The rollout of Covid-19 vaccinations in a number of countries provides light at the end of the coronavirus tunnel, even if it doesn’t spell the end of the crisis. When we finally make the transition from the current state to the next normal, we may not be sure what the world will look like, but we do know there are a few big ideas in play that could shape the near future.
Whatever happens, we should expect to see the return of some of the challenges we were facing prior to the Covid outbreak, among t hemtrade disputes, digital disruption and supply chain relocation. However, each of these has also been transformed by the pandemic, as have the responses to them.
A year ago, the US-China trade war was causing significant disruption for many, but some markets were able to create opportunities from it. Vietnam did especially well by targeting Chinese companies wanting to relocate production to avoid US trade sanctions, with a focus on electronics and manufacturing.
This, combined with the country’s successful management of the Covid outbreak, means it is expected to be the only Asian economy outside of China to grow in 2020, with the Asian Development Bank forecasting growth of 2.3% in 2020 and 6.8% in 2021.
Developing smart supply chains will be key to future success. Fortunately, Asean offers a lot of opportunity for companies looking to diversify their risk by relocating production and supply chains. It also provides access to a combined market of 650 million people.
Regional cooperation will be the key to our success. The signing of the Regional Comprehensive Economic Partnership, the world’s largest trade agreement, by Asean’s 10 members plus Australia, China, Japan, New Zealand and South Korea presents cause for optimism.
US President-elect Joe Biden’s new administration may bring the return of more diplomatic discourse, but we shouldn’t expect it to banish the spectre of US-China trade tensions. Mr Biden has also announced plans to make the US more self-sufficient by strengthening domestic manufacturing, technological innovation and supply chains, and cracking down on what he sees as anti-competitive practices, to reduce dependence on China and other countries. Either way, we should expect US policy to affect global trade flows and look at how we as a region can create opportunities from this.
The coronavirus crisis has accelerated digital transformation around the world. China this year announced plans to speed up its development in quantum computing initiatives, the arrival of which will literally take all things digital to a new level. Beijing’s digital strategy is a key component of its plans to double the size of China’s economy by 2035.
The country, which already boasts some 4,200 businesses working on quantum computing, is keen to lead the world in this respect, presenting significant challenges to Silicon Valley. The mastering of this technology will dramatically alter how we use digital tools and generate and analyse data, creating further disruption and opportunity.
Last year was a wake-up call for many of us, leading to a reset in the way we relate to one another as individuals, businesses and nations. While challenges remain, this year could present opportunities to make the most out of this watershed moment.
Suwatchai Songwanich is an executive vice-president with Bangkok Bank. For more columns in this series please visit www.bangkokbank.com