Recovery and Resilience: Spotlight on Asean Business
September 12, 2022
Almost three years into the pandemic, governments and businesses alike are mapping out a blueprint for a resilient and sustainable recovery that leaves no one behind. Asean–a vast, diverse region of emerging markets in Southeast Asia–has shown abundant resilience in the face of ongoing challenges, demonstrated cooperation and is poised for growth.
We gathered business leaders, policymakers and industry experts to discuss the Regional Comprehensive Economic Partnership (RCEP), the world’s largest trade bloc, and look at the possibilities, including renewable energy initiatives in an area on the frontline of climate change.
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- Tengku Zafrul Aziz, Minister of Finance, Malaysia
- Deborah Elms, Founder & Executive Director, Asian Trade Centre; President, Asia Business Trade Association
- Benjamin Hung, Chief Executive Officer, Asia, Standard Chartered
- Sri Mulyani Indrawati, Minister of Finance, Republic of Indonesia
- Hon. Mohammad Atiqul Islam, Mayor of Dhaka North Bangladesh
- Pang Xue Kai, CEO, Tokocrypto
- Amb. Sihasak Phuangketkeow, Special Advisor of Eastern Economic Corridor; Former Permanent Secretary of The Ministry of Foreign Affairs of Thailand
- Nischint Sanghavi, Regional Crypto Lead, Asia Pacific, Visa
- Angelia Chin-Sharpe, CEO, Singapore BNP Paribas Asset Management
- Sonali Tang, Regional Director, Singapore, Asian Development Bank
- H. E. Surangel S. Whipps, Jr., President, Republic of Palau
- Bill Winters, Group Chief Executive, Standard Chartered
- Ng Lai Yee, Singapore Managing Partner and Country Leader, IBM Consulting
- Haslinda Amin, Chief International Correspondent for Southeast Asia, Anchor, Bloomberg Television
- Michelle Jamrisko, Senior Asia Economy Reporter, Bloomberg
- Ishika Mookerjee, Deputy Team Leader, Asia Stocks, Bloomberg
- Joanna Ossinger, Senior Reporter, Bloomberg
Asean is on track to becoming the largest trading bloc, and “the only one every economic superpower is keen to develop a closer relationship with,” said Benjamin Hung, Chief Executive Officer, Asia, Standard Chartered in his opening remarks. Despite current critical economic, political and supply chain challenges, it’s an “oasis of growth,” launching into the 4th industrial revolution with new business models and interconnectivity, and 15 years of steady GDP growth.
Malaysia’s Finance Minister Tengku Zafrul Aziz is confident the economy will expand faster than expected in the current year, supported by strong private consumption amid risks from a global slowdown. The economy, which expanded 8.9% in the second quarter, will likely see the momentum continue in the third quarter. “Next year is going to be a tough year,” Aziz said, describing a budget aimed at maintaining momentum and adhering to Malaysia’s new fiscal responsibility legislation.
Indonesia’s Finance Minister Sri Mulyani Indrawati warned against excessive monetary policy tightening that could derail economic recovery as the government also does its share to ease supply disruptions and cool inflation.President Joko Widodo is coordinating with local government leaders and policy makers to identify the source of price pressures in the food supply or energy costs, Indrawati said. “That is really up to the central bank, that’s why they’ll decide if this current inflation is going to affect the expectation of inflation on a more permanent basis then it is time for the central bank to act,” she said on the rate hikes.
On global entities potentially miscalculating the depth of the problem in China and Europe, Bill Winters, Group Chief Executive, Standard Chartered, said the U.S. economy is proving to be more resilient than predicted, but a recession could still happen. “We’ll see just how high rates have to go.”
“Tragic” is how he described the energy crisis in Europe, calling dependence on Russian gas the “great geopolitical mistake” of the millenium. Winters spoke to China’s economy “stumbling” in the wake of ongoing lockdowns, especially in real estate, but that “the underlying dynamism of its economy remains quite strong.” He is hopeful, and said the fastest recovery will happen in Asia.
Panel: Moving up the Value Chain
The panel spoke to the supply issues, the value chain, and where Southeast Asia stands now in light of the pandemic and Ukraine.
