Unlocking Opportunities in ASEAN
What the pandemic has laid bare, is that inter-connectivity is now more urgent than ever. Building connections be it from a digital, or sustainability perspective will be instrumental in resetting the global economy and building a resilient post-pandemic world.
Nowhere is this more apparent than in ASEAN. The region, on track to become one of the world’s largest trading blocs, is the beating heart of the world’s supply chains.
“ASEAN’s global connectivity gives it an unparalleled advantage from which to build future strength,” said José Viñals, Group Chairman of Standard Chartered PLC, during the opening speech at the Standard Chartered ASEAN Business Forum that took place on October 21 and 22, 2021.
Intra-ASEAN trade grew 25% between 2010 and 2019, with regional investments growing 40%.1
Yet for ASEAN to reclaim its pre-pandemic growth rates and sustain its economic recovery, Natalie Black, Her Majesty’s Trade Commissioner for Asia Pacific, agreed that cooperation within the 10-nation bloc is key.
During the event’s first panel titled “Catalysing ASEAN Connectivity,” Ms Black shared how the UK became an ASEAN Dialogue Partner in August 2021 and is currently finalising a Digital Economy Agreement (DEA) with Singapore.2
The DEA, once signed, will be the first such agreement between an Asian and European nation, reaffirming both economies’ commitment to openness and connectivity, while facilitating digital trade.
Major reset
“Looking ahead, ASEAN is at the tip of a major reset,” said Benjamin Hung, Standard Chartered’s Chief Executive Officer for Asia. “All the major economic superpowers are very keen to establish a closer collaboration and relationship with the region.”
Undoubtedly, ASEAN is an attractive economic partner. ASEAN makes up almost half of the world’s best performing developing economies and the region’s internet economy alone is set to double to USD363 billion by 2025.3
Furthermore, the ability to ink one of the world’s largest trade pacts – the Regional Comprehensive Economic Partnership (RCEP) – amid a global pandemic is a testament to the region’s willingness to keep open trade flows.
But it is not enough to just be willing to conduct bilateral trade; economic partners need to be committed to each other’s growth and development.
Gabriel Lim, Permanent Secretary, Ministry of Trade and Industry Singapore, highlighted on the same panel that “free trade agreements are not only an economic marriage but a strategic marriage as well.”
“When you have many countries committing to working together to grow and prosper, there is an underlying commitment to one another’s success and stability,” he said.
Resilience through sustainability and digitalisation
Talking about a region’s stability and resilience would be remiss without sustainability considerations though.
Christiana Figueres, Founding Partner, Global Optimism and former Executive Secretary for United Nations Framework Convention on Climate Change, said that with ASEAN being central to the world’s supply chains, the region is susceptible to the shifting demands of consumers and corporations globally towards carbon neutrality.
As an illustration to this point, a new study titled Carbon Dated by Standard Chartered revealed that 78% of multinationals will remove suppliers that endanger their transition plan by 2025.4
“Unless there is a trend of decarbonisation, it’s going to be increasingly difficult to access capital and the cost of capital will become expensive,” continued Figueres.
But building a resilient post-pandemic future for ASEAN needs to be rooted in both sustainability and digitalisation.
According to an ASEAN Digital Generation Report by the World Economic Forum, some 85% of respondents see digitalisation as being either very important or important for economic recovery.5
And in the world of finance, the ability to anticipate and meet customers’ evolving needs is critical to engineering new growth.
“COVID-19 has fundamentally changed the way consumers shop and bank,” said Rino Donosepoetro, Vice Chairman, ASEAN & President Commissioner, Indonesia of Standard Chartered, during the subsequent panel titled “The Digital Pivot”. “It’s reached a point where we can leave our wallets at home but not our mobile devices.” About 98% of Singapore millennials use mobile banking apps6, he added.
Echoing the views on how ASEAN’s consumers are rapidly evolving from a digital standpoint, Magnus Ekbom, Group Chief Strategy Officer of Lazada, shared how everyday purchases are now being bought online.
Mr Ekbom pinned this to the region’s companies “adopting a digital reality” much faster than before, fuelled by the tech-savviness of ASEAN consumers.
Digitalisation: both an ‘offence and defence’
In order for companies to be future-ready, Oliver Tonby, Senior Partner and Core Leader of McKinsey’s Digital Capability Centre, believes that senior executives need to use digital as a means to play “offence and defence”.
“On the one hand, you have to look for new products and new business models,” said Mr Tonby. “On the other hand, digitalisation can be used defensively, to reduce costs and streamline.”
Yet using digitalisation cannot just be about chasing recent fads, warns Wern-Yuen Tan, CEO of Asia Pacific, Australia, New Zealand and China at Pepsico.
“For us, we believe it’s not just about investing in e-commerce or livestreaming capabilities because that’s the cool thing now,” he said. “But really leveraging data and digital tools to make better decisions across the value chain, such as creating demand for our products; fulfilling that consumer demand and improving employee experience.”
Ultimately, while we often speak about digitalisation in terms of data and technology, this comes down to people and skills, reminded Ruma Balasubramanian, Managing Director at Google Cloud, Southeast Asia,
“ASEAN is one of the fastest growing economies in the world,” said Ms Balasubramanian. “If we build the right skillsets, we have a tremendous opportunity to lead a digital recovery from an economic perspective.”
Having weathered such a vulnerable time during the pandemic, ASEAN, as a region, has an unprecedented opportunity to reassess what a resilient future would look like. Underlying this, are its people, dealing head-on with the intertwining themes of digitalisation, connectivity and sustainability.
1 ASEAN Statistical Yearbook 2020
2 https://www.britcham.org.sg/news/uk-now-asean-dialogue-partner; https://www.gov.uk/government/news/uk-singapore-joint-statement-on-the-launch-of-negotiations-on-a-digital-economy-agreement
5 https://www3.weforum.org/docs/WEF_ASEAN_Digital_Generation_2021.pdf
6 https://av.sc.com/sg/content/docs/sc-pr_covid-19-triggers-singapore-millennials.pdf