Trust in Asia Pacific, Middle East & Africa 2014

TRUST IN

ASIA PACIFIC, MIDDLE EAST & AFRICA 2014

TABLE OF CONTENTS TRUST IN ASIA PACIFIC, MIDDLE EAST AND… FOR THE FIRST TIME… AFRICA ...

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GERMANY, THE WORLD CHAMPION OF TRUST, WILL FIND DIFFERENT CONDITIONS IN ASIA THAN AT HOME – PRIVATELY HELD COMPANIES CANNOT RELY ON A TRUST BONUS ..............................................................

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BUSINESS MUST LEAD THE CHANGE WITH SOCIETAL ISSUES .........................

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PUBLIC AFFAIRS IS AT THE CORE OF TRUST BUILDING .....................................

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BUSINESS, SOCIETY AND TRUSTED NGOS ....................................................

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NO SINGLE PANACEA FOR BUILDING TRUST IN BUSINESS IN APACMEA .........

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PRIVATE ENTERPRISE AND INTERNET HEROES DRIVING CHINESE TRUST .........

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TRUST IN HONG KONG ...............................................................................

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THE BUSINESS OF PERCEPTION AND THE REALITY OF BUSINESS IN JAPAN ...... 20 KOREA SHOWS IMPROVEMENT BUT STILL A LONG ROAD AHEAD ................... 22 TRUST AND THE BRICS: GOING NOWHERE SLOWLY? ....................................

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THE BUSINESS OF TRUST IN INDIA: STAYING ENGAGED AND RELEVANT TO ENJOY PEOPLE’S CONFIDENCE .................................................................... 26 THE UNIQUE STATE OF TRUST IN SOUTH AFRICA ........................................... 28 TRUST ACROSS THE UNITED ARAB EMIRATES ................................................

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THE TRUST TRIP PLANNER FOR SOUTH EAST ASIA AND AUSTRALIA .................

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AUSTRALIA’S REVERSAL OF FORTUNE: STABILIZED LEADERSHIP SPURS INCREASED TRUST BUT HIGHLIGHTS A GROWING DIVIDE .............................. 34

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INDONESIA: A YEAR OF LIVING TRUSTINGLY .................................................

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FOCUS ON TRANSPARENCY AND INTEGRITY SEE TRUST IN BUSINESS IMPROVE DRAMATICALLY IN MALAYSIA .........................................................

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STATE OF TRUST IN SINGAPORE REMAINS STRIKINGLY HIGH; YET BUSINESS AND GOVERNMENT HAVE ROOM TO BUILD .................................................

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TRUST IN ASIA PACIFIC, MIDDLE EAST AND… FOR THE FIRST TIME… AFRICA Asia Pacific and the Middle East remain the optimistic and trusting regions, even if our new market to the study, South Africa, looks more skeptical and “European” in its trust profile. Overall, trust in the regions has gone up marginally this year, though that was largely driven by a noticeable increase in trust in NGOs. Across the whole of Asia Pacific, Middle East and Africa (APACMEA), NGO’s remain the most trusted institution ahead of business at second, media at third and government the least trusted of the four.

As always, there is no such country as APACMEA (let alone Asia Pacific) and the trust scores for the four institutions vary hugely in each market. For example, trust in government in UAE is now at a stratospheric 88 percent, perhaps for being seen as a steady hand in a tough and increasingly politically fractious neighborhood. China and Singapore continue to score highly whilst the ANC government in South Africa is the lowest ranked in the 27 countries we monitor.

However, and as reported In November last year in our Emerging Market Supplement to the Trust Barometer, the rest of the world does not trust businesses headquartered in our biggest markets.

Chinese and Indian businesses are trusted by only 36 percent and 35 percent (respectively) of people in developed economies compared to the 76 percent and 82 percent they score at home. And this situation has not improved for five years, spelling problems for exports and any corporate global ambitions for our biggest firms. Shockingly, only 34 percent of people in developed markets would trust a Chinese company acquiring a local business and only 40 percent would trust an Indian firm that was trying to invest in one of their businesses.

Two other government winners: Japan, where the administration of Prime Minister Abe and perhaps his “Abenomics” gets a 13 point thumbs up; and Australia, where the lack of Gillard and Rudd and the arrival of Abbott also scores a 13 point trust increase.

The region is also different to the rest of the world in the trust it confers on various types of business.

In Europe and North America, family businesses are the most trusted, at 76 percent and 85 percent respectively, whilst in APACMEA they are tied for being the least trusted. Family businesses that are seen to have strong values in the “west” are perhaps seen as nepotistic and sometimes even corrupt in APACMEA; and conversely publicly traded businesses, which are often seen in European countries as having few values and have suffered scandal and in some sectors economic failure, are scored low (only 48 percent of countries in the EU are trusted to do what is right). In APACMEA, however, a publicly quoted business appears to be conferred with the benefits of transparency and global business practice – and is probably viewed as a much better place to pursue a career – and so score the highest at 74 percent.

APACMEA remains, by far more, the most trusting region for business, no doubt driven by the economic benefits it has brought in one generation to millions of people. Six of the top seven most trusting countries for business are in APACMEA with UAE and Indonesia business posting significant gains and leading the world with 82 percent of informed

The region is also a global outlier in how it views sectors like financial services. Other than perhaps in South Korea, there was no banking crisis in the markets we survey in APAC and so financial services continue to score high trust marks; in fact the trust in financial services in China, Indonesia and India (an average of 80 percent) is more than three times

Incredibly, only 17 percent of informed publics in South Africa say they trust the government to “do what is right.” The other big loser this year is the government of Hong Kong which plunged 18 points, showing the impact of a series of high profile scandals involving senior government officials and rising concerns over a lack of direction on issues relating to universal suffrage.

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publics trusting the institution in both markets.

higher than Spain, Ireland and Germany (an average of 25.3 percent).

Similarly, if you find yourself working in the energy sector then you will be trusted by more than twice as many people in India, China and UAE (88.3 percent average) as you will in Germany, Sweden and the UK (37.6 percent average). The world is indeed not flat!

percent trusting NGOs, probably still due to the scandals that emerged in the wake of the Tsunami and the resulting relief effort.

However, in most markets, trust in NGOs is at such a level that engagement with them would seem to be a pre-requisite for just about all businesses looking to build their own trust and standing.

Trust in media declined slightly across the region led by falls in India (-8 points) and Hong Kong (-5 points) but globally remains high with six of the top seven scores. As usual, there seems little correlation between trust in media and the “freedom” of that media with high trust scores in China, UAE and Singapore and much lower scores in “free” media markets like Japan and Australia. This has been consistent for some years now showing, we believe, that nation building is seen as a legitimate role for media in some markets, whereas accurate and truthful reporting and the holding to account of authorities is more the expected benchmark in others.

NGOs increased their trust score in eight of the ten APACMEA markets we have trend data for. There were some spectacular gains, notably India at six points and the UAE at 9 points, possibly due to NGO led debate around working conditions for guest workers and the ongoing work of locally-grown and long-established NGOs like the Red Crescent that have arisen off the back of conflict in Syria. In most APACMEA markets, however, we believe that people are scoring local and community organizations that provide medical (including environmental protection linked to health issues), educational and poverty relief and support rather than western activist style political and environmental NGOs. In addition, in several markets across APACMEA, for example Indonesia, where there was a whopping 22 point increase in NGO Trust, NGOs have improved disclosure & reporting systems, thereby increasingly transparency.

Japan remains an outlier in the region with only 37

David Brain President & CEO, Edelman APACMEA david.brain@edelman.com 5

GERMANY, THE WORLD CHAMPION OF TRUST, WILL FIND DIFFERENT CONDITIONS IN ASIA THAN AT HOME – PRIVATELY HELD COMPANIES CANNOT RELY ON A TRUST BONUS When it comes to investing, hiring, producing and selling in Asia, companies headquartered in Germany enjoy the highest level of trust. The “land of ideas” can count on huge support and open arms compared to other markets. Here are some differences: number one in China, Hong Kong and South Korea. Number two in Indonesia and Japan (after Japan itself) number three in Malaysia (after Japan and the US) – and only number four in India (after the US, UK and Japan).

Chinese and Indian companies still face major trust roadblocks when doing business in Germany – as in most places in the world. Approximately two-thirds of developed market respondents reject domestic investment from companies based in these two and other emerging markets.

The task ahead for both – Asian companies in Germany and German companies in Asia – is broadly speaking the same but in specific ways very different: in a time, where government faces an erosion of trust, business is looked to, when it comes to shaping the future and solving the issues of countries and economies. Corporates are generally requested to play a role in the debate around regulation. They are asked to take a stand on issues that go far beyond their own business. According to 89 percent of the Chinese respondents, the food and beverage industry should be a more active participant in the broader debate over solutions to food and nutrition policy issues. People want companies in the food sector contribute to creating a legal framework, which helps to foster transparency, high and reliable product quality and innovation alike. There is an expectation to engage in the conversation and the CEO is asked to take a key role in this. So far, this finding applies to all of the markets. What is fundamentally different is the how – and the level of trust a company starts from.

The country of origin is only one of the four key factors shaping trust in business. For both – Asian and German companies – the other three factors are the industry sector they are in, their enterprise type (publicly listed, mid-sized, family) and its leadership.

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The strong backbone of the German economy has always been the small and mid-sized businesses and family companies, providing employment to over 20 million people. 77 percent of the Germans asked in our survey believe that privately held companies are responsive to customer needs. In Asia though, the perception is different. German mid-sized companies cannot rest and rely on a trust bonus based on private ownership. Many corporate brands are hugely successful and growing in this part of the world, but not benefitting from their trust and heritage bonus, which they earned over a long time in their home market. In Asia, for the most part big business, publicly-traded and state-owned business enjoy the advantages of size, awareness, influence – and trust. Publicly-traded companies are perceived to be innovative, to have higher quality products and to be responsive to customer and employee needs.

India is the only country in Asia that shows the same trust preference for privately-held companies as Germany. What does that mean for German midsized companies?

There is an opportunity for leadership stepping out and engaging with local stakeholders. Generally speaking, we are still in a crisis of leadership. The trust levels in both business and government leaders are low – but there`s a divide between those markets, where business and government leaders are equally distrusted to make ethical decisions, tell the truth and solve societal issues (in Malaysia, Singapore, Hong Kong, South Korea and to a lesser extent in China) – and those where government leaders clearly lose the game (Japan, India and Indonesia).

CEO trust levels in the German market are traditionally low compared to the rest of the world, even though this is on the rise. The hostile sentiment, which CEOs know from their home market, is not transferrable to Asia. In most markets, the CEO is trusted as a spokesperson, still less than a person like you, academics and technical experts – but more than their board of directors, their employees, government officials or bloggers. More than anything else, they are requested to be engaging with all

stakeholders, clearly and transparently – and being front and center, when it comes to issues. The time spent on engagement is requested and will pay off.

