ASEAN overcomes challenges in the post-COVID-19 era
More than two years after COVID-19 appear, ASEAN countries are gradually recovering, but will also face significant challenges.
Challenge
In Southeast Asia, economic growth is expected to hit 5.1% this year, from 3.2% in 2021. With 400 million people, or 59% of the population, fully vaccinated. Many economies are on track to reopen. But the spread of the Omicron variant can reduce the growth rate. Shocks from the war in Ukraine and sanctions against Russia are disrupting the supply of goods. Asian countries that are major fuel importers, including Thailand, are seeing a drop in real income. Countries that are heavily indebted, especially Laos and highly dependent on exports, such as Malaysia and Vietnam, are particularly vulnerable to global growth and financial shocks.
The Bangkok Post quoted Aaditya Mattoo, the World Bank’s chief economist for East Asia and the Pacific as saying: “The consecutive shocks mean that people’s economic losses are increasing. and the government’s financial capacity is shrinking.
The Asian Development Bank (ADB) warns that conditions in Southeast Asia remain fragile and many households continue to suffer massive income losses. Some traditional growth drivers such as tourism, transportation and personal services are not expected to recover anytime soon.
The pandemic has also led to severe disruptions to the labor market. The International Labor Organization estimates that ASEAN will be short of 10.6 million employed workers in 2020 compared to the no-pandemic scenario. Job loss is especially hard for women, young people and workers in micro, small and medium enterprises (MSME). The job gap is estimated at 9.3 million people in 2021 and forecast to be 4.1 million this year.
To deal with these challenges, experts say that it is necessary to focus on four groups of solutions: Greening ASEAN; take advantage of Free Trade Agreements (FTAs); supporting MSME businesses and tourism development.
Greening ASEAN
As the economy recovers, building the foundation for a more sustainable future will come first. According to Ms. Indranee Thurai Rajah, Singapore’s Second Minister for National Development and Finance, greening the supply chain, related infrastructure and finance will be key.
Speaking at ADB’s 2022 Southeast Asian Development Conference in mid-March, Rajah said: “We will need to collectively address disruptions in global supply chains and maintain a trading system. Open, stable, and rule-based. The integration of green solutions in different stages of the logistics value chain will not only improve productivity but also reduce the carbon footprint of the region.”
ADB estimates that Southeast Asia needs about $210 billion in annual infrastructure investment to continue its growth momentum, reduce poverty, and respond to climate change.
New trade agreements
New Trade Agreements could also help rebuild Southeast Asia’s economy, most notably the Regional Comprehensive Economic Partnership (RCEP), which took effect earlier this year.
RCEP, which includes 10 ASEAN countries plus Japan, Korea, China, Australia and New Zealand, is the world’s largest FTA, accounting for 30% of global GDP ($25.8 trillion), 2.3 billion people or 30% of the world’s population, and 25% ($12.7 trillion) of the value of global trade in goods and services.
ADB Chief Economist Albert Park said that RCEP has the potential to strengthen intra-regional supply chains and strengthen regional integration sustainably, but it takes time to effectively implement.
Cyn-Young Park, ADB’s Director of Regional Cooperation and Integration, said that RCEP will have a larger income impact than the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). According to her, the CPTPP adds about $188 billion to world income while the RCEP generates an additional $263 billion. RCEP will create 2.6 million new jobs, compared with 1.5 million from CPTPP. According to Ms. Park, Mexico and Vietnam will benefit significantly from the CPTPP and Vietnam will have more jobs from RCEP.
Promoting small businesses
The pandemic also shows a new level of urgency for changing the way businesses operate, most notably going digital. Grab co-founder Hooi Ling Tan said the region’s smallest businesses need help with this.
She added, Southeast Asia should also use fintech innovations to provide MSMEs with access to credit. A Tech for Good Institute report found that 60% of MSMEs surveyed were unable to get loans.
Tourism revival
While most of the region’s economies have reopened their borders to international tourism, the tourism industry is still reeling from the lingering effects of the pandemic.
In the midst of the crisis, however, there are opportunities to rebuild tourism in a way that is more sustainable, more inclusive and less susceptible to shocks.
The Philippines, for example, is planning a six-year tourism development plan to make the industry more resilient to future crises. Tourism Minister Bernadette Romulo-Puyat said that one of the most immediate measures the government is taking is to restore jobs and livelihoods to tourism workers, who have lost their jobs due to the pandemic.
at Blogtuan.info – Source: laodong.vn – Read the original article here