Prior to the Covid-19 pandemic, Southeast Asia had made huge advancements and was forecasted to be the fourth biggest economy by the year 2030. Unfortunately, the Covid-19 pandemic has resulted in economic devastation for ASEAN countries.
Arguably, the pandemic has posed the greatest challenge since ASEAN’s formation. However, there are positive signs that ASEAN can make an economic recovery in 2021.
It is of paramount importance for ASEAN countries to work together to mitigate the negative health and economic repercussions of the Covid-19 pandemic.
The ASEAN Comprehensive Recovery Framework was developed by ASEAN to specify Southeast Asia’s Covid-19 recovery strategy, including improving quality of healthcare and medical infrastructure, and to achieve greater trade integration and collaboration regionally.
During last month’s ASEAN Foreign Ministers’ Retreat, diplomats emphasised the importance of economic solidarity and integration. They also reaffirmed their commitment to fight the pandemic together.
Vietnam’s Deputy Prime Minister suggested during the retreat that ASEAN nations can tap on the ASEAN Covid-19 Response Fund to acquire vaccines and medical supplies.
ASEAN governments have also been recently rolling out Covid-19 vaccinations, in hopes of achieving herd immunity and to curb the spread of COVID-19.
Trade wise, all ASEAN nations are involved in the ASEAN Single Window Live Operation, where trade and cargo flows can be accelerated as computerised trade information are transferred across countries.
Six ASEAN countries such as Cambodia, Laos, Malaysia, Singapore, Thailand, and Vietnam embarked on the ASEAN Customs Transit System, which will help to promote the seamless transportation of goods in the region. With this online system, the transportation of goods across Southeast Asia nations can be tracked and be made more streamlined and cost-efficient.
Governments in Southeast Asia will continue to play an instrumental role in mitigating the economic impact of the pandemic by helping individuals and firms financially. The Thailand government will be issuing a new US$7 billion stimulus package to help individuals and businesses tide over.
Singapore’s Deputy Prime Minister Heng Swee Keat believes that ASEAN’s rising middle-class and digitalised economy growing expeditiously will set the foundation for Southeast Asia economies to recover quickly from the pandemic.
The Philippines has been a country that embraces hard cash traditionally. However, as the pandemic has resulted in movement restrictions initially, Philippines citizens had to start adopting digital payments. For example, there was a 150% increase in applications for Globe’s GCash mobile money facility.
The convenience of digital payments will help to promote online spending, facilitating economic activity and growth in the process. During the last 6 months of 2020, millions of micro, small and medium-sized enterprises in Indonesia were digitalised in the “Bangga Buatan Indonesia” initiative.
Indonesia’s digital economy is predicted to generate US$150 billion by 2025. The Asian Development Bank predicts that ASEAN’s GDP will increase by 5.2 percent in 2021.
Southeast Asia’s economic growth in 2021 will be significantly dependent on China, ASEAN’s largest trading partner. Most ASEAN nations are large trading partners with China, exporting large volumes of manufacturing products to China.
In January 2021, China’s Foreign Minister Wang Yi met with ASEAN’s Secretary-General, seeking to boost China-ASEAN ties.
During the pandemic, China has been constantly helping Southeast Asian countries by donating medical supplies and exchanging critical health information. China also pledged to collaborate closely with ASEAN, economically.
Recently, the Chinese Foreign Minister promised US$1.34 billion in loans for infrastructure programs in the Philippines.
ASEAN to work together
In January 2021, Brunei became the ASEAN chair for 2021. This would be the fifth time that Brunei helm the chairmanship of ASEAN. This year’s chairmanship would undoubtedly be much more challenging than the past ones.
Brunei’s strong leadership would be vital in order for ASEAN to work well together, trade wise, and to fight the pandemic. It is hoped that ASEAN will improve relations within the bloc and with its external partners in 2021.
Vietnam had done relatively well in 2020 in leading the ASEAN bloc. There were several trade collaborations in 2020, with the Regional Comprehensive Economic Partnership (RCEP) deal being the most momentous one. Vietnam had also ensured that ASEAN remained united and cohesive in fighting the pandemic together.
Brunei would be hoping to at least replicate Vietnam’s success, in a crucial year for ASEAN and the world.
Brunei’s Sultan Haji Hassanal Bolkiah acknowledges that recovery from the pandemic would be one of Brunei’s main agendas. The Southeast Asian nation will also help ASEAN to leverage on the economic opportunities that the RCEP deal presents.
ASEAN has overcome many challenges in the past together, from the Asian Financial Crisis in 1997, to SARS in 2003, and the 2007-2008 Global Financial Crisis. Undoubtedly, Southeast Asia will overcome this ordeal and make a speedy economic recovery, after the pandemic is under control.
Author: Ong Bo Yang