Whereas a CEO`s role is not first and foremost to speak to the media, as our results show, traditional media is still the most trusted source of information globally and it seems wise to use this opportunity to build some profile for the corporate brand. Search is replacing traditional media in many places in the world, but in Germany and most markets in Asia, traditional media is still the most trusted.

German business is in a prime position to build trust in Asia and harvest the return on this investment if they are visible and engaging, by helping solve the issues at hand in local markets and being a partner to close obvious performance gaps in local businesses and the economy. The reputation of delivering high quality products and being an innovator will give them the license to act in their key partner markets such as China, where high product quality is ranked at the top of a number of trust building measures, but disappointment prevails from its delivery.

Cornelia Kunze Vice Chairman, Edelman APACEMA cornelia.kunze@edelman.com 7

BUSINESS MUST LEAD THE CHANGE WITH SOCIETAL ISSUES Trust continues to be a key currency to ensure confidence across the Asia Pacific, Middle East and African markets, however, it’s time that business now steps out and takes the lead to influence and change key societal issues. Today’s world requires a shift from the historic, transactional nature of capitalism to a model of value creation that encompasses societal benefits as well as shareholder value. It is imperative that the inventiveness and speed-to-market innate to the private sector be applied to building this new approach. No longer can business wait for governments to lead change, even though informed elites and the general public see that government’s role is to continue to provide protection.

The 2014 Edelman Trust Barometer shows that 86 percent of global respondents believe a company can take specific actions that both increase profits and improve economic and social conditions in the communities in which it operates. This year’s results show not only an opportunity, but more importantly, a responsibility for business to redefine and reprioritize the way it thinks about value.

The 2014 Edelman Trust Barometer, however, shows that both engagement and integrity still require the greatest amount of work to be done by business to ensure that ever-fragile trust continues to grow. Business must continue to adapt the way it listens to its customers, treats its employees, and communicates its business openly and transparently to all its stakeholders, including inwardly at its business practices and take greater responsibility for its actions to address issues and crises. The demands for increased transparency in business have never been greater. Business does a great job in areas where it can easily measure itself, such as the production of its products and services, but in those areas where it does not, such as engagement and integrity, it needs to start to develop measurement processes.

The question is how business can best take on this new role in leading societal change. Edelman recommends the Chief Executive Officer becomes 8

the Chief Engagement Officer, taking responsibility for establishment of the context in which change will occur. Instead of the usual inside game played by business, which relies on lobbying regulators or elected officials, the CEO should take the case of the broader publics, to make the macro case for forward progress, not just the micro case for a given product or new factory. There should be the usual strong economic rationale but there must also be careful consideration given to arguments which address emotion and risk, as well as societal benefit. The CEO must have the courage to hear what is being said in the debate and be willing to change accordingly.

It’s now time for the CEO to take a stance on societal issues and take chances to ensure operations not only meet profit and return projects expected by shareholders, but equally on the development of solving societal issues. This is not only an external view but also looking internally to bring about better change.

This cannot, however, rely solely on the CEO. There should be an inclusive management model that embraces academics, employees, industry trade groups, technical experts and NGOs that will enable a company to become a credible voice on issues.

The 2014 Edelman Trust Barometer shows that trust in CEOs is low, and there has been very little change over 2013, but it is a prerequisite to join with NGOs who hold the highest or second highest levels of trust among eight of 11 APACMEA countries surveyed, in order to create context.

Interestingly, there still remain significant deficits in the levels of trust in companies emanating from China and India, and to a lesser extent South Korea, within developed markets and even across APACMEA markets. A significant job is yet to be done by companies from these countries to improve their reputations and trust levels.

This year, for the first time, the Edelman Trust Barometer measured the levels of trust in family and

privately-owned companies as well as small medium enterprises. Across APACMEA, the level of trust varied considerably, although there was consistency across the region that privately held companies were seen as more responsive to customer needs, more entrepreneurial and more innovative. On the flip side, they were less trusted to act responsibly, be transparent in their business practices and less responsive to employee needs and communication.

business. A business can no longer just be thinking about production and delivery. It must move to meet societal expectations. Business must lead the debate for change in society. It has to participate, advocate and evaluate.

While CEO’S across APACMEA had higher levels of trust than the global average, it is important to note that employees and “people like us” also carried similar levels of trust to CEOs’. Globally, the 2014 Edelman Trust Barometer showed employees hold a much higher level of trust than CEOs; but either way CEOs must communicate openly and regularly with employees so that they can be used as a wave to build trust for a company. Not only are CEOs facing a multitude of new external challenges from NGOs and activists today, from government regulators and the new media landscape, they also need to reconsider the importance of employees as a strong and wide communications source particularly in respect of their active access to social media discussion. As such, there is an imperative to instigate deeper, more considered and transparent employee engagement programs across their workforces. This is another rationale for why Edelman takes the stance that the CEO must become the new chief engagement officer of the company.

Trust is a license to operate and for business to act, do, manufacture and offer services into the future.

Trust allows institutions to bring along stakeholders as active participants and advocates, because of the depth and confidence inherent in their relationship.

Trust, however, is fleeing, and must be continually monitored and tracked.

It is still the CEO’s responsibility to close gaps in trust between the institution and its multiple stakeholders.

The chief engagement officer has the responsibility change from the “what” to the “how and why” of

Chadd McLisky Chairman, Edelman APACMEA Corporate chadd.mclisky@edelman.com 9

PUBLIC AFFAIRS IS AT THE CORE OF TRUST BUILDING A key conclusion of the 2014 Trust Barometer is that business is expected to play a bigger role around the debate of policy issues and further contribute to regulation and policy making. Beyond a focus that is committed to operations and stakeholder engagement, business is required to evolve its efforts from a micro-centric approach to include a macro based focus; from the merely transactional to include shared values; from the satisfaction of purely legal requirements to meeting societal expectations; and to move beyond the “what” but to also explain the “how” and “why.” The overall trend uncovered in this year’s Trust Barometer revolves essentially around public affairs, which is at the very core of trust building.

for businesses to achieve success, at least not in the long-term.

Over 70 percent of respondents believe business should be involved in formulating regulations in the energy, food and financial services industries. Respondents in the Asia Pacific, Middle East and Africa region have even higher expectations than the global average for businesses in the energy (by 7 points), food (by 6 points) and financial services (by 6 points) industries to be more active participants in policy debate. In markets like China, where high-volumes of laws and regulations are being updated or newly developed to match the rapid development of the economy, industry and society, multinational companies could offer additional value in their participation by sharing best practices or lessons learned from other markets.

Showing a willingness to contribute to the better well-being of society, and providing clarity as to the “why” and “how” of their operations, are endeavors that are already in practice by companies working hard to earn a license to lead. General Electric is one of the great examples. In his articulation of strategic focus on aviation, energy and healthcare in the China market, GE Greater China CEO, Mark Hutchinson explained clearly why each of these focus areas is aligned with China’s priorities, demonstrating how their presence in the country goes beyond a mere commercial or business interest (link).

Business cannot achieve sustainable success by confining its focus to narrowly-defined operational issues. In China, KFC works with the government and industry to address supply chain issues in order to increase transparency and traceability; international iron ore suppliers work with the government and their customers in addressing overcapacity and environmental-impact issue of the steel making industry; and pharmaceutical companies strive to contributing to the reform of healthcare provision in order to create a transparent and sustainable environment for responsible product marketing, just to name a few. Without taking into account the broader context within which they operate, it will be increasingly difficult 10

Meeting legal requirements and full compliance are seen as a given. Business is expected to go beyond this and understand and meet societal expectations.

One of the key debates during the pharmaceutical industry’s anti-corruption crisis in China since the summer of 2013 revolved around claims made by multinational companies that they had fully complied with regulations. Stakeholders expressed not only skepticism in relation to this, but also debated the role of major global players in China’s healthcare industry.

Public affairs is currently at the core of trust building and as we move forward, the role of business continues to evolve. It is no longer enough for business to operate without considering broader implications such as its societal contribution; the onus is now on business to proactively participate in policy debate and contribute to policy making in order to create real value for the needs of society.

Cindy Tian Vice Chairman, Edelman APACMEA Public Affairs cindy.tian@edelman.com 11

BUSINESS, SOCIETY AND TRUSTED NGOS Globally, NGOs are the most trusted institution when compared with business, media and government. This is certainly the case in the APACMEA region as well. In fact, NGOs operating in the region now enjoy the highest levels of trust in the world. In 10 of the 11 surveyed APACMEA markets, NGO trust scores are higher than the global average of 64 percent with most enjoying north of 70 percent trust.

(2013) to 73 percent (2014). This can be attributed to a couple of key trends: • In a battle for funding (particularly from increasingly selective international donors post financial crisis), NGOs are dramatically improving their governance and reporting structures, thereby strengthening transparency. World Vision International Indonesia, for example, worked with professional accounting firm, KPMG, on its reporting and recruited certified auditors into the organization.

• In 2013, there were some well-received high profile NGO-business partnerships. The agreement signed between long-term rivals, Greenpeace and Asia Pulp and Paper to address environmental degradation is a good example.

But why, apart from Japan, are trust levels in NGOs so consistently high (and rising) across the whole APACMEA region?

The one exception to the rule is the abysmally low levels of trust in NGOs in Japan – the lowest in the world.

We believe this is the result of a trust collapse in NGOs from the fallout of the March 2011 Fukushima disaster, in which NGOs in Japan were believed to have failed on many levels in their relief efforts. Nearly three years later, social and mainstream media in Japan continue to question the speed (or lack thereof) of financial assistance and reconstruction to affected areas. Worse yet, anger resulting from the lack of transparency around the financial management and disbursement of charitable donations continue to percolate.

On the opposite end of the scale is China, with NGO trust levels now at 84 percent - the highest in the world.

This is a remarkable change from 10 years ago, when NGOs in China were the least trusted institution we surveyed in the market with a trust score of only 31 percent.

Indonesia experienced the most dramatic jump over the past year – a 22 point increase in trust in NGOs from 51 12

We believe the reason is that respondents across our region are defining NGOs differently than in other parts of the world. Specifically, APACMEA respondents are scoring “local community NGOs” that directly work on pressing social development issues – environmental challenges impacting personal health like water & air quality, poverty alleviation, acute health issues and rural education – rather than “western activist style political/environmental NGOs.” In some APACMEA rapid growth economies, such as Indonesia, NGOs are increasingly seen as a core pillar upholding civil society and as such play a critical function in society. These organizations are understandably being rewarded with trust points.

And why do NGO trust numbers continue to rise in most APACMEA markets? In addition to the two trends – increased transparency and high profile NGO-business partnerships – happening in Indonesia, NGOs around the region are showing dramatic improvements in organizational management. In short, they are becoming more sophisticated and professional.

