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Speaker 1: Let me bring it back to Singapore now at the

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Speaker 1: Bloomberg New Economy Forum, and my next guest is speaking

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Speaker 1: this year, and of course has been to a number

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Speaker 1: of these events over the last six years that we've

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Speaker 1: been holding this forum. Bob Morrits is a global chairman

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Speaker 1: at PwC International. Just trying to count back the years

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Speaker 1: and how every year seems to be a theme of

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Speaker 1: embracing some sort of instability, right so, and I feel

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Speaker 1: like I always ask you how sentiment, what are people

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Speaker 1: asking and what are you telling them to do?

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Speaker 2: Right now?

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Speaker 3: You've got a sentiment that's a bit muted if you

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Speaker 3: look around the world. No surprise as you look at

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Speaker 3: the GDP numbers that are out there, when you look

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Speaker 3: at the compression on margins and honestly, everybody driving from

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Speaker 3: market share capture because you're not able to ride the

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Speaker 3: curve of growth that's embedded or being foreseen over the next.

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Speaker 2: Year or two or three. Having said that, you see two.

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Speaker 3: Or three parts of the world that are really opportunistic

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Speaker 3: right now. India is one of them, and second is

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Speaker 3: Southeast Asia. When you look at the combination of the

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Speaker 3: upside potential there in terms of the rise of the consumer.

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Speaker 3: You look at supply chain manageming being an alternative that

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Speaker 3: was parts of the world versus a China plus one,

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Speaker 3: they see a lot of upside and as a result,

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Speaker 3: you see corporates trying to think through where should I invest,

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Speaker 3: How should I invest? As I think about that risk tolerance,

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Speaker 3: it becomes really important to actually measure the risks versus

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Speaker 3: the returns right now, and that's where CEOs are spending

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Speaker 3: a lot of their time.

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Speaker 1: Yeah, so these you know, newer Shania markets. We know

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Speaker 1: everyone loves India at the moment, and so they should

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Speaker 1: for a lot of reasons. But does it count aweigh

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Speaker 1: the risks and the downsides that we see in China,

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Speaker 1: not just the economic slowdown, but of course I got

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Speaker 1: to ask you about you know, the auditing regulation complications

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Speaker 1: that we've seen.

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Speaker 3: Yeah, well, first off, when you look at the broader market,

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Speaker 3: you've got to bring that balance from China into the mix.

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Speaker 3: Everybody that's in China today is trying to rethink what

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Speaker 3: does that look like going forward to how do I

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Speaker 3: operationalize myself in China and how do I actually give

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Speaker 3: myself optionality and agility for what may ever come?

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Speaker 2: And again we don't have that certainty as much as

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Speaker 2: we'd like to.

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Speaker 3: Have at this point in time, but the upside in

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Speaker 3: the region is still relatively positive. And Europe you have

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Speaker 3: a totally different situation in terms of what's happening right now.

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Speaker 3: So each CEO is focused on what call three things.

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Speaker 3: How do I actually go after revenue as much as

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Speaker 3: I possibly can, How can I actually deal with my

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Speaker 3: margin compression and the talent game right now because you

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Speaker 3: are starting to see restructuring and other aspects associated with

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Speaker 3: how much talent do I have and less but not

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Speaker 3: at least where am I going to make my investments

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Speaker 3: my capital investments Alike, as it pertains to the audit business,

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Speaker 3: we still see upside potential when you look at it worldwide.

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Speaker 3: It's a pressure point in terms of doing more for

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Speaker 3: less relevant to the audit of today, but the reality

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Speaker 3: is there's.

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Speaker 2: Not enough trust in the system and.

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Speaker 3: As a result, the question is can the profession, so

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Speaker 3: to speak, our profession actually serve a role when it

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Speaker 3: comes to not only financial information that's needed, but also

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Speaker 3: non financial information that's.

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Speaker 2: Needed by the stakeholder community.

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Speaker 3: And that's where you see rules and regulations coming into place.