Amb. Sihasak Phuangketkeow, Special Advisor of Eastern Economic Corridor; Former Permanent Secretary of The Ministry of Foreign Affairs of Thailand said that despite talk of recovery, “The external environment doesn’t offer cause for optimism.” But he believes in the region and Asean, and sees opportunity for each country to do overdue economic restructuring, invest more in human capital and digitalization, think more globally and create a green economy that can increase investment flow.
“We don’t need more thought. We need to actually implement things in Asean,” said Deborah Elms, Founder & Executive Director, Asian Trade Centre; President, Asia Business Trade Association,
expressing her hope that the intense disruption would be the impetus toward action. She used the example of seven or more unrealized plans to link up highways in the region. “As far as I know, you still can’t drive across Asean.”
Ng Lai Yee, Singapore Managing Partner and Country Leader, IBM Consulting agreed, and said the crises has given the region a clearer perspective on why it needs to move up the value chain. She referenced an IBM study that indicated new thinking on what supply chain resiliency means, and said Asean needs to pull together risk modeling, alternate suppliers and simulations to get things done. “I truly believe this is the time to embrace technology in the supply chain in order to achieve what we’ve been saying.”
Panel: Green Recovery
In Bangladesh, meeting Asean’s target of 23% of energy from renewable sources by 2025 is not just a commitment. It is essential to its survival. Hon. Mohammad Atiqul Islam, Mayor of Dhaka North, said “Every day, 2,000 people come from different districts to my city, and I cannot say ‘No’.” Migrants fleeing their homes and farmlands, devastated by chronic coastal flooding, are “exchanging one set of risks for another” and “creating the country’s biggest challenge of the moment.” Renewable energy sources are the only way they will be able to meet rising demand. He spoke to additional challenges, such as religious sector restrictions, sanitation and a population density of 49,000 people per square kilometer.
Climate change is the theme that cuts across all ADB operations, said Sonali Tang, Regional Director, Singapore, Asian Development Bank. She acknowledged the persistent challenges but said renewables have been ramping up. “I think we should take some encouragement from the fact that momentum has built up over the past two or three years.” ADB invests $5-6 billion annually. Asked where countries currently stand on the 23% target, Tang explained a multi-faceted approach of building new capacity for renewables, transitioning fossil fuel plants and closing coal-fired plants early in their economic life. Many Asean countries, rich in green resources, have met or exceeded the goal, and efforts are underway to maximize those resources across the region with a connected grid.
All Asean countries are committed to the COP26 net-zero by 2050 goal, said Angelia Chin-Sharpe, CEO, Singapore, BNP Paribas Asset Management, but for developing countries to be able to source their total $100 billion pledge is another matter. She talked about how her firm is attempting to bridge the capital gap and encourage the innovation financing that encourages more investors. On how they determine the difference between a good investment and greenwashing, Chin-Sharpe said they use proprietary ESG scoring. “But it’s not just their score and commitment. It’s how they are looking at exclusion of risk to profitability and the capital market.”
Web 3.0, Metaverse and the Future of Blockchain
The Republic of Palau, with a mere 20,000 people, has big entrepreneurial aspirations rising out of its digital asset strategy. President H. E. Surangel S. Whipps, Jr. said they passed this year the Digital Residency Act, providing a platform and country-hosted portal on which vetted e-corporations can register and find the necessary security to do business globally. “We need to expand the offerings and add regulations to make it more beneficial to residents,” he said. “There is already great excitement.” Palau is also planning to soon launch a national stablecoin, which has attracted interest from investors.
Are we in a crypto winter? The signs are there, according to Pang Xue Kai, CEO, Tokocrypto, who is not troubled at all. The market has always run on 4-year cycles, with current global conditions adding to the downtrend. He sees it as a necessary adjustment period, with “spring cleaning” on the horizon. “A lot of companies overextended their portfolios, causing great issues to the industry in general. It’s going to pass and I’m looking forward to what’s going to come next.” Pang said Web3, the metaverse and GameFi are the most talked about in the VC space and by regulators in Indonesia, where interest from many perspectives is high.
Nischint Sanghavi, Regional Crypto Lead, Asia Pacific, Visa expanded on that, saying that upcycles attract speculators and developers. The developers are the ones who ride out the downs cycles. “We follow them to see how we can help them in the early stages of their businesses. The number of developers right now is at its highest, and they are staying, despite conditions. I think it’s a good sign and the best products are probably yet to come.” Sanghavi predicts some sort of merger of defi and traditional finance.
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