Moreover, the NGO ecosystem in APACMEA is rapidly evolving. In the process, it is becoming more effective at addressing societal concerns. This is largely being facilitated by digital communications.

Take an example from China.

The Institute of Public & Environmental Affairs (IPE) has become one of the most respected environmental NGOs in China. They are particularly well known for their work on water pollution. While IPE maps water pollution issues at a national level, they have a sophisticated network of local community level NGO partners who monitor water pollution across the country and share the data up to IPE to publish on its website. IPE is also well connected with international NGOs, like Environmental Defense in the US, for example, and consistently shares its data up to the international level. Add in several years of experience working directly with well-known brands to minimize the water impacts of their direct and indirect (i.e. supply chain) operations and it is easy to understand why IPE has so much credibility. And it is this NGO ecosystem that IPE has developed with the help of digital technology – from local grassroots up to international forums – that makes IPE so effective at addressing the issue.

Understanding stakeholder expectations around businesssociety impacts is also important from a risk perspective.

For example, global retailers that source textiles from volatile labor markets like Bangladesh and Cambodia need to understand the local nuances of the issues in those markets to mitigate them. International and local NGOs understand the nuances and thus should be identified and monitored, if not engaged, as part of any risk management process. Should the issue escalate, NGO relationships can be a valuable asset in minimizing business and/or reputation risk.

It is evident from this year’s Trust Barometer that there is an expectation for business to address societal issues. In APACMEA, NGOs are the ideal trusted partners through which business can do so.

So what does all of this mean for businesses operating in APACMEA? Simply put, to build trust and mitigate risk in APACMEA, it is now imperative for business to engage NGOs in the markets and communities in which they operate. It is not so much “if” you engage NGOs and address societal issues, but rather “how.”

From a trust building perspective, understanding the impacts that your business has on society – positive and negative – and the expectations that stakeholders have of the business to address those impacts is critical.

Once those fundamentals are understood, proactive engagement with credible NGOs that work on the issue area will provide a trust halo effect for the business.

Samsung (disclosure: client), for example, recently partnered with the Hong Kong Business Environment Council (BEC), among others, for an environmentally focused community engagement program in Hong Kong called Samsung “Solve for Tomorrow.” BEC is a well-established NGO in the market and not only brings credibility to the program, but also provides expert insights to ensure that the program is locally relevant and as impactful as possible.

Ashley Hegland Director, Edelman APACMEA Sustainability and CSR ashley.hegland@edelman.com 13

NO SINGLE PANACEA FOR BUILDING TRUST IN BUSINESS IN APACMEA Trust is an asset that needs proactive management in today’s increasingly open business environment. The socio-economic and political diversity across the Asia Pacific, Middle East and Africa region (APACMEA) presents an added layer of complexity for business leaders looking to build trust in their companies.

With the most important attributes for building trust varying by market, there is no single panacea that allows companies to stand tall amongst their peers. While there are similarities with the West, it is apparent that an Anglo-American imposed approach to managing trust is likely to misfire without a groundup sensibility of the relevant drivers of trust in the region.

In APACMEA, the fundamental business purpose of providing high quality products and services is a top-three trust criteria in all but two markets, namely Australia and Indonesia. Possibly a consequence of continued skepticism about product safety after a series of high-profile scandals in the last five years, quality of product or service is the most commonly important trust building attribute across the region. In contrast, in the US it ranks fifth and in the UK it ranks sixth.

Within APACMEA, there are differences too.

• Unlike the rest of the region, having ethical business practices does not feature as a top five criteria in Japan and South Korea. Both economies have been traditionally dominated by very large conglomerates, the keiretsu and chaebols, where the subsidiaries are interlocked in dependent and often nebulous business relationships.

• Similarly, treating employees well does not feature as high in Singapore and Malaysia as it does in the rest of the region. Both economies rely heavily on immigrant labor for un-skilled jobs, whereas in many other markets, economic growth has been fuelled by home grown, low-cost labor.

The 2014 Edelman Trust Barometer is Edelman’s 14th annual exploration of trust that surveys 33,000 people in 27 markets around the world, of which 11 are from the APACMEA region. A core component of the Trust Barometer looks at the most important actions for building trust in a company under five categories: Engagement, Integrity, Products and Services, Social Purpose and Operations. Around the world, since the global financial crisis, operational performance attributes have declined in importance for building trust while focus on engagement with stakeholders and integrity have risen to the fore.

While this is also true of APACMEA generally, there are distinct differences.

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• Having transparent and open business practices is less important in building trust in the region’s

three BRIIC markets of India, Indonesia and China, as well as Hong Kong and South Africa. With a heritage of patriarchal, family-owned businesses -- often closed to external inspection -- at the center of economies across most of APACMEA, transparency only falls into the top-three criteria list in Japan and the United Arab Emirates.

The study also indicates that the role of communications needs a re-think.

provision of products and services, the characteristics of Engagement and Integrity now dominate as most critical for building trust in the region. On that basis, where historical reputation will count for little, business leaders must design a roadmap that addresses these expectations in how their companies operate and how they communicate. And that roadmap needs to pay attention to the nuances in each market, rather than rely on a Western-devised approach or a singular regional strategy.

• Ironically, in a region where corporate communications practices are often focused on quarterly earnings and annual reports, delivering consistent financial returns to investors ranks lowly across the entire region as a trust building attribute. It begs the question whether corporate communications plays the right role in the region.

With an increasing focus amongst stakeholders on Integrity and Engagement, should a senior corporate communicator now have a seat at the company policy decision-making table? • The Trust Barometer suggests a clear steer for companies that are yet to fully embrace digital media channels as a way of building closer relationships with customers. Listening to customers’ needs and feedback is the most important driver for trust in five markets in the region and features in the top three for all but Hong Kong, Japan and South Korea. Even for companies that are now digitally savvy, perhaps they need to move beyond promotional online marketing to establishing channels that will build deeper and lasting customer relationships.

This complex web of differing and sometimes contradictory trust characteristics across the region, presents a demanding challenge for business leaders. It would be dangerous however, to take the findings of the study out of context and to simply focus on the single most important trust drivers by market. Each trust building attribute does not stand alone. In an environment where stakeholders expect more from companies beyond the fundamental

Bob Grove CEO, Edelman North Asia bob.grove@edelman.com 15

PRIVATE ENTERPRISE AND INTERNET HEROES DRIVING CHINESE TRUST With an annual GDP growth of 7.7 percent last year, China’s continued pursuit of economic reforms is paying off with sustained domestic confidence in business and government. The China results of the 2014 Edelman Trust Barometer shows increased trust in business in line with overall optimism in the country’s economy. As Xi Jinping’s new government enacts a policy agenda that encourages the growth of private enterprise, supports domestic innovation, and looks to break up the state owned monopolies that have defined China’s economic structure for recent decades, so too are the areas that define public trust shifting to reflect the new playing field.

While dominant state owned enterprises (SOEs) still play an important role in the overall economy, comparing data from last year’s Barometer, we now see China’s emerging private sector taking the lead in building public trust. Here, as in other markets, the technology sector is forging the path ahead. In China, the so-called “BAT triangle,” consisting of domestic internet giants Baidu, Alibaba and Tencent (Edelman client), is smashing traditional business models and driving higher levels of public trust in private enterprise as a whole.

These innovators in e-commerce, online banking, and web-based communication are not only changing the way business is done in China but are also putting a public face on their vision for the future through outspoken CEOs – respected as local success stories and icons of home-grown ingenuity. With his e-commerce evangelizing, Jack Ma, founder and chairman of Alibaba, is a shining example of a company leader who has responded to the call for CEOs to redefine themselves as what Edelman is calling “Chief Engagement Officers.” His savvy response to customer demand for discounted online sales led to a spectacular result last November on China’s biggest online shopping day – Singles Day (akin to Valentine’s Day but for single people).

Alibaba’s e-commerce platforms Taobao and T-Mall broke the record for one day online sales by over 80 percent – hitting over CNY 35 billion (USD 5.75 billion) in 24 hours.

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In addition to achievements in domestic markets, national pride in the success of Chinese companies in overseas markets is driving local confidence. Huawei is one example, which despite its trust deficit in some global markets has a strong reputation in China based on an overseas expansion strategy that supported profits of CNY 28.6 billion in 2013. Tencent’s innovative WeChat social media platform launched in 2011 and quickly grew to 600 million registered users; and with a base of 100 million users located outside of China the company is now eyeing the lucrative US market. Another domestic hero walking tall on the global stage is Lenovo. According to IDC, Lenovo’s PC sales have already surpassed Apple in the US, and are now rank number one in the world.

Looking at overall Chinese investment into the US in 2013, the private sector makes up 87 percent of the projects and 76 percent of the value, eight times the level of investment just five years ago.

The 2014 Edelman Trust Barometer also offers some surprising data for China watchers. Trust in NGOs in China now exceeds that of government or business, having gone from 48 percent trust in 2008 to 84 percent today, reflecting the fast changing nature of Chinese civil society. Another noteworthy finding is that online search results are the most trusted source of information over media. This result is in line with changing social behaviors in other parts of the world but has serious implications for any company that is not currently incorporating digital programs into their overall communications strategy. China is the country with the world’s largest mobile Internet user population, and among its 600 million Internet users, 460 million are using mobile devices to go online.

Looking forward, this trend will guide further changes in trust in the existing media landscape.

While there is cause for optimism that the new generation of Chinese leadership will further liberate the power of the private sector in its contribution to the overall economy, Chinese companies should heed the lessons of their global counterparts and brace for increased public scrutiny both at home and abroad. There is clearly still plenty of work to

do in meeting global demand for transparency and accountability. While 76 percent of Chinese respondents trust their own multinational within China, when we look to levels of trust in Chinese companies in the US, that number drops to only one in five. Chinese business can and must rise to the challenge of operating against the drivers of trust as they look abroad for new growth opportunities.

Steven Cao CEO, Daniel J. Edelman China Group steven.cao@edelman.com 17

TRUST IN HONG KONG The third annual Hong Kong results of the 2014 Edelman Trust Barometer will fuel an already heated debate about the future ability of our city to remain a global financial center. This year’s findings show a significant drop in trust in business, government and media, and when viewed in the wider socio-economic context of the past year raise serious questions about the special administrative region’s direction and leadership.

Despite the grim findings, the Trust Barometer serves as a starting point for holding conversations with influencers and decision-makers on strategies for addressing the concerns raised by the survey.

But any discussion of the solutions for rebuilding trust in the areas most affected must review the potential drivers for what prompted the decline, namely the litany of scandals involving senior government officials or those within the Chief Executive’s inner circle. The 2013 Hong Kong findings observed a continuation of the scandals that saw the initial erosion of trust, with one key exception. The 2014 findings saw trust decline not only in leadership but also in the institutions of government and business, which up to now had enjoyed immunity from the loss of trust witnessed in other categories.