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Speaker 3: Europe has put a significant amount of regulation place relevant

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Speaker 3: to non financial reporting. India has recently done the same,

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Speaker 3: and worldwide you're going to see some standards come in

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Speaker 3: as well, which will create more cost, complexity and uncertainty

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Speaker 3: for organizations. And that's where we see the opportunity for

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Speaker 3: ourselves to try to help organizations drive that value.

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Speaker 4: Bob, what about geopolitical tensions? Great to see you again.

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Speaker 4: Last year in Singapore, we're really focused on the war

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Speaker 4: ongoing in Ukraine and then we're talking to you as

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Speaker 4: China tensions and now we have another war in the

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Speaker 4: Middle East, So how do you tell CEOs how to

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Speaker 4: manage these tensions?

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Speaker 3: Great to see you as well when sorry you're not here.

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Speaker 3: Geopolitics is just icing on the cake right now because

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Speaker 3: you have what i'll call the macroeconomic issues and the

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Speaker 3: microeconomic issues, the uncertainly coming from the geopolitics.

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Speaker 2: Just as to the complexity.

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Speaker 3: The advice we're sitting down with CEOs about is how

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Speaker 3: do we think about scenario planning? How do you bring

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Speaker 3: more agility into your organization because you can't predict where

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Speaker 3: those geopolitical implications will come from, So what you want

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Speaker 3: to be is best position to move fast to take

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Speaker 3: advantage of the opportunities or minimize your risks. That could

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Speaker 3: be supply chain changes, that could be pricing changes, and

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Speaker 3: that could be compliance with rules and regulations because of

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Speaker 3: those geopolitical issues. So each CEO and management team are

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Speaker 3: trying to think about that careful and be faster in

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Speaker 3: its decision making right now. And the ones that are

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Speaker 3: fastest and more agile are going to be the ones

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Speaker 3: that survive over the next couple of years and thrive

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Speaker 3: as we look at the amount of change that's going

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Speaker 3: to be coming their way.

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Speaker 4: And you just mentioned also China plus many others in

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Speaker 4: that sense, how much progress have you seen on friend shoring,

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Speaker 4: near shoring or whatever we might call this.

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Speaker 3: Yeah, when you look at the supply chain issues that exist,

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Speaker 3: you see actually CEOs coming back to the basics. Where

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Speaker 3: can I get the right economics, Where can I get

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Speaker 3: stability uncertainty? Where can I get it more greener as well,

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Speaker 3: which is equally as important as they think about their

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Speaker 3: own reporting, And last, but not least, how can I

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Speaker 3: work with whoever's going to supply me goods and services

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Speaker 3: to give me the data to make those quick decisions.

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Speaker 3: Those four things are the key decision makers. What we're

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Speaker 3: not seeing is on shoring bringing everything.

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Speaker 2: Back to the home office, so to speak.

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Speaker 3: You are seeing multiple options being brought to the table. Yes,

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Speaker 3: you see some near shoring ongoing, but CEOs broadly are

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Speaker 3: looking at multiple options now to have that optionality and

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Speaker 3: agility that I talked about earlier.

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Speaker 2: What options does your business have? An China?

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Speaker 1: Is the worst of it over? You sort of getting

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Speaker 1: confirmation of what the restrictions on foreign auditing and accounting

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Speaker 1: firms look like.

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Speaker 3: Now with respect to China, you actually have a number

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Speaker 3: of different things that are ongoing right now. Right the

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Speaker 3: US China relationships actually brought it to a head where

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Speaker 3: you had access to information for the regulators to actually

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Speaker 3: inspect accordingly. So that's going to be open minded and

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Speaker 3: it's going to allow for the inspections to happen. So

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Speaker 3: that tension has decreased quite a bit. What is really

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Speaker 3: more interesting is actually the reality of what the auditing

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Speaker 3: profession is all about going forward and where you see

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Speaker 3: this happening now as regulators focusing more on inspections and

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Speaker 3: compliance that make sure good quality.

