21 April 2020 – The first online ASEAN Roundtable Series organised by the CIMB ASEAN Research Institute (CARI) brought together business leaders from Malaysia, the Philippines, Singapore, Thailand, and Indonesia to discuss the series of stimulus measures announced by several ASEAN governments in response to the COVID-19 pandemic.
The panellists consist of four of ASEAN’s leading business leaders and expert, Chua Soon Ghee, Partner of Kearney Singapore; Shinta Widjaja Khamdani, CEO of Sintesa Indonesia; Mr Arin Jira, Chairman of the Map Ta Phut Industrial Gasses Co Ltd Thailand and Jose Ma Concepcion III, President and CEO of RFM Corporation Philippines. The panel discussion was chaired by Tan Sri Dr Munir Majid, Chairman of the CARI.
Shinta Widjaja Kamdani said that even though there are limits to the extent what ASEAN countries can do to save themselves from the economic damages and crisis projection caused by the pandemic, all policy responses and government spending that are aimed at alleviating financial burdens on business will translate into survivability for business in the longer term.
The panellists agree that diversification of supply chains also involves reducing the region’s overdependence on Chinese manufacturers and raw materials.
Disruptions in the supply of raw materials, labour, and sub-assembly components to ASEAN (particularly from China) had a significant impact on ASEAN industries.
Data shows that ASEAN manufacturers saw their worst month on record in March 2020, with the headline PMI falling from 50.2 in February to a record low of 43.4 in March. This was attributed in part to disruptions in supply chains impacting production and causing delays in deliveries .
“The sudden China shutdown triggered a global supply chain shock and will accelerate the movement of some manufacturing from China to ASEAN and elsewhere. China has a 28% share of global manufacturing, while ASEAN is only at 4-5%.
“For those countries who are prepared with policy tools such as incentives and schemes, this will be a golden opportunity,” observed Chua Soon Ghee.
The panellists agreed that the stimulus measures announced by several ASEAN governments were timely.
However, the assistance provided to SMEs is limited and targeted at providing support and relief in the short term.
Chua added that most of the stimulus packages have been focused on ameliorating the pain of a sudden sharp drop in demand, through some combinations of wage assistance, fees rebates or deferrals as well as loan support. New rounds of support should go beyond the short term.
He noted that critically, governments need to help SME address cash flow problems directly by providing loan support to keep SMEs afloat until demand goes back to normal.
The flow-through has been slow in many circumstances and will need to be accelerated through either moral exhortation, legislation, or direct cash to affected individuals and companies.
The panel observed that the impact of the COVID-19 pandemic has accelerated the speed of digital transformation. E-commerce and online businesses were already growing quickly in ASEAN prior to the outbreak, but most businesses will now consider e-commerce as a necessity rather than a luxury.
The acceleration of digitalisation, however, has brought to fore the digital literacy gap in the market, while some businesses are still playing catch up to digitalisation.
The panel suggested that policymakers focus on providing capacity building to MSMEs on how to navigate and adjust to the new business environment, in particular on how to leverage digital technologies.
Businesses must act on digital preparedness now in anticipation of the market’s returning to normal.
In closing, Tan Sri Munir urged ASEAN leaders to deepen ASEAN integration in response to the post-pandemic trade order.
He claimed that in the aftermath of COVID-19, globalization will be diminished. There will be greater regionalization of the world in which ASEAN is well-placed if it took its chances, and truly established the AEC, that single production base and market long-promised but still fragmented by barriers and nationalist sentiment.
He said the post-COVID-19 economic recovery is entirely in ASEAN’s hands and in those of its partners in the wider RCEP.