Opportunities abound despite Asia’s recovery hinging on vaccine roll-out

Even as Asian countries continue to combat Covid-19, the region is responding to the pandemic, while also planning for a post-pandemic recovery.  

On March 31, the FIPRA Network hosted a webinar bringing together an expert panel comprising principals from each of FIPRA’s six units in the Asian region – China, Japan, India, Korea, Singapore/ASEAN and Australia/New Zealand – to provide expert views from each of their respective territories. 

The conversation was moderated by John Richardson from FIPRA Australia / Richardson Coutts, who also serves as the co-chair of the FIPRA Asia group. On the panel were: Philip Howard from FIPRA Japan / GR Japan, Haiying Yuan from FIPRA China / Yuan Associates, Manash Neog from FIPRA India / Chase India and Joseph Chung from FIPRA Korea Richard Andrew from FIPRA Singapore / Landmark Public Affairs.

The webinar was opened with a question from John Richardson to the panellists about the prospects for recovery in each of Asia’s biggest markets. 

All speakers confirmed a drop in GDP across the region in 2020 and spoke about how government funding through stimulus packages had helped to cushion the effects of the pandemic as the region drifts into its second quarter of 2021.

Philip Howard speaking about the economy in Japan said that even though it had been the least affected by the pandemic among the G7 countries, it had instituted massive government spending programs, which cushioned the impact on businesses and households, and has contributed to the consensus predictions of 4% growth for Japan in 2021. 

Haiying Yuan provided updates from China on how the Chinese economy is closely linked with the global economy, and how a disruption in the global supply chain significantly influenced China’s economy. Despite this, Haiying says China is on the path to recovery.  

Covid has been well controlled, and citizens are back to work. Figures from the National People’s Congress indicate that China’s GDP is on the rise – from 2.3% in 2020 to an expected 6% for 2021. 

“Even though China had an increase of 2.3% in the year 2020, this figure was also the lowest growth speed recorded in the last 40years. Also, 60% of China’s GDP comes from the service industry, and this industry is the most difficult in terms of recovery,” Haiying said. 

A full recovery is still going to be hinged on a few other indicators. Among them, global oil prices, vaccine rollouts and government responses around the world. A key area of interest is the impact of rising protectionism across the world.

– Manash Neog, FIPRA India / Chase India

Addressing the situation in India, Manash Neog said the economy is on a rebound. India has recorded a GDP growth rate of 0.4% in 2020 in comparison to same quarter the previous year. It is recovering, but with strong support from fiscal measures and the country’s central bank.  

The last quarter of 2020 also shows a growing increase in investments of 25% after two-quarters of contraction. The IMF predicts that India’s economy will grow at 12.5% in 2021.  

“A full recovery is still going to be hinged on a few other indicators. Among them, global oil prices, vaccine rollouts and government responses around the world. A key area of interest is the impact of rising protectionism across the world,” Manash added. 

Joseph Chung reported that Korea was also badly hit by the pandemic. But like other Asian countries, the Korean government has made significant provisions in the fiscal budget for the health and welfare of the people. 

“The government seem to have successfully quarantined the demographics and tried to sustain the number of confirmed cases at a manageable level. But until there is a cure, or a nationwide vaccination, we are still quite a distance from the full recovery of our normal life as well as a full recovery on economic activity in Korea,” Joseph said. 

From Singapore, Richard Andrew shared that the country has done extremely well since the beginning of the pandemic leveraging technology extensively. But that Singapore is also dependent on the health of the nations within the region it sits. 

Singapore is small but punches above its weight. Though it has been significantly affected by events happening externally, it has certainly got its house in order domestically. It is going to ride the wave as south-east Asia comes out of the pandemic.

– Richard Andrew, FIPRA Singapore / Landmark Public Affairs 

“Singapore is small but punches above its weight. Though it has been significantly affected by events happening externally, it has certainly got its house in order domestically. It is going to ride the wave as south-east Asia comes out of the pandemic,” Richard said. 

Even though it had a negative growth last year, IMF projects the Singapore economy will grow by 5% in 2021. 

John Richardson gave a brief of the situation in Australia, saying that the government had been able to keep the economy on life support through a very big stimulus package which includes a 135 billion Australian dollar, 12-month-long income support system. A program that ended with the last quarter. 

As the Australian economy is a service-based economy particularly in tourism, education and professional services. Closing borders to successfully contain and control the spread of the pandemic has had a cost on these sectors of the economy which rely very much on the visitor economy.  

