Bulletin No.2 | Monday, February 23, 2021

About this Bulletin

Building on the success of the inaugural Asia Trade Summit in 2019, The Economist’s Asia Trade Week 2021 brings together business leaders, trade negotiators, policymakers, academics and economists for a week of rigorous discussion and debate on the most important issues surrounding trade and Asian business.

Through the week starting February 22, 2021, the global audience and world-class speakers are taking stock of what happened in 2020, scrutinising the changing patterns of global trade, looking at the trade community through a critical lens and assess how businesses are dealing with economic, political and environmental issues. The programme includes a series of online discussions as well as physical and in-person events from Hong Kong, Singapore, and Shanghai to dive deep into the major factors that will shape the future of trade in Asia and beyond.

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The case for sustainable trade

In context of the environmental degradation and social tensions across Asia, the discussion focused on what sustainable trade means and what it takes to make trade more sustainable, from policy perspective or corporate perspective, in operations and supply chains.

Trade brings economic and social benefits, especially with poverty reduction, but there is also a cost in terms of impact on the environment. The primary principle of sustainable trade is balancing economic goals with the need to strengthen social capital and environmental benefits. One of the panellists introduced the Hinrich Foundation Sustainable Trade Index that measures the capacity of 20 economies, including 19 in Asia and the United States, and their participation in international trade to support domestic and global economic goals and environmental protection with better social equity. He stated that sustainable trade is measured by the three pillars; economic, social, and environmental.

COVID-19 has increased the drive for competitiveness among countries. The ones that are moving forward as per the three pillars of sustainability are in the right direction. However, one of the panellists emphasised that speed is also an essential aspect as by adjusting speed and consistency along the way accordingly a country can achieve its sustainability goals. Finally, partnership also plays a vital role in establishing sustainable trade in the new normal era.

It was noted that decarbonisation and climate adaptive industry transition is one of the largest challenges today. The world needs more than double copper and four times nickel in the next thirty years than it did in the last thirty years. It is essential to create and have more sustainable supply and value chains available from mining, manufacturing and consumption.  The panel highlighted that it is also imperative as majority of consumers prefer sustainable products these days. 

Speakers included Alvin Tan, Ministry of State, Ministry of Trade and Industry (Singapore); Vandita Pant, Chief commercial officer, BHP; Malavika Bambawale, Managing director, sustainability solutions – APAC, ENGIE Impact; Ditlev Blicher, Regional managing director, Asia Pacific, Maersk; Louise Pender, General counsel and chief people officer, Zalora; Merle A. Hinrich, Chairman, Hinrich Foundation; Simon Baptist, Chief Economist, The Economist Intelligence Unit. 

Digital imperatives

The discussion on digital imperatives underlined the importance of digitisation in driving globalisation from the current crises brought up by the pandemic. The pandemic has brought in challenges to globalisation, as more countries became inward looking. The failure of the globalisation in reducing inequalities made a strong sense against globalisation in many parts. Digitisation through its tools will help to distribute the benefits of globalisation more equally and thus to steer up globalisation in a more acceptable manner. 

The pandemic came when digitisation of trade was in its nascent stage. But path breaking innovations and initiatives happened in the digital space, thus helping the market to adapt to the needs of the new normal. Digital technologies have kept trade moving during the covid-19 lockdowns. Some businesses and financial institutions have been forced to scale up digital offerings as most of the workforce has stayed at home and transactions have been done online. The benefits of digitisation go beyond e-commerce and payments, having larger benefits such as ensuring inclusiveness and reducing inequalities. 

The discussion concluded pointing to the needs of having global collaboration and global trade rules in a digitised world. It is the responsibility of everyone to ensure the safety of the digital space. The panellists of the discussion mentioned the need to close the digital divide through global initiatives. Everyone including traders, freight forwarders and consumers should be having access to the digital tools to make the trade system more inclusive. It also noted that supply chains can be made more robust and resilient through greater digitisation.

Speakers: Andrew Hoad (Chief Network Officer, Supply Chain & Logistics, DP World), Craig Burchell (Senior vice president, global trade affairs, Huawei), Song Toh (Vice president, global network services, Tata Communications), Sanjay Singh (Chief information officer and Vice president Global business services, P&G Asia Pacific, Middle East & Africa), Christopher Clague (Managing editor, Asia, and global editorial lead, trade and globalisation, The Economist Intelligence Unit). 

Country Spotlight: New Frontiers

Followed by the U.S. China trade war, Covid-19 has shaken supply chains and exposed vulnerabilities of trade. As a consequence, supply chain diversification has become the top most priority for many companies. The panel reflected on the opportunities and challenges of global value chains (GVCs) and supply chain diversification. There has been an upward trend in foreign direct investment (FDI) in developing countries. However important, supply chain diversification is yet peculiar as it comes with multiple implicit costs. It also requires a very stable policy environment in the host country. Migrating supply chain will hence require rethinking and reimagining various aspects, both explicit and implicit.

The panel gave examples of Philippines and India, among others stating that Philippines is competitive in intermediate products but require a more efficient and faster legislature to be able to leverage public policy to attract more investments.  India has a great market and a stable policy environment but needs to build global business environment by incentivising foreign investment. 

Similarly, while discussing the country response to the Covid-19, the panel said that Thailand was successful in containing the virus, Malaysia is struggling with the second wave and Philippines is the hardest hit. Hence, effective roll out of the vaccine is vital to revive their participation in global trade as well boost their efforts in adapting with the emerging supply chains. It was also stated that digitalisation can increase GVCs participation as digital platforms serve as a meeting point for buyers and sellers. Also, access to high speed internet can lead to more inclusive GVC participation.

Speakers of the session were: Nick Marro, Lead, Global Trade & Analyst, Asia and Access China, The Economist Intelligence Unit; Ndiame Dope, Country Director, Brunei Darussalam, Malaysia, the Philippines and Thailand, World Bank; Bobby G. Fondevilla, Executive Director, Investment Assistance Service, Board of Investment, Philippines; Satyakam Arya, Managing Director and Chief Executive, Daimler India.

In Conversation with Sansern Samalapa Vice Minister for Commerce, Thailand

Simon Cox, Emerging Markets Editor, The Economist in Conversation with Sansern Samalapa, Vice Minister for Commerce, Thailand discussed how the pandemic affected Thailand. In 2019, Bangkok was the most visited city in the world with over 22.7 million international visitors. The Covid-19 outbreak has not just drastically devastated Thailand’s tourism sector but also affected its hospitality, agriculture and food production sectors. 

The minister discussed the fiscal and monetary measures taken to increase domestic demand such as up to 40 per cent subsidy for hotel rooms, tax rebate scheme, shopping subsidies for small business, among others. He indicated that for the year 2021, key priorities of the government includes better management of agricultural product, promotion of allied platforms and marketplace, improve the capacity of MSMEs sector to increase their participation in the mainstream economy and increase international trade value through key trade negotiations. With these measures, use of technology as well as innovation and enterpreurship are equally important for sustainable economic development and improve the country’s competiveness in the global markets, he added. 
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