short term.”
Zhou is more concerned by the Chinese government’s crackdown on speculation in the property market, which analysts say will benefit property management companies at the expense of developers. “The reshuffle in [the] real estate industry will indeed challenge the independence of [property management services],” Zhou said. “As for us, Cifi and Ever Sunshine [have always been] two independent listed companies with independent corporate governance and compliance.”
For Rerkpiboon, it’s the energy crisis that’s keeping him up at night. “PTT, as a national oil company, has played an important role to ensure supply for Thailand’s energy security, stabilize the volatility of energy prices, and drive national economic growth,” he said. PTT is prepared to increase both crude and refined oil supplies as needed, Rerkpiboon said, coordinating with international partners to secure more crude oil than normal.
Nonetheless, the company is rapidly diversifying, with investments in cleaner energy sources, infrastructure for electric cars, pharmaceuticals, and peer-to-peer energy trading using blockchain. “Energy crises in the past as well as a significant increase in energy prices are the key factors for businesses to reduce dependence on fossil fuels and accelerate the clean energy transition,” Rerkpiboon said. “Oil and gas companies worldwide, including PTT, have to adjust their strategies [to] adapt to changes.”