The Trust Barometer does not specifically ask participants why they feel a certain way but merely asks their views on trust. We can attribute the continued slide and impact on the institutions of government and business to the litany of scandals which impacted senior government officials especially those within the Chief Executive’s inner circle.

When asked “What are the most important roles for government in business?” the top three responses are: “protect consumers from irresponsible business practices;” “regulate business to ensure companies are behaving responsibly;” and “work to ensure free market access and open competition.”

In 2013, we witnessed, to name just a few of the events, the arrest of Lew Mon-hung (a former senior adviser to the Chief Executive) as part of a fraud investigation into his energy company, the resignation of Barry Cheung (a former member of the Executive Council) after an investigation into alleged irregularities in his commodities trading business and the criticism of Paul Chan (Secretary of Development) for failing to disclose personal interests in a land site being redeveloped by his ministry. Arguably it 18

was the staggering revelations about exorbitant spending

by Timothy Tong and the ICAC, and the controversy over Leung Chun-ying’s surprise rejection of HKTV’s TV license application, which raised the biggest concerns about the drivers of trust within the institution of government These controversies exemplified the factors that are most damaging to trust. We saw an absence of accountability, with individuals and institutions not held responsible for their actions. There was a lack of transparency with little or no public explanation of what happened and why. And in all cases, there was little to no chance for the public to participate in the process of investigation or resolution.

It is no surprise that the people of Hong Kong have, lacking a mechanism to drive change, sought to give voice to their frustration, for example with anti-government protests in July and widespread support for striking dock workers in April. Even the media, respected as an honest and vocal mouthpiece for the people’s concerns, has seen a 5 point decline in trust.

Last year we identified the paradox that we trusted the institutions of government and business, but we faced a crisis of leadership with them at the same time. In the year of the snake, the actions of those leaders may have poisoned our trust in the institutions. We have dropped from being the fifth most trusting nation last year, to the tenth this year. The only group to enjoy any increase in trust was NGOs, who crept up from 76 to 77 percent.

Our government experienced an 18 point drop in this year’s Trust Barometer, falling to just 45 percent. That is the largest drop of any country surveyed. Even the loyal base, those who say they “trust a great deal,” was halved to just 10 percent. According to the weekly survey by the Public Opinion Program of University of Hong Kong, Chief Executive Leung Chun-ying’s personal popularity rating consistently fell below 45, a score regarded as a “crisis” threshold.

It’s is a worrying fact that only 16 percent of the general public trust government leaders to tell the truth, regardless of how complex or unpopular it is.

While high-profile controversies have sustained deepening concerns about our leaders’ integrity and style of leadership, the survey also points to a bigger question, that of whom we trust to ensure our future as a competitive

and thriving business center. Pride in being an international business powerhouse is a product of our history and built into our identity. But who do we trust to ensure we maintain our global position?

It’s clear that those polled felt let down by our government’s inaction. A massive 52 percent of us say there is not enough regulation, and only 11 percent say there is too much. That compares to a global average of 42 percent and 27 percent respectively. We are a market that prides itself on free markets, competition, and entrepreneurialism, but we are among the most demanding for regulation. Moreover, less than a quarter of us (22 percent) trust government leaders to correct issues within industries that are experiencing problems.

While not stellar, Hong Kong’s economy in 2013 was stable. The IPO market is recovering with the total amount raised by the Hong Kong Stock Exchange up 80 percent on 2012. GDP grew 2.9 percent in real terms year-on-year.

However, our trust in business dropped 11 percent in 2013 to just 49 percent. This bucks the global trend which saw trust in business stay flat at 58 percent.

We also go against the global grain in the types of business we trust. Hong Kong is one of the few markets where family-owned businesses are less trusted than publicly traded companies, with 51 percent versus 72 percent.

And while banking and media are two of the less trusted industries globally, here in Hong Kong we they enjoy 77 percent and 69 percent trust ratings respectively.

There is a gap between our domestic trust in business and that of other countries around the world. In spite of our own distrust of business, Bloomberg recently gave Hong Kong the number one spot for the second year running as the best country for business internationally. Hong Kong is still well respected globally as a business center and can still play a pivotal role as an Asian business hub. But our declining trust in business may indicate our uncertainly about how that role can be ensured.

For companies looking to improve how much they are trusted, the survey offers clear instructions. There are 16 drivers of trust split into five categories: Engagement; Integrity; Products & Services; Purpose; and Operations.

For each driver we are able to look at the gap between the importance the public places on it versus the performance companies are seen to have given – where the gap is biggest there is the greatest opportunity for companies to improve trust. For companies in Hong Kong, seven of the top eight drivers fall into the Engagement and Integrity categories. People will trust companies who: act responsibly in a crisis; are ethical; treat their employees well; listen to customers; communicate often; are transparent and open; and put customers before profits.

In a market where there is increasing demand for a more transparent and participatory political system to address pressing social issues, there is a significant opportunity for business to play a bigger role in society. In Hong Kong, 79 percent believe that business can pursue its self-interest while doing good work for society. Around one in three of us place a high importance on trust in companies who address society’s needs (34 percent), protect the environment (34 percent) and positively impact the community (31 percent).

The question is how business can best take on this new, unfamiliar role in the public discourse.

We suggest a three step approach: Participate: Seek input from a broad range of stakeholders.

Partner with non-governmental organizations in the drafting of clearly articulated goals which offer both a business case and a pro-society rationale.

Advocate: Offer a clearly articulated strategy that begins with the context of how a proposed change will improve lives of customers, as well as your bottom line. Go on tour, engaging in debate with critics, informing media of all stripes, from mainstream to social.

Evaluate: Evolve behavior based on collective inputs. Have measurable outcomes, specific quantitative and qualitative targets. Report frequently on progress against metrics.

The year of the horse could be pivotal. Hong Kong is still a global player on the business stage with a proud, independent population. But declining trust in its key institutions foreshadows uncertainty about the city’s future.

There is undoubtedly an opportunity for business to take a broader and more vocal role in maintaining our position as a global leader.

Andrew Kirk MD, Edelman Hong Kong and Taiwan andrew.kirk@edelman.com 19

THE BUSINESS OF PERCEPTION AND THE REALITY OF BUSINESS IN JAPAN On the Monday morning following last summer’s upper house elections in Japan, PM Shinzo Abe invited a group of young people to his personal residence. Among them were: A Paralympic skier who lost her leg in a car accident.

A fisherman who became a community promoter after nearly drowning.

A young business owner with a successful new factory that replaced its recession-ravaged predecessor.

He wanted to hear firsthand from those who’d experienced failure and then been able to get up again. This event was covered widely by the Japanese domestic and foreign media. PM Abe wanted to send a strong message to Japan, and to the world. It is possible for Japan to get back on its feet.

Since then PM Abe has proved himself to be a master communicator, using a range of platforms from traditional to digital, from social to face to face to communicate his simple messages of the three arrows of Abenomics and the need for a stronger and more assertive Japan. While he may be facing some challenges with some of his messages regionally, locally his popularity rating remains above 60 percent. He has indeed been very successful with changing the perceptions of Japanese about their own economy, and for better or worse, is changing the perception of Japan on the world stage as well.

The recent winning of the 2020 Olympics being just one proof point here.

But, the burning question remains.

Does change in perception lead directly to a change in trust?

The 2014 Edelman Trust Barometer shows that globally there has been a widespread collapse in trust in government. The collapse in trust for the Japanese government occurred some two years 20

earlier in 2012 when, following the tsunami disaster and Fukushima nuclear incident, trust in government in Japan fell to levels never before seen in the history of the Trust Barometer. Last year saw a small uptick but it could have ended up being nothing but a dead cat bounce. But lucky for PM Abe and his government, cats are said to have nine lives! This year’s Trust Barometer shows a massive 13 point uptick in trust in government to 45 percent. Abe-san and his Abenomics seem to be regaining the trust of the electorate. “Seeming” is but perception one might challenge. The reality is that while it is a 13 point jump, which is commendable, the percentage of people that say they trust government strongly is a miserly 8 percent. And, at 45 percent, it begs the question as to what the other 55 percent are thinking.

Just after the field work for the 2014 Trust Barometer was completed in Japan, Mr. Abe forced through the highly unpopular Designated Secrets Act. This move resulted in street demonstration against the law of a size that Tokyo has not seen since the 1960s.

Even Mr. Abe himself had to publicly admit he had not done a good job in explaining the Secrets Act to the public. So while the perception of popularity is strong, the reality seems to be that Mr. Abe still needs to work like a horse to pull the Japanese people along with him on his journey to an economically vibrant, stronger and assertive Japan.

Consistent with the rest of the world, trust in business in Japan remained around similar levels to the last survey. The big difference is that while NGOs are the most trusted institutions globally, in Japan they rank lowest. The crown for the most trusted institution in Japan goes to business with trust sitting at 53 percent, more or less at a similar level to the rest of the world.

Along with the renewed confidence in Japan, Japanese trust in their own companies rose to 80 percent, returning almost to levels of a few years ago. Last year we suggested that the erosion of the trust premium in local companies was providing opportunities for foreign companies in Japan. Was our call wrong? I suggest not. While trust in their

own companies has improved, Japanese also trust companies headquartered in countries like Germany and the U.K. more than they did last year. Perceptions surrounding the opportunity may be changing, but the reality of the opportunity still exists.

No discussion of trust in increasingly globalizing Japanese companies would be complete without some discussion of the elephant in the room.

The elephant in this case being the heightened geopolitical friction between Japan and its regional neighbors. Over this year, trust by Japanese of companies headquartered in China fell from 3 to 2 percent. This is a sad reality for the country’s largest export market. Trust in South Korean companies fell from 16 to 9 percent with them now only being trusted half as much as Russian companies.

CEOs still rank in the top four in terms of credibility as a spokesperson. Globally they are second last on the list. Japan’s companies need to embrace the need for a broader slate of spokespeople in the global communications context. The need for Japan’s CEOs to play the role of Chief Engagement Officer is even more compelling as they face the reality of leading truly global Japanese organizations.

Surprisingly, Chinese trust in Japanese companies improved over the past year from 57 to 66 percent.

Our thesis here is that whatever the political perceptions, the reality is that Japanese products may be seen to be contributing to an improvement in the lifestyles of Chinese people and that this may override geopolitical and cultural issues.

Trust in Japanese companies by South Koreans also jumped by a token 4 points but at 41 percent, the majority of South Koreans distrust Japanese companies. Perhaps the more sophisticated manufacturing base in South Korea means that the perception of Japanese products does not lead to the same trust reality as in China.