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Speaker 2: Audits are done.

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Speaker 3: And second, what does the audit need to be in

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Speaker 3: the non financial space. Those are the two phenomenons that

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Speaker 3: we see on a worldwide basis right now that capital

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Speaker 3: markets and stakeholders more broadly are.

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Speaker 2: Really interested in.

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Speaker 1: Yeah, I want to talk to you about Australia. Is

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Speaker 1: the almost four hundred jobs announced to go this week?

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Speaker 1: How much of this feeds into I guess sort of

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Speaker 1: post the tax scan utational rebuilding. Is the worst of

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Speaker 1: that over or do you see more challenges ahead?

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Speaker 3: The challenge we had in Australia was again unfortune not

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Speaker 3: represented a PBC nor necessarily acceptable, and we put in

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Speaker 3: a number of different steps to move forward with that

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Speaker 3: with the transparency that the stakeholder group deserves and needs

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Speaker 3: to see from us if we're going to actually regain trust.

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Speaker 3: We feel like we've bottomed out now and we're moving

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Speaker 3: forward with that remediation. We're very public with that. Relevant

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Speaker 3: to the point on the headcount on a net basis,

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Speaker 3: p TOBC is continuing to.

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Speaker 2: Increase headcount on an overall basis.

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Speaker 3: We made some commitments two years ago with our new

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Speaker 3: strategy to add another one hundred thousand plus on a

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Speaker 3: net basis, not on a gross basis, but on a

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Speaker 3: net basis, and you're going to see some ins and outs.

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Speaker 3: What's happening is you're slowing in the deals market on

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Speaker 3: a worldwide basis, so you may see some reductions there,

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Speaker 3: but you're going to see some increases in other parts

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Speaker 3: of the business right now. So net net we actually

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Speaker 3: are very much still in the recruiting mode and the

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Speaker 3: maintenance mode in terms of what we need from an

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Speaker 3: overall headcount perspective.

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Speaker 1: In Australia, do you think the environment government regulatory is

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Speaker 1: going to get a little bit tougher before it improves.

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Speaker 3: So you'll see two things happening in Australia. One is

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Speaker 3: the continued investigations that are ongoing, and that's not just

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Speaker 3: p TOWBC, that's everybody now in terms of the profession

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Speaker 3: and what's happening coming out of the hearings.

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Speaker 2: And secondarily, you.

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Speaker 3: Are seeing a relook at what has to happen around

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Speaker 3: the profession and the ecosystem that.

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Speaker 2: Is around it.

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Speaker 3: And what I mean by that is what do regulators

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Speaker 3: do differently, what are preparers do differently, what do the

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Speaker 3: orders do differently? And what do the boards and governance

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Speaker 3: committees do differently as well? And that's going to be

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Speaker 3: ongoing for the next two years. Australia is going to

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Speaker 3: take a look at what other countries did, UK, for example,

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Speaker 3: and Europe clearly went through that over the last five

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Speaker 3: or six years.

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Speaker 2: Australia will be looking at that.

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Speaker 1: In the same vein, is a potential split of ordit

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Speaker 1: and advisory really kind of in the mix there for you?

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Speaker 2: Is that something that you'd contemplate. Now, we've been very

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Speaker 2: clear on this.

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Speaker 3: We do not believe that a split of the businesses

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Speaker 3: makes any sense. It doesn't enhance quality and it doesn't

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Speaker 3: make sense in terms of serving our stakeholders. We've been

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Speaker 3: steadfast on the point of view the multidisciplinary firm in

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Speaker 3: scale makes all the sense in the world. Will continue

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Speaker 3: to look at our portfolio and trim around the edges,

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Speaker 3: but holistically we believe in the large scale multidisciplinary firm.

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Speaker 1: Always great to chat with you, of course, especially here

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Speaker 1: in Singapore. Bobmat's level chairman at PETERWC International