Significant developments expected in the next 5 years
Digital trends are among the most important developments that businesses need to embrace in the next five years. 80% and 59% of respondents respectively believe that digital revolution and transformation as well as increased usage of automation and artificial intelligence will affect businesses. The potential significance of digital trends is echoed by Asia Pacific Chief Executive Officers (CEO) where speed of technological change was rated the second greatest worry in the 21st Annual CEO survey by PwC in 2018.
Digital technology alone is not the solution to business transformation. What’s important is speed of execution. This is where small and medium-sized enterprises (SMEs) could have an edge over larger businesses. The case can even be made that technological solutions benefit SMEs disproportionately over their larger competitors. The overall costs of change and implementing new systems in SMEs could be lower and the risks around failure more easily mitigated.
The Digital Technology Blueprint issued by MIA in 2018 advocates the direction the profession needs to take proactively in response to digital technology over the next 5 years.
As discussed in earlier sections, regulatory or policy changes is a consistent theme in this outlook. Respondents are clearly indicating that regulatory changes will play a big role in business operations for the next few years. One of the policy changes that will impact businesses is the widening of scope for services tax.
Tax authorities globally are contemplating the appropriate methods to tax digital services or transactions to level the playing field. Our government has already begun to devise policies in response to the new economy. Starting from 1 January 2020, foreign digital services e.g. popular music streaming service, Spotify, and video streaming service, Netflix, will be taxed under the service tax regime.
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The next generation
38% of respondents highlight that expenditure patterns of millennials and beyond will be significantly different from their parents while 37% rank future workplace mobility as the fifth most important development over the next five years.
“Attracting and retaining the best talent increasingly requires a clear expression of purpose”
——Larry Fink, Chairman and CEO of BlackRock Inc.
By about 2020, nearly half of the working population will consist of millennials, many of whom are selective on the companies that they buy from and work for. This could result in a gradual change in company cultures and values.
Businesses will be increasingly defined by an age of collaboration between smart tools and smart people that will create new opportunities for value. Future generations of workers have mobility aspirations so different from their parents that employers increasingly face pressure on engagement and retention.
However, corporate values attract and retain the next generation of employees better than flexibility.
Larry Fink, Chairman and CEO of BlackRock Inc. in his January 2019 open letter to CEOs calls on CEOs to pursue purpose along with profits. “Purpose is not a mere tagline or marketing campaign; it is a company’s fundamental reason for being – what it does every day to create value for its stakeholders. Purpose is not the sole pursuit of profits but the animating force for achieving them”, Fink said.
credit to Business and Economic Outlook MIA ACCA 2019 Report, MIA & ACCA