Overall, Japanese companies are well trusted around the world. Around 9 out of 10 people trust Japanese companies in countries such as India, Mexico, Brazil and Malaysia. In Indonesia a whopping 96 percent trust Japanese companies. This is good news for Mr. Abe who is looking to countries like India and Indonesia as bases for Japanese companies to diversify away from concentration on China.

But the reality for Japanese companies that are globalizing too is more than the perception. In Japan,

Ross Rowbury President, Edelman Japan ross.rowbury@edelman.com 21

KOREA SHOWS IMPROVEMENT BUT STILL A LONG ROAD AHEAD This year Korea’s overall Trust number of 51 percent plants it squarely in the middle of all 27 countries surveyed. Barely squeezing out of the distrusted category in 2014, this is a crucial moment for Korea, which now more than ever must make solid moves out of neutral and into the ranks of the “truster” country category.

While Korea’s overall trust score is lower than the global average (54 percent), it did come in higher than last year, and as one of the countries with the biggest differential between government and business last year as well, it saw that gap decrease slightly.

Though the lowest of the four institutions surveyed, confidence in Korea business did see a slight improvement, most likely due to the efforts begun by businesses over the past year to dedicate more budget and resources towards generating corporate shared value. However, the new administration’s vision of “economic democratization” failed to manifest itself, seeing instead shockingly poor treatment by large conglomerates of their vendors coming into the public spotlight. Those cases are reflected in this year’s number of respondents, over half of those surveyed, who believe that more government oversight is necessary.

Business must prove to the publics that they can do right in product/service quality, be ethical and socially responsible as well as transparent. Eighty three percent of Korean respondents stated that they believe it possible for companies to pursue profit and contribute to society simultaneously, while 82 percent believe that by leading the charge to help resolve social issues, companies can achieve even greater profit.

Corporations must now focus less on “what” they do and instead start thinking about “how” they do.

They need to broadcast and communicate their intention more and understand that rather than place the utmost importance on work to rule, they need to listen to and satisfy society’s expectations 22

first. As such, CEOs must take on the role of “Chief Engagement Officer,” and communicate honestly with not only their employees but all stakeholder groups. Business has been given a slight reprieve this year, but this faith by the publics is not 100 percent unshakeable. At a time of ever widening income disparity, a 2.8 percent economic growth rate and the collapse of the middle class, Korea needs more.

Barely out of its first year, the new government demonstrated a trust number of 45 percent, one point higher than the global average and not a big change over last year. Unfortunately, as the government’s leaders are not trusted to help solve business issues, and a very small number of the public trust them to tell the truth, they still have a lot to do in their remaining four years of the term in order to gain the trust of its citizens. 84 percent of Korean respondents said that policymakers must engage with all stakeholder audiences when implementing new regulations, significantly higher than the global average of 79 percent who said the same. With no end to the continued and vitriolic warring between the ruling and opposition parties in sight, the onus is on lawmakers to change their behavior before their actions cause the economy to slide into recession.

2014 has begun with many tasks that remain on Korea’s to-do list. Korea enjoys a more optimistic economic outlook relative to the global economic outlook, and needs to look to improving the trust between individuals and institutions as the way to begin resolving the social challenges it currently faces rather than look to achieving its economic goals as the answer. Trust is immediate and demonstrates a bigger influence on business and society, more so than just striving for economic gain.

Korea’s trust number of 54 percent, based on where global companies are headquartered places it in between Spain and Italy, ranking it 11th out of the 27 total countries surveyed. Korea’s Hyundai Motor Company competes with Germany’s BMW and Volkswagen (Germany is the most trusted country for a global company to be headquartered at 80

percent). Korea’s Samsung Electronics’ (Edelman client) also competes with Apple based in the US (ranked eighth at 68 percent) in smartphone devices.

Korea’s corporates are fighting on the global stage, without the strength of the trust of its own citizenry.

If a corporation’s reputation is based on the assets of its history, trust can be an asset for the future. This asset, if gained, can be something on which we can place our hope.

SB Jang MD, Edelman Korea sb.jang@edelman.com 23

TRUST AND THE BRICS: GOING NOWHERE SLOWLY? Similar rankings, dramatically different base Again this year, our Trust scores for the BRIC countries of Brazil, Russia, India and China show that these markets have much in common. Excluding China, they exhibit the highest degree of trust in business as an institution (Brazil 70 percent, Russia 45 percent and India 79 percent). All trust government the least of the four institutions we study (Brazil 34 percent, Russia 27 percent, India 53 percent and China 76 percent). Brazil (36 points), India (26) and Russia (18) all show a large gap between trust in business and government, and that gap has widened over the past year. China once again is the outlier, where the gap is only one percentage point, though it is worth noting that a year ago, government was trusted more than business.

While the BRIC markets show significant similarities in their institutional rankings, they diverge dramatically on overall trust scores. As a group, they cover the full spectrum of our trust index: China is tied (with the UAE) for the most trusting country surveyed with an overall score of 79; India is in the top ten with 69; Brazil is firmly in the middle of the pack with 57; Russia is our second least trusting market (over Poland) with a score of 37.

Alike in the eyes of others Another thing the BRIC markets have in common is the fact that other countries don’t seem to trust them – or specifically, companies headquartered there. Brazil with a 42 percent rating, Russia with 38 percent, China with 36 percent and India with 35 percent make up four of the five least trusted nationalities in our survey. Only Mexico trumps the BRICS with a 34 percent trust rating for companies headquartered in that market. These ratings drop even further if one considers only developed western markets.

One could argue that this is to be expected. BRIC markets are little known – and understood even less – in the west. There are no global brands from 24

these countries that would build knowledge and understanding based on consumer recognition.

Other markets have blazed the same trail from low to higher trust as they emerged, the quality of their products improved and their brands became widely known and appreciated – think of Japan and Sony, Korea and Samsung.

While this is undoubtedly true, it cannot mask the fact that there is a definite cost to this mistrust. When asked “How much do you trust a company based in (xxx) to buy a company in your country?”, developed markets (U.S., UK, France, Germany) awarded Brazil a score of 40 percent, India 38 percent, China 34 percent and Russia only 30 percent. Interestingly, emerging markets (China, India, Indonesia, Mexico, South Africa) rated them at 60 percent, 60 percent, 63 percent and 62 percent respectively.

Even when this was limited to “buying a minority share in a domestic company,” developed markets trusted Brazilian companies at 43 percent (while emerging markets trusted them at 63 percent), Indian companies at 41 percent (62 percent for emerging), Chinese companies at 36 percent (63 percent for emerging) and Russian companies at 33 percent (63 percent for emerging).

Whichever argument you choose to believe – natural progression of emerging markets/companies, or potential barrier to international business opportunity – it is perhaps most concerning that these scores have not improved over the past five years of our survey.

This at a time when BRIC markets have been relatively top of mind – as evidenced by the coining of the term BRIC in the first place.

Robert Holdheim CEO, Edelman South Asia, Middle East and Africa robert.holdheim@edelman.com 25

THE BUSINESS OF TRUST IN INDIA: STAYING ENGAGED AND RELEVANT TO ENJOY PEOPLE’S CONFIDENCE Responsible in part for the success of India’s USD 40 billion and growing diamond trade is a 300-yearold secret: a ragtag army of trusted workers who physically transport million dollar consignments secreted away in the recesses of their ordinary clothes. Travelling on crowded trains and buses, these couriers, called “Angadias,” have kept the wheels of the industry running between Surat, India’s diamond capital that specialises in cutting and polishing the rough stones, and Mumbai, the export hub. There is no paper trail -- no computerized tracking, no insurance, no detailed list of valuables, nor any receipt or record of transfer. Word of mouth is all.

Even older in India’s business tradition is the practice of “Hundi,” an informal promissory note used for everything from remitting funds to borrowing money and sometimes as a bill of exchange in wholesale trade transactions.

In both cases, the transactional risks are heavy, yet instances of breach are rare.

In India, the transactional relationships of small and medium firms have for generations been based mostly on trust. Contract enforcement is more about a firm belief by the parties involved in the personal integrity of each other.

So, in a country where trust is intrinsic to business, the Trust findings come full circle: the 2014 Edelman Trust Barometer again highlights that business remains the most trusted institution in India.

Globally, with an aggregate score of 69 across all four key institutions (business, NGOs, media and government), India is the fifth most trusting country on the 2014 Edelman Trust Barometer, a two place drop from a year ago.

Seventy-nine percent of Indians trust business the most, followed by trust in NGOs at 75 percent (a jump of six points from 2013) and the media at 71 percent (a fall of eight points). Their trust in 26

government has continued to slip, presently at 53 percent.

Since 2008, when a financial crisis began roiling the global economy, trust in business has been steadily high in India. No major Indian company suffered, no Indian banks collapsed as fallout of the downturn, both facts inspiring confidence in Indian business.

Conversely, this period corresponded with erosion in the trust in government, signaling that Indians see business as the prime driver of economic activity in the country and the principal harbinger of change and employment.

Indians’ trust in business reflects their hope in an institution they see as offering not only the assurance of employment, but also providing a chance to fulfil their aspirations for a better, more efficient lifestyle.

Especially since they see the government failing to deliver on governance and public services.

Another outcome of gaps in governance and public accountability has been the expansion of NGO space in India. The rise in trust in NGOs coincides with a wave of activism that India has seen over the past two years. From massive street protests against corruption to similar spontaneous public outrage over crimes against women, NGOs have been at the forefront of campaigns for change and action. Clearly, Indians have rewarded non-profits by placing higher trust in them.

But most of this activism would have meant little without the steady support of the media, seen as an important pillar in the efforts to institute a culture of public accountability. While Indians largely trust the media, the latter’s credibility has slipped slightly this year – possibly because of a growing debate around paid news and issues of ownership of the media.

Still, Indians’ trust in the media has been sustained by an unwavering coverage of sensitive issues of high relevance to the common man, be it instances of high public corruption, violent crimes against women or issues around access to natural resources.

Social media has played a key role in democratizing information dissemination, thereby empowering the Indian public and enhancing its trust in the media’s power to change. No more can a debate be controlled, or a dissenting point of view suppressed.

Together, NGOs and the media have helped force the government order major changes affecting public life. This has enhanced Indians’ trust in both institutions.

(To read more on our take on the dynamic landscape of public trust in business and identify opportunities for business leaders to build and sustain trust, a new kind of dialogue is needed. Read about it here and here.)

Business must, however, not assume that the low trust in government implies a desire or demand for deregulation. Instead, there is strong public support for government oversight on business. The increased trust in NGOs also signals a similar role of an overseer for the non-profits – providing at once checks and balances to both business and the government.

But NGOs don’t have a carte blanche from the public at large. They must be careful of the difference between partnering and protesting, and seek to become equal participants in driving social uplift and economic growth. The changing media dynamics will only add to the scrutiny of these institutions and further empower the common man to raise his voice and demand that his rights be respected.

