World GDP is likely to contract 4.5 – 5% this year and Asian economies have done marginally better as they are going to contract by 1.5 – 2%, one of the worst contractions after the second world war. “Interestingly Asian trade has stood up and the fall in exports has been much less than what we have seen globally. Which is reflective of the swift policy response, and maybe the inherent resilience of the trading giants of Asia,” says Nitin Jain, MD & CEO, Edelweiss Wealth Management who was the chairperson and moderator of the roundtable discussion.
There are signs of growth all over Asia: Data from IMF shows that growth started in the third quarter of 2020. China’s PMI has strengthened, Japan’s PMI has recovered and South Korea’s PMI scored its highest since Feb 2011. Factory activity grew in Taiwan and Indonesia. India’s manufacturing will get moving again, once vaccines are rolled out next year. Growth in the region is forecast to rebound strongly, in the next two years and as this happens, there will be new opportunities and challenges that both businesses and governments will have to face.
“Asian countries must strengthen internationality, as much as they pursue transnational interests. Diversifying Asia’s economies from over-reliance on exports, to the west is a work in progress. Reorientation towards regional and domestic demand will take time. India is moving in the right direction to cultivate self reliance,” says Prasoon Mukherjee, Chairman, International Business Division IBD, Singapore Indian Chamber of Commerce, SICCI.
One constant theme that emerged in the discussion was India’s importance in the region. “India is the powerhouse that I think has not really been appreciated for what it is. We’ve always looked to China. China is a global power, it’s a manufacturing power, it’s a global strength that none of us can ignore. But I think India’s time is coming, and I’d like to see greater cohesion, and greater opportunities coming from linking ASEAN and India.” says Datuk Vinod Balachandra Sekhar, Chairman and and Group Chief Executive, Petra Group, Malaysia.
Japan, which went through a severe GDP contraction as its consumer spending dipped heavily during Covid-19 also believes that Japan and India need to have a strong trade relationship that is similar to US and China. “The confrontation between China and the US is becoming very high for these two big economies, and the rest of the countries need to bounce back, especially India and Japan, who are the two biggest economies after China in the region. We need to cooperate to balance the business environment and the political environment for it to become more stable,” says Yoshiki Sasaki, CEO, Japan Strategic Capital, Japan
NASSCOM is doing many programs to strengthen the Japan-India relationship by bringing together Japanese hardware with Indian software and Japanese investors to Indian startups. During Covid-19 NASSCOM was able to increase the number of engagements it did every quarter because of technology. “Earlier, we used to do one program a quarter, but now, we do one program a month for the startups and for the SME community. There is a huge appetite for Japanese venture companies and the investor community,” says Gagan Sabharwal, Senior Director, Global Trade Development, NASSCOM, India
Relationships within the Asia region also have to improve for reasons of supply chains. Most nations are now opting for a ‘China plus one’ strategy and India has to gain from that. “ COVID-19 has provided unique opportunities to India during this time, there is an opportunity to participate in the global supply chains. Multinationals have lost a lot of trust in China with the anti Chinese rhetoric fueled by the international media”, says Dr. Asif Iqbal, Indian Economic Trade Organization.
Industry veterans from Singapore also believe that strengthening relationships between nations in the region is the way forward. “The strength of the region will lie in the social and economic unity of the ACI (ASEAN, China and India) without encroaching on each other’s country’s borders, and in the wisdom of working together for the betterment of all. The region has been resilient to the challenges in the past, like the Asian financial crisis, the 2008 financial crisis, and we have seen it on and we have emerged together undefeated”, says Atul Temurnikar, Co-Founder & Chairman, Global Schools Foundation, Singapore.
The acceleration that Covid-19 has brought to technology is undeniable. In most countries, this is the only sector that has thrived despite the pandemic. The case is the same for the Philippines. The IT and BPO industry in the Philippines was declared an essential service and has done much better than any other industry in the country.
Many digital and infrastructure initiatives taken by the Philippines are similar to India. “We have to further strengthen our telecom infrastructure, upskill the talent pool, and tap opportunities beyond the metro cities to sustain the growth of the industry. This is why we’ve launched the Digital Cities 2025 program, which aims to establish twenty-five new IT-BPO hubs around the Philippines by intervening in four key areas: Institutional Development, Talent Attraction and Development, Infrastructure Development, and Marketing and Promotion,” says Rey Untal, President and CEO, IBPAP, Philippines.
Indonesia, which has been severely impacted due to Covid-19 as domestic consumption came down drastically, is now looking at revitalizing the economy through trade. “For economic recovery, in health care industry, tourism sectors, agriculture,we will need investment in the agriculture sector to make agri-food products which can be exported for example palm oil. This will be required to improve the economic situation and increase employment in the country,” says Mayra Andrea Mueller, President, Indonesia – Jordan Business Councils
The discussion also focused on stark economic inequality in the region and how addressing that is the responsibility of businesses. “We need to find a way through which capitalism can uplift everyone. As devastating as Covid has been it has given us an opportunity to rethink and relook at the way we operate. Asia is the future. There is no question about it. It was the future before this pandemic, it is certainly the future going forward,” says Datuk Vinod Balachandra Sekhar, Chairman and and Group Chief Executive, Petra Group, Malaysia.
Collaboration, digital initiatives, a balance between nationalism and regionalism emerged as the key themes during the discussion. It is evident that India is extremely important in the region and more so because of its large start-up ecosystem that offers a great investment opportunity to international investors. The governments in all countries are taking the right steps to support MSMEs and provide new credit lines and opportunities to individuals. With more collaboration and trade the Asian economy can only grow and strengthen more.