Key highlights
- Despite lingering concerns on external risks, SEA CFOs are prioritising revenue growth (82%) ahead of cost control (71%) and financial performance (70%).
- There is considerable and growing appetite for M&As. More than one-quarter (28%) of SEA CFOs say their organisations have completed at least one M&A transaction in the last 36 months, and nearly half (46%) expect the number of deals to increase over the next 36 months.
- Talent and trust-related factors – AI-related technical skills and fluency (78%); risk of adoption (55%); and culture and trust (45%) – are top concerns cited by SEA CFOs on the use of AI within the finance function.
- Less than one-quarter (23%) of SEA CFOs are incorporating ESG considerations into operating models, despite broad recognition of their importance.
The Deloitte Southeast Asia CFO Program recently released the findings from its latest SEA CFO Agenda 2025 research, which found revenue growth (82%) to be squarely at the top of the strategic agenda for Chief Financial Officers (CFOs) in Southeast Asia (SEA), ahead of cost control (71%) and financial performance (70%). This is despite lingering concerns surrounding external risks, such as economic slowdowns, as well as inflation and interest rates.
The research, comprising a survey with 190 CFOs in seven geographies across SEA – namely, Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam – and a series of one-on-one interviews with 11 SEA CFOs conducted in the second half of 2024, also reveals a markedly different picture of SEA CFO sentiments from the previous year.
“Our latest findings reveal that SEA CFOs are broadly neutral, albeit cautiously optimistic, about the overall economic outlook and their company’s financial prospects – which is a sharp contrast to the pessimistic sentiments that we observed last year. This suggests that SEA CFOs have acclimatised and adapted to the new norm of ongoing economic and geopolitical volatilities – and this has, in turn, translated into a palpable focus on growth,” said Ho Kok Yong, CFO Program Leader, Deloitte Asia Pacific & Southeast Asia.
Accelerating value creation
To support their organisations in driving growth within an uncertain operating environment, SEA CFOs are adopting a range of discerning approaches to recalibrate their capital allocation strategies, while also intensifying their scrutiny of portfolio holdings. Based on the survey findings, more than half (58%) of respondents now assess their portfolio performance at least twice a year.
Notably, there is considerable and growing appetite for mergers and acquisitions (M&As). More than one-quarter (28%) of respondents indicated that their organisations had completed at least one M&A transaction in the last 36 months, while an even greater proportion – nearly half (46%) – expect the average number of deals to increase over the next 36 months.
“The fact that a majority of SEA CFOs are already reviewing their portfolios at least twice a year is encouraging. However, in order to be truly agile and able to course correct, SEA CFOs need to take the lead in helping their organisations move towards an ‘always on’ portfolio review mindset, This means dedicating resources and engaging the board to ensuring that assets are aligned with the overall strategic direction, and, where they are not, being willing and able to move quickly to divest or engage with partners who can create value,” commented Kok Yong.
“Ultimately, thriving in today’s highly dynamic and volatile conditions requires organisations to develop two key capabilities: resilience, through which they secure their foundations; and transformative growth, with which they accelerate value creation. The objective for SEA CFOs should therefore be to diversify and improve their revenue profiles, so that their organisations are resilient enough to continue growing through boom-and-bust cycles,” he added.
Advancing a trustworthy AI agenda
Overall, SEA CFOs expect digital technologies and automation to play a bigger role in their organisations’ operations. More than half (59%) of respondents expect to embed more automation or digital technologies into operations, and more than one-third (34%) expect to increase their digital investments in the year ahead.
A significant proportion of SEA CFOs that Deloitte spoke to also shared that their organisations have established centres of excellence (CoEs) and/or dedicated teams to oversee the experimentation of artificial intelligence (AI) use cases. However, given that most organisations are only in the early stages of their AI journey, these use cases are primarily low-risk applications that aim to enhance productivity by partially automating manual tasks.
Furthermore, due to the lack of compelling use cases and difficulty quantifying its associated benefits, SEA CFOs face challenges rationalising AI investments. Other AI-related concerns also include risk and governance issues (45%), as well as privacy and security issues (27%).
Within the finance function specifically, SEA CFOs regarded talent and trust-related factors – AI-related technical skills and fluency (78%); risk of adoption (55%); and culture and trust (45%) – to be their top concerns related to the use of AI.
These findings allude to a broad recognition amongst SEA CFOs that human judgement and action are critical to the successful adoption of trustworthy AI – and that developing the skills and capabilities of employees to not only use AI tools productively, but also identify, assess, and manage their attendant risks should be the focus going forward in terms of AI fluency efforts.
Aligning ESG and financial objectives
While Deloitte’s conversations with SEA CFOs revealed a shared understanding of the growing importance and urgency of environmental, social, and governance (ESG) priorities, the survey findings found that less than a quarter (23%) of respondents are incorporating climate and/or ESG considerations into their operating models, with the overwhelming majority currently only in exploratory or experimentation phases.
Possible reasons for this include barriers relating to talent resources and capabilities (80%), difficulty measuring ESG impact (78%), and competing priorities (69%). While talent constraints and measurement difficulties are well-established challenges in the ESG domain, what stood out was the significant number of discussions Deloitte had with SEA CFOs on the challenges of managing the inevitable trade-offs that come with advancing climate and ESG priorities. These challenges were especially pronounced in the area of procurement, as ESG-compliant sourcing strategies often come with higher costs that may need to be offset through other cost optimisation programmes.
From a financial decision-making point-of-view, key actions that SEA CFOs are taking include conducting ESG risk assessments (40%), reporting on ESG initiatives to stakeholders (40%), and establishing ESG performance metrics (33%). Only a minority (16%) are aligning capital allocation with ESG goals – a finding that is in line with the aforementioned challenge in measuring ESG impact.
“Without a doubt, SEA CFOs recognise that there is no conflict between ESG and long-term financial success. In the immediate short term, however, they face very real challenges in aligning ESG and financial objectives. To support their organisations in striking the right balance, SEA CFOs could consider implementing balanced scorecards and engaging in cost-benefit analyses to dovetail financial and ESG objectives,” said Kok Yong.
“Nevertheless, it is important to also keep in mind that while metrics are important, they are not the be-all and end-all. SEA CFOs should avoid becoming overly fixated on short-term financial metrics as that would only serve to undermine long-term financial viability,” he added.
Methodology
Between August and October 2024, Deloitte Southeast Asia surveyed 190 CFOs across seven geographies (Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam) to better understand their challenges and priorities. A significant majority, or 62%, of this sample was composed of CFOs from companies with annual revenues of more than US$100 million, with broad coverage across the consumer; energy and resources; financial services; life sciences and health care; manufacturing and industrial products; public sector; and technology, media and telecommunications sectors. A series of one-on-one interviews was also conducted with 11 SEA CFOs between September and November 2024 to obtain a more granular understanding of the unique nuances and perspectives of SEA CFOs.