Trust, as a culture ethic, has long been in the DNA of India -- in the credibility of a million-rupee “Hundi” chit made out on the back of a cigarette pack. Or, the trust placed in an “Angadia” with a cargo of pink diamonds in the inside pocket of his waistcoat.

In the coming days, the challenge will be to maintain this trust in an ever-widening environment of suspicion, close scrutiny and rising public expectations.

Rakesh Thukral COO, Edelman India rakesh.thukral@edelman.com 27

THE UNIQUE STATE OF TRUST IN SOUTH AFRICA Despite a growing interest in social media, traditional media has demonstrated remarkable resilience in South Africa as a trusted news source according the 2014 Edelman Trust Barometer. From the Daily Sun’s role in informing the blue collar workers in the ranks for taxis, to a former Irish international rugby player turned radio host on Talk 702 or Sunday Live on publically funded South African Broadcasting, 68 percent of the informed public trust traditional media as a source of information compared to 45 percent who trust social media.

Only online search engines (71 percent) compete effectively with traditional media in South Africa as a source of information. This finding is even more interesting when taking account of the declining global trust in media, among nearly 80 percent of countries. South African trust in the media overall is above the global score of 52 percent.

The trust in media here likely explains why they want CEOs to have an active media presence (69 percent) compared to the rest of the world (53 percent).

However, trust in leaders in South Africa is low. Both business and government leaders have a hill to climb in earning the trust of the general South African public for their ability to correct issues within industries that are experiencing problems (22 percent business, 10 percent government); to make ethical and moral decisions (business 21 percent, government 9 percent); to tell you the truth regardless of how complex or unpopular it is (business 16 percent, government 7 percent); and to solve social or societal problems (business 19 percent, government 12 percent).

South Africans trust companies headquartered in Germany (81 percent), the United Kingdom (80 percent), Sweden, Switzerland (79 percent), Canada (74 percent), The Netherlands and Japan (73 percent) and United States (70 percent). However, in an interesting twist, South Africans are leery of other emerging markets such as China (41 percent), Brazil (40 percent), Russia (34 percent), India (31 percent) and Mexico (30 percent).

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Family-owned companies (74 percent) fare well in South Africa. Perhaps not surprisingly, privately-held companies are rated better than publicly-traded companies on trust drivers like being entrepreneurial (71 percent vs 53 percent), being responsive to customers’ needs (70 percent versus 55 percent) and offering high quality products or services (69 percent versus 57 percent).

Despite waivering trust in government, only five percent of South Africans believe that government should not play a role in business. They want government to build infrastructure that facilitates business opportunities (38 percent), protect consumers from irresponsible business practices (25 percent), regulate business activities to ensure companies are behaving responsibly and work to ensure free market access and open competition within business (both 15 percent).

South Africans want business to do more and they want CEOs to do more to build trust. They require CEOs to communicate clearly and transparently, to tell the truth regardless of how complex or unpopular it is, to engage employees regularly to discuss the state of the business (86 percent) and to be front and center during challenging times (85 percent). South Africans (77 percent) also want CEOs personally involved in supporting local charities and good causes.

Business now has a licence to lead the quest for solutions in South Africa, but business leaders will have to communicate better to achieve success and meet trust expectations.

Tod Donhauser GM, Edelman South Africa tod.donhauser@edelman.com

Francois Baird Chairman, Edelman Africa francois.baird@edelman.com 29

TRUST ACROSS THE UNITED ARAB EMIRATES The UAE Trust Renaissance Against the backdrop of regional economic and political turmoil, the United Arab Emirates has emerged as a trusted centre of stability in the Middle East. UAE tied with China (79 percentage points) to be recognized as the most trusted country surveyed as part of the 27 country global trust index.

While political destabilization continues to greatly impact the region, particularly Syria and Egypt, the UAE has actively positioned itself as the economic hub of the region, attracting investors, bilateral partnerships and the steady flow of expatriates to support the expanding economy.

Emerging as the most trusted country was consistent with the significant increase in trust of the four major institutions – government (+15 points), business (+17 points), NGOs (+9 points) and media (+11 points) from the 2013 Edelman Trust Barometer.

The fieldwork was conducted in October and November 2013, around the time public sentiment was at its highest, in the lead up to the announcement of Dubai securing the World Expo 2020. While this may have had a positive impact on the results, the public support for the bid is reflective of the public’s increasing trust of the UAE Government to act in the best interests of the country.

Economic recovery boosts trust in business The recovery from Dubai’s economic downturn, coupled with the continued growth of Abu Dhabi, has contributed to the increase in trust in business with the UAE again leading the rankings along with Indonesia (82 percent). This is compared to the global rate of trust in business at just 58 percent.

The UAE demonstrated the greatest trust in international organizations with headquarters in Japan (95 percent) and Germany (93 percent), which are supported by strong bilateral trade partnerships across electronics, automotive and construction.

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The industrial sectors that garnered the most trust correlate with these international headquarters with consumer electronics manufacturing (92 percent), automotive (92 percent), and energy (91 percent) all trusted.

With an increasing focus on foreign trade, it could be argued that trust in UAE business is aligned to the requirements of transparency for international partnerships. In the past year, major trade relationships have been established with Russia and Serbia, complementing the established relationships between UAE and developed markets including UK, Singapore, Korea and Japan. Foreign direct investment is expected to top USD 12 billion in 2013, a 200 percent increase in the past five years.

Trust rising significantly across all institutions The increased trust in government may be attributed to an increased focus on transparency among local constituents, and from effective efforts (both locally and internationally) to support the economic development of the nation. Given the confluence of government and business in the Emirates, it is likely the increase across both institutions is related.

The barometer found that the most important role for Government in business was to build the infrastructure that promotes and facilitates business (28 percent). Over the past year, there have been a range of milestones achieved in the economic plans across the Emirates. The increased availability of operations across free zones, including KIZAD, ADGM on Al Maryah Island and JAFZA, has supported the facilitation of primarily international private enterprise - focused mainly on supporting developing industrial platforms.

The UAE is maintaining a sensible balance of government regulation, according to the informed public. Only 15 percent of respondents believe that the UAE Government is over-regulating business. If we look at these findings specifically for the energy sector, only 28 percent of respondents felt that there

was not enough government regulation compared to 73 percent in the UK, which could also be reflective of the performance of that sector over the past year.

Total trust in media among informed publics saw a significant increase over the past year, from 59 percent to 70 percent, with the highest growth rate in the markets surveyed. Within the media sector, online search engines were the most trusted source of information at 83 percent compared to 65 percent globally.

Trust in NGOs also rose to 76 percent compared to a global average of 64 percent. The increasing regional focus on the current Middle East situation, particularly the humanitarian crisis in Syria, may be the reason behind the increase in trust in NGOs. Organizations such as UNHCR and Red Crescent have been raising support and awareness for relief efforts throughout the UAE. This, coupled with the support of all institutions, may have impacted perceptions of trust across the board.

The resurgence of trust in the UAE throughout 2013 is a result of consistent efforts by the institutions to reengage both informed and general publics, following several years of regional instability. Through increased transparency, a focus on international partnerships and economic recovery, UAE institutions have become some of the most trusted around the world.

Nicola McAlpine GM, Edelman United Arab Emirates nicola.mcalpine@edelman.com 31

THE TRUST TRIP PLANNER FOR SOUTH EAST ASIA AND AUSTRALIA We all know how hard it is to be able to build trust with your stakeholders. It becomes harder when you have an 8pm flight to catch home and your colleagues are shaking their heads as they discuss the latest traffic woes across many South East Asia and Australia (SEAA) cities. Fortunately, the 14th Edelman Trust Barometer can help you devise a trust building schedule as you hit the road this year.

You need a coalition in every port

If you are clocking up air miles, now is the time to change up your schedule and bank some trust points as well. Here are some actions from our trust barometer that can make your trips more rewarding;

Stop going straight to the office

Change your breakfast consumption habits You should wake up and eschew the paper at breakfast and go straight to online search engines for your general news and information. Whatever the form of these across the region, search engines are on track to overtake traditional media, enjoying among the highest trust scores as it pertains to general news and information.

You can no longer travel alone Air Warriors of SEAA can no longer travel alone. If you are moving around the region it pays to have an entourage. If you want your messages to be credible, you should never travel without an academic or expert partner or a technical expert from your company. These individuals are crucial in helping form credible opinions about your company across all of the markets. In every market, these groupings are the most trusted spokespeople to provide credible messages. Offering a 20 point credibility bonus above a CEO. A side benefit is when you are stuck in traffic; you won’t hear what your previous entourage might have thought you wanted to hear, but, some rational and sometimes hard hitting messages from those people whom are really in the know.

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To make engagement more credible, relevant and transparent, having an NGO partner in each market is crucial. NGO’s are the most trusted institution across SEAA, except in Indonesia where they are 3rd but experienced the biggest gain in all institutions in that market.

If you could build an ideal schedule for each of your market visits, visiting the office should no longer be your first stop. This might seem elementary, but, getting out in front of your customers and listening to them is deemed among the most important actions to build trust in Singapore, Australia and Indonesia. The problem is that there is on average a 20 point gap between the importance of listening to customers versus business performance in this area.

In Malaysia, having high quality products is deemed the most important. Consistent as a top 5 driver in all SEAA markets is being ethical. If you can bypass the office and go straight to the customer there is a definite boost to your trust score.

Become a Policy Wonk The vibrant nature of politics across our region makes for exciting and somewhat confusing times. This year’s data clearly points towards business being required to have greater engagement around public policy issues of the day. Yet, the same public is also pushing government to focus on infrastructure build (Indonesia), consumer protection (Malaysia), and business regulation (Singapore and Australia) as the most important role that government should play in business.

Travelling executives should not be afraid of pushing a public policy position, either on their own or in partnership with NGO’s. The informed public across SEAA overwhelmingly agrees that “when policymakers are developing new regulation on

businesses and industries they should consult with multiple stakeholders before making final decisions.�

The hope of car owners and taxi drivers in Jakarta must be that the Indonesian Government heeds the words of the people, 45 percent of whom clearly want the government to build infrastructure that promotes and facilitates business opportunities.

Finish the day with a ‘snifter’ at an Ambassadors or Chambers of Commerce drinks If you take engagement seriously and you want to form a better understanding of the context of the market or your operating environment, your picture is going to be clearer if over drinks you can glean insights from executives from other companies. If you could meet with a fellow CEO from a Japanese (Indonesia & Malaysia), Canadian (Australia), or Swedish (Singapore) company you might be able to understand why they are the number 1 trusted companies in the different markets. Or if you are a travelling banker and your institution is still pushing the BRICs, you are going to have to work extra hard as the BRICs are a dirty word in the world of trust across SEAA. Buying the drinks might be the only solution for bankers.

