ASEAN govts should adopt new measures to counter growth risks
08 Oct 2020
ASEAN governments need to adopt new measures to support intra-regional trade and investments and foster digital adoption in order to counter emerging external and internal growth risks, Standard Chartered bank said.
In a report titled “ASEAN – A Region Facing Disruption: Positioning Mid-Corporates for Growth in Southeast Asia” published recently, the bank said growth expectations could be realised through specific opportunities across three sectors, namely manufacturing, infrastructure as well as retail and consumer.
“In addition to regulatory shifts, it will also be essential for mid-corporate companies to develop the right capabilities to effectively regionalise and digitalise their operations,” it said.
It said mid-corporate business is defined as those with annual revenues between US$10 million and US$500 million.
“Acting as a value-adding link between multinationals targeting entry or expansion in the region, numerous small-scale suppliers and fast-growing consumer base mid-corporate businesses will be key to strengthening ASEAN’s presence in a rapidly changing global economy,” it said.
Standard Chartered said successful deployment of the growth strategies would depend heavily on a strong capability foundation within the firms, supported by four key elements — talent development, organisational culture, technology infrastructure and capital management.
“Mid-corporate firms will need to deploy new technologies along their production lines to meet multinational company expectations of achieving higher productivity at lower costs. The impact of technology adoption could be significant,” it said.
It said according to PriceWaterhouseCoopers’s Global Industry 4.0 Survey, manufacturers worldwide are expected to reduce operational costs by 3.6%, while increasing efficiency by 4.1% annually through the adoption of next-generation industrial technologies.
Standard Chartered said ASEAN’s mid-corporate manufacturers would need to devise more competitive value-propositions to strengthen their market position or risk losing business to global competitors.
The bank said the deployment of technologies such as the industrial Internet of Things and collaborative robots would need to be prioritised in the short term, while advancements in three dimensional (3D) printing and digital contracts offered long-term solutions to mid-corporate issues.
It said digital contracts based on the blockchain technology is emerging as a potential solution for cross-border trade.
“While these are still in the nascent phase, with pilot projects being tested by market players and common standards being developed by industry consortiums, digital contracts are expected to gain significant adoption over the next few years, giving a boost to regional trade and manufacturing profits,” it said.
It added that smaller local businesses should also be strengthened to achieve more equitable and sustainable development across the region.