Australia’s science first health care focus has really dominated and dictated the way the response to the pandemic has been played out in the country. The prospects therefore for recovery very much rely upon the successful completion of the vaccinations.

– John Richardson, FIPRA Australia / Richardson Coutts

“The country’s science first health care focus has really dominated and dictated the way the response to the pandemic has been played out in the country. The prospects therefore for recovery very much rely upon the successful completion of the vaccinations,” John said. 

The conversation also focused on government policies and priorities to deliver economic recovery across the region.  

Haiying discussed how China, pushing towards recovery adopted a Dual Circulation policy, which covers two prospects. One end focuses on the domestic market as a response to the buying power of China’s 400 million sized middle-class population. The other end of the policy is focused on strengthening regional cooperation, especially in Asia.   

“A shift of focus into the domestic market is China’s way of responding to the growing living standards of Chinese people, and this is followed up by improving the business environment to enable level playing fields, transparency, IPR protection and as well, stimulate more foreign direct investment into China,” Haiying said. 

Philip, who also serves as the co-chair of the FIPRA Asia group, added that Japan is focused on economic recovery. The government is demonstrating that it is very determined to maintain businesses, to maintain jobs and to maintain consumption.  

The government is also using industrial policy to help with the recovery, like giving tax breaks and flooding the market with stimulus packages to small businesses, big businesses, and troubled businesses -and has even given 100,000 yen to every person in Japan.

– Philip Howard, FIPRA Japan / GR Japan 

Despite the Covid cases, the government of Japan has remained determined to push ahead with the Tokyo Olympics. Although foreign visitors will not be allowed to attend, a lot of investments have already been made, like making the Tokyo transport systems barrier-free for the Paralympics.  

“The government is also using industrial policy to help with the recovery, like giving tax breaks and flooding the market with stimulus packages to small businesses, big businesses, and troubled businesses -and has even given 100,000 yen to every person in Japan,” Philip said. 

Manash gave a robust analysis of the Indian governments approach to pursuing economic recovery goals along two parallel paths: on one end is its vaccine diplomacy policy and on the other a renewed focus as well as a financial injection into some key economic driving sectors. 

“India’s vaccine diplomacy policy is geared towards smoothing the nature of its geopolitics and enhancing its trade policy relationships in the global economic environment. The second focus has been to aid the businesses themselves. To boost the manufacturing and exports and encourage startups to grow,” Manash stated. 

While assessing the impact of the Covid and government efforts across the region, panellists discussed opportunities in a post-Covid world. Speakers agreed on emerging post-pandemic opportunities around eCommerce and e-services, green economy, inter-regional trade and digitalization of public services. 

In Korea, Joseph said that the political atmosphere is moving into an election circle, and the government is trying to balance both the economy and politics as the country moves towards recovery. FIPRA Korea is closely following up these elections, pulse-reading for who is going to win this election, and what that will mean for the growth and recovery of the country. 

Until there is a cure, or a nationwide vaccination, we are still quite a distance from the full recovery of our normal life as well as a full recovery on economic activity in Korea.

– Joseph Chung, FIPRA Korea 

In Singapore, what the government is focusing on includes securing external linkages, particularly in Southeast Asia, redoubling efforts to ensure inclusive growth, and investing in economic resilience and sustainability. The last part is inclusive of retaining foreign investment. 

Richard said the sectors that are expected to grow will be the upward oriented sectors, trade-related services, e.g., trade in water, water transport, wholesale trade activities – areas reflecting Singapore’s regional trading hub status. 

A more people led initiative is happening in Australia as John narrates that an overriding market-led theme for recovery and opportunity and is the movement towards zero emissions by 2050.  

“The movement towards zero emissions in 2050 is a dominant opportunity. It has been driven by the market and by businesses choosing to follow the market. This is a big opportunity that will manifest itself here in investment in batteries, investment in technology, and renewables,” Richard said. 

While the Indian government announced a target of zero net emission by 2050, in China Haiying said China is also moving in the same direction and is open to welcoming more foreign companies into China to support this process of economic sustainability. 

In the early 80s or even 90s, China looked at green and growth as two separate things and they had a conflict. But more and more Chinese people are now saying green is growth.

– Haiying Yuan, FIPRA China / Yuan Associates

“In the early 80s or even 90s, China looked at green and growth as two separate things and they had a conflict. But more and more Chinese people are now saying green is growth. It’s such big progress but we also understand this green growth needs some industry upgrading and need new industry patterns like new energy, new agriculture,” he said. 
 
(Written by Sherriff Tahiru)