Hire a Prius and eat local Finally, if you want that added extra boost to your trust trip hire a Prius. Trust in renewables, technology and automotive is a potent combination of trust across all markets. And as much as it pains me to say and advice I find hard to follow, you need to stay away from fast food restaurants and eat local. Fast food restaurants have the lowest trust in all markets in the food and beverage industry.

All in all the 2014 trust travel message is slow down, listen to local people, be bold in advancing your position, build partnerships, and eat local.

Iain Twine CEO, Edelman Southeast Asia and Australasia iain.twine@edelman.com 33

AUSTRALIA’S REVERSAL OF FORTUNE: STABILIZED LEADERSHIP SPURS INCREASED TRUST BUT HIGHLIGHTS A GROWING DIVIDE Australian news headlines scream that our economy is slowing and is at a cross roads. Our manufacturing plants have shut their doors. Our powerhouse resource industry is slowing and our agriculture industry faces uphill battles.

Retail tills are still not ringing like they should. The Aussie dollar is slipping.

Despite this, businesses leaders remain resilient and confidence is high. Our new government has declared that “Australia is open for business” and a renewed optimism has emerged.

However, The 2014 Edelman Trust Barometer suggests that there is a sense of unease amongst everyday Australians who may still be experiencing the unevenly distributed rates of growth and prosperity from the twospeed economy.

Most Aussies are really feeling the pinch. They’re concerned about the rising cost of living. Electricity and gas prices are on the rise as well as bricks and mortar prices. Despite low interest rates, owning a home seems like an impossible dream, especially with continued anxiety around job security.

The Trust Barometer measures trust amongst Australia’s general population (18-64 years) as well as an “informed public” who meet the following criteria: collegeeducated; household income in the top quartile for their age in Australia; read or watch business/news media at least several times a week; follow public policy issues in the news at least several times a week. The differences between these two groups are stark, with a 14 point gap amongst informed publics and general population.

Overall, trust amongst this informed public is high, having increased eight points between 2013 and 2014 to an average trust score of 58 percent. This was elevated in particular by rising trust in business (59 percent) and government (56 percent) in 2014. For the Australian general population, trust is still hard won with only 38 percent trust in government and a 49 percent trust in business.

A year ago Australians were contemplating a lengthy ninemonth election campaign as the former Prime Minister Julia Gillard attempted to build trust in her government by announcing well in advance of the September 7th election. Business and the community reacted angrily as 34

the country’s decision making process and ability to plan ahead were put on hold as we waited for the election to be held.

Interestingly, the Coalition led by Tony Abbott campaigned on the issue of trust. Pledging “we won’t let you down,” Abbott said, “you could trust us in opposition and you will be able to trust us in government.”

In September, The Sydney Morning Herald endorsed the Coalition saying “Australia is crying out for a government that can be trusted to deliver what it promised.” The Herald was right. The Edelman Trust Barometer revealed a nine point drop in trust in government between 2011 and 2013.

The election of the Abbott Coalition Government brought fresh hope that (at the very least) the political bickering and infighting would end and our elected politicians would concentrate on governing the country.

However, Tony Abbott should be aware that he still suffers a trust deficit. According to the 2014 Trust Barometer, only seven percent of Australians trust government to tell the truth, regardless of how complex or unpopular it is and only 10 percent believe they make ethical and moral decisions.

Edelman’s 2014 Trust Barometer results reflect the Australian population’s decision to change their government in such an emphatic fashion. Trust in government overall has risen a staggering 13 points with informed publics and six points with the general public.

This contrasts with trust levels in government globally which witnessed historic declines, particularly in the United States and Europe. Over time, Australia’s trust in government appears to fluctuate in line with Australia’s electoral cycle, particularly changes in the country’s leadership.

2014 saw Australia’s highest levels of trust in business since the Trust Barometer survey began in this market in 2009.

The 2014 Barometer’s analysis of factors shaping trust in business in Australia including leadership and trust in the CEO, industry sector, country of origin and industry type make for some quite telling conclusions.

Once again, the technology, consumer electronics and brewing and spirits industries take out the top three positions as the sectors most trusted while banking, energy, chemicals and media are the least trusted.

Despite this, trust in all fifteen industry sectors rose with many experiencing double-digit percentage point rises.

For example, trust in energy rose by a solid 20 points while telecommunications rose by 15 points, consumer packaged goods by 14 points and even media rose by 11 points.

When broken down into specific parts, some sub-sectors showed more trust than others: energy renewables achieved a 71 percent trust level while mining languished at 44 percent. In financial services, trust in banks was the highest level at 46 percent while credit cards were 38 percent.

Country of origin is an equally interesting measure of trust in business. Australians are most trusting of companies headquartered in Canada (82 percent) and Europe. Trust in companies headquartered in China, our largest twoway trading partner, is very low (26 percent) but perhaps underscores attitudes to things like foreign investment, particularly by Chinese sovereign-owned enterprises.

In terms of the ownership type of businesses most trusted, Aussies prefer family-owned and small to medium enterprises the most while they trust big business and ASX-listed companies the least. The buy local and “Aussie Battler” narrative still resonates with Australians and with a big rise in shareholder activism, this measure should be a concern to the boards and executive management of companies traded on the stock exchange.

message to engage with people. Academics, technical experts and financial analysts rank the highest in credibility.

Companies should look to empower its employees as brand ambassadors. Australians see regular employees as far more credible than CEOs although CEOs have enjoyed a 20 point rise since 2009.

One of the most interesting trends in the level of trust measurement in Australia over the last five years has been the steady increase in levels of trust in all four institutions.

Trust in each institution, NGOs, business, government and media rose in 2014 and each has the highest level of trust since we started tracking in 2009 . Trust levels in Australia in NGOs rose by six points to a whopping 70 percent.

The media, Australia’s least trusted institution, has steadily increased in trust since 2009, moving from a mere 35 percent to 48 percent in 2014 (among informed publics).

So despite our cynical nature and a politically tumultuous year, Aussies are actually a trusting lot. At a 58 percent average trust score in 2014, Australia is in fact now more closely aligned to our more trusting and optimistic Asian counterparts.

2014 has been a watershed year for trust in Australia, particularly in how it has so dramatically acted as a catalyst to a change of government and as a reaction to bad behaviour. But politicians and business leaders would do well to remember Australians are fickle and their loyalty is not guaranteed! The rosy picture seen with our informed publics is balanced by continued apprehension from the broader Australian population. Expectations are high for both government and business to deliver what they have promised in an ethical manner and through engagement with NGOs, partners and the community.

Despite our high level of trust in business, Australians by and large want the government to apply continued scrutiny of the private sector. As well as seeing an important role for government in promoting and supporting business to do well, a large number of people don’t think there is enough regulation either. When broken down into key industries, 47 percent of people want more regulation of the financial services industry while a whopping 58 percent want increased scrutiny and regulation of the energy sector. And up to three quarters of Australians see a role for business and other stakeholders in the policy formulation process with specific industries expected to contribute more back to their own sector.

Once again, Australians’ level of trust in spokespeople continues to be a challenging area for businesses and how they communicate. CEOs, boards and entrepreneurs remain the least credible spokespeople for a company.

There is a new dynamic emerging where conversations are informed by an ever increasing array of sources, where it’s no longer ok to rely on a single spokesperson and a single

Michelle Hutton CEO, Edelman Australia michelle.hutton@edelman.com 35

INDONESIA: A YEAR OF LIVING TRUSTINGLY In April 2014 Indonesia will vote for a new parliament and in summer 2014 for a new president. The incumbent, who is term-barred, presides over a government limping towards its end, back-bent by the weight of corruption allegations.

Some sort of political seismic shift looks likely.

Perhaps all the more so if one considers the extraordinary fact that some 67 million of Indonesia’s citizens will be first time voters (those who, since the last elections, turned 17 years old or, if under 17, are married). That’s around 35 percent of Indonesia’s 187 million voters (Indonesia is a young country and the average age, according to the UN, is around 28 years old). This generation is obsessed with Twitter, Facebook and (increasingly) Path; they don’t necessarily read newspapers or watch TV news; they may be less likely to be inspired by 60-something retired generals as presidential candidates. The majority of the country only has a patchy recollection, if any, of life under the pre-1998 New Order military regime, or even of the chaos of 1998 which gave birth to Indonesia’s democracy.

Indeed some tell us, “Today, the idealism that brought about the end of the New Order 15 years ago has made way for a sense of tired disillusionment with politics. Endemic corruption has infected all of government from the central government in Jakarta right down to the district level.” 1 So with this background and, the elections coming up, what do our Trust survey results tell us to expect in this seminal year?

Well, Indonesia remains one of the world’s most trusting countries in media and business: but not so much in government. That said, it is worth noting that while trust in media overall remained high (78 percent amongst informed publics), those who said they trust media ‘a great deal’ dipped by four points.

This year we see a startling 22 point rise in the level of trust in NGOs amongst informed publics, after years

• There is a greater level of transparency and better reporting as NGOs have to fight harder for funds (as some large international donors are now scaling back their funding of support for “middle income” Indonesia) • We have seen some high profile acts of partnership between NGOs and Indonesian businesses; not least the compact between Asia Pulp and Paper and Greenpeace (signed in early 2013) • And, most significantly perhaps, many Indonesians see NGOs as a crucial part of developing civil society and – like the rise in trust in business – want to see partnership between key stakeholders to deliver change in Indonesia.

The rise in trust in government is interesting (given the daily parade of politicians before the KPK, the anti-corruption commission and its courts). We think our survey audience is picking up on the fact that the governing process in Indonesia is becoming demonstrably more transparent. Surveys of all sorts – including our own Trust Barometer – underline the importance Indonesians put on transparency.

In the last twelve months we have begun to see a new generation of reforming municipal leaders (one

From the “get out the youth vote” campaign Ayo Vote - http://www.ayovote.com/tips-for-first-time-voters/ - which Edelman Indonesia sponsors on a pro bono basis with digital communications support.

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of decline. Our assumption is that this is drawn from three things:

So 2014 is going to be an exciting political year in Indonesia. Whoever wins the parliamentary and presidential elections will have to deal with the world’s third largest democracy and the many developmental challenges it faces. Not the least of which is the causes and consequences of asymmetric economic development: the rich are getting richer at a far more rapid rate than the bulk of the Indonesian population. And the rule of law. The fact that the head of the Constitutional Court was arrested for corruption tells you a lot about the state of law in Indonesia.

of whom, the governor of Jakarta, Joko “Jokowi” Widodo, may yet become president); and we’ve seen the KPK secure a spate of quite breathtaking arrests and later convictions of corrupt leaders; along with ministers; government agency bosses, members of Parliament and – most shockingly – the head of the Supreme Court.

So we think this very dramatic holding of power to account, and a rising sense that the 2014 elections will herald deep change in Indonesia, more responsive to this young nation, explains the improvement in trust in government. We get further confidence in this analysis when we see that, while trust in “government” has improved trust in government leaders to “tell the truth” remains weak.

In fact, Indonesians are twice as likely to trust business leaders to tell the truth than they are likely to trust government leaders, our Trust Barometer finds.

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Allied to this is the apparently endemic nature of corruption across Indonesia’s established political parties. Too many spend too much time trying to shear government budgets to fund party political campaigns. At the recent Economist Indonesia Summit2 I was very struck by the words of McKinsey Indonesia Chairman Raoul Oberman, when he said that Indonesia needs a funded democracy. In other words, funded political parties to let democracy develop in a corruption-free way. I think that rings very true. And such a change would I think be an important step forward in improving the Rule of Law in Indonesia.

The Head of Strategic Command of the Indonesian army Lt. Gen. Gatot Nurmantyo recently caused alarm – understandably since Indonesia was a military dictatorship for over 30 years – when he described Indonesia as having an “empty democracy.” Our Trust results show that beyond democracy, Indonesians want transparency, ethics and strong action. What is so challenging for Indonesia’s power-elites is that the 2014 elections, assuming they are “free and fair,” may challenge the status quo in a way they’ve not experienced before in this young democracy. Young Indonesians may not want the same for their country as their elders. And, if that is so, then 2014 is going to be just the beginning of a fascinating period.

Stephen Lock CEO, Edelman Indonesia Head of Public Affairs for Southeast Asia stephen.lock@edelman.com

Edelman Indonesia is the official PR partner for many of the Economist events across Southeast Asia

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FOCUS ON TRANSPARENCY AND INTEGRITY SEE TRUST IN BUSINESS IMPROVE DRAMATICALLY IN MALAYSIA Rebounding from a two-point drop from 2013, businesses in Malaysia saw a significant jump in trust with a nine point increase to 72 percent this year.

This increase comes mainly by big enterprises and public companies, indicating that a commitment to transparency and high standards of governance are held in high regard by Malaysians.

of the business, telling the truth regardless of how complex or unpopular it is and remaining front and center during challenging times, in order of importance. These attributes were only separated by one percentage point each, beginning at 86 percent, indicating that transparency and honesty in top executives are paramount.

This result comes on the back of Malaysia moving up six notches to sixth place entering the top 10 nations the World Bank deems friendliest to business.

Implementation of strict reporting standards, integrity pacts, open tenders and independent PAC oversight initiated by Prime Minister Najib Razak’s administration has contributed significantly to business earning higher public trust.

This year’s survey also showed an expected result in terms of trust in government given the recent policy changes announced at the end of 2013.

The result was further strengthened by the World Bank’s vote of confidence for the country’s banking sector, reporting that it is poised for further growth in 2014 with strong prospects and profitability. It was no surprise then to see that 78 percent of Malaysians said they have a high level of trust in banks.

Eighty percent of respondents in Malaysia said they trusted big businesses, up by three percentage points from a year before, while 77 percent said public companies are trustworthy. This sentiment is shared almost similarly across Asia Pacific with 73 and 74 percent, respectively, indicating they would conduct business with these established companies.

Technology companies continue to enjoy high levels of trust with an increase of five percentage points to 90 percent, while consumer health and pharmaceutical companies saw trust gains of four and three percentage points respectively to 79 and 77 percent.

However, while trust in business saw a marked increase, trust in its leaders was lackluster.

Respondents gave clear indication of the attributes they expected from CEOs to build trust. This includes communicating clearly and transparently, engaging employees regularly to discuss the state 38

The big news this year in global trust scores was the collapse of trust in government. In fact, trust in government declined in more than half of the countries surveyed. In Malaysia however, following the rather divisive and emotionally-charged 13th General Elections last year, trust in government only dropped 6 points to 54 percent after rising double digits last year.

As Malaysia forges ahead with its ambition of transforming to a high-income economy by 2020, the government has shown that it is willing to make unpopular decisions to achieving this goal. With the tabling of the 2014 National Budget in October, the Prime Minister announced subsidy cuts and, most significantly, the introduction of the Goods and Services Tax (GST) in 2015. A significant volume of views on digital and social media showed a generally-opposed view to the GST. Coupled with the less than sterling government spending report card highlighted by the Auditor General, it was no surprise that this year’s Trust Barometer showed that Malaysians’ trust in the government is declining.

That being said, trust in the government still remains in positive territory compared to the 2012 Trust Barometer results where only 49 percent of those surveyed gave the government a thumbs-up.

This year, respondents also viewed a company’s product and services, level of engagement and integrity as priority areas for building trust. While they expected a company to deliver on product quality

and have high ethics, there was a significant gap in how they thought companies were performing, with an 18 point gap separating importance from performance for both.

Meanwhile, a third of respondents said that they expect the government to protect consumers from irresponsible businesses. A further 20 percent equally said they wanted the government to build infrastructure that promotes and facilitates, and that the powers that be work to ensure free market access as well as open competition within industries.

The 2014 Edelman Trust Barometer continued to strengthen the fact that Malaysians are generally a trusting lot, showing a one point total increase in trust from a year before to 65 points in 2014. Trust in Non-Governmental Organizations (NGOs) remains strong and leads against businesses, media and government, albeit with a one percentage point drop in trust from a year prior, to 75 percent.

Technical experts and academics remained at the top of the list of people most trusted by Malaysians.

Another significant drop was for peers, who dropped 12 points but only moved down a notch to fourth.

This pattern isn’t reflected globally, however, with peers in fact gaining a single percentage point in terms of trust.

One thing is clear though, a strong majority of Malaysians feel that business and industry leaders need to play a more active role in national policy discussions, showing a demand for a more inclusive and cooperative government-business relationship.

Raymond Siva MD, Edelman Kuala Lumpur raymond.siva@edelman.com 39

STATE OF TRUST IN SINGAPORE REMAINS STRIKINGLY HIGH; YET BUSINESS AND GOVERNMENT HAVE ROOM TO BUILD In 2013, recurring debate themes for Singaporeans revolved around soaring housing prices, public transportation woes, health and environment scares around dengue and the haze, and foreign labor sentiments. Our government participated in these discussions, making a more concerted effort to engage Singaporeans, online and offline, through national initiatives including “Our Singapore Conversations.”

Yet this may not be enough for now; Singapore’s trust in government dropped 7 points to 75 percent, according to the 2014 Edelman Trust Barometer. The decline mirrored a global trend, in which trust in government fell to a historic low of 43 percent, making it the least trusted institution globally for the third consecutive year.

In this environment, Singapore still retains its reputation for being one of the most trusting in the world, ranking third out of 27 countries. Despite the dip, our trust in government remains relatively high, and continues to trump our trust in business – a rarity worldwide.

Singapore’s trust levels in the other three institutions also persist, with business down six points, NGOs up one, and media flat.

As we cast the spotlight on the institutions, the Singapore research tells us that: NGOs hold the cards: Non-government organizations continue to be the most-trusted institution in Singapore and worldwide. Singapore’s trust in NGOs rose by 20 points over the past five years, to 76 percent in 2014 from 56 percent in 2010. This steady increase led to NGOs

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becoming the most-trusted from the least, a positive sign for the over 140 international non-profits, industry associations, philanthropic foundations, social enterprises and sustainability-related outlets that call Singapore its regional or global base.

The power of collaboration between business and government: Singaporeans believe that government and business should collaborate to create benefits for all – more than one in five say they want government and business to work together to ensure free market access and open competition within industries. The two institutions should also counterbalance each other, as more than half say they trust government to regulate business activities to ensure companies are behaving responsibly (28 percent) and protect consumers from irresponsible business practices (26 percent). Not surprisingly then, Singapore State-Owned companies (74 percent) are as trusted as Publicly-Traded companies (75 percent) and Big Business (72 percent). This creates opportunities for the hundreds of global MNCs that call Singapore a regional HQ to leverage its reputation as part of their emerging market entry strategy.

Traditional media trumps online: Overall, Singapore’s trust is comparatively high, as nearly 80 percent of the countries surveyed report trusting media less than last year. Singapore’s trust in media remains flat from 2013 at 70 percent, though its intensity dropped by 2 points. This drop in intensity may be attributed to a new licensing scheme by the Singapore authorities to regulate Internet news sites, including Yahoo! Singapore; when announced, the decision drew strong criticism from at least 100 websites, who “blacked-out” their websites for a day in the #FreeMyInternet protest. At 79 percent, trust in Singapore’s traditional media (such as Channel News Asia and The Straits Times) remains high at around 14 points more than the global average of 65 percent. So, while traditional media may not always be the first source of information, traditional media still tend to be the go-to source for trusted verification. This can also be seen at how frustrated Singaporeans were online at the slowness of news on the Little India riots reported by MediaCorp and Singapore Press Holdings. They were waiting for their trusted news sources to verify data that was spreading online.

Areas of Opportunity for Business and Types of Spokespeople The 2014 Edelman Trust Barometer identifies 16 trustbuilding attributes, grouped into five performance clusters: engagement, integrity, products and services, purpose and operations. Of these, the performance clusters of integrity and engagement are consistently key drivers of building trust.

Respondents say that there are three actions business can take to further build trust: (1) act responsibly in a crisis, (2) be transparent and open, and (3) listen to customers.

These will help to close the widest gaps in how Singapore companies currently perform against the attributes that Singaporeans identify as most important.

Engaging the right spokespeople at the right moments is also key in building trust. Within Singapore, employees are most credible in driving engagement on behalf of a company. However, when it comes to presenting a company’s integrity and business ethic, the CEO is the more credible influencer. An “activist consumer,” on the other hand, should be tapped to engage around a company’s purpose.

online search engines as an amplification tool.

•Align opportunity with credible spokespeople and influencers including academics, technical experts and a “person like yourself.”

•Enhance your leaders’ roles; CEOs have made a comeback as a trusted spokesperson but need a new mandate. CEOs can build trust in themselves and their companies by communicating clearly and transparently (according to 84 percent of respondents), telling the truth regardless of how unpopular it is (82 percent) and remaining front and center during challenging times (79 percent).

* The Edelman Trust Barometer, now in its 14th Edition, surveyed 33,000 respondents across 27 countries, making it the most robust exploration of trust and reputation worldwide.

A Suggested Baseline Path Forward To effectively build trust in Singapore, organizations should consider taking the following steps based on data from the 2014 Edelman Trust Barometer: •Consider partnerships and engagement with NGOs. Increasingly, many Singapore-based NGOs are leading the conversation around sustainability, environment, foreign worker welfare and anti-human trafficking, and are getting credit for it regionally. Identify the ones that work for your company’s causes and advance it jointly.

•Earn and promote traditional media coverage using

Amanda Goh MD, Edelman Singapore amanda.goh@edelman.com 41