As we pace into the end of 2021, the China-ASEAN Business Alliance (CABA) represents the region business community covering one-third of the global population, reflecting on the economic events in the past year.
Looming Shadow of COVID-19 – As the world braved the COVID-19 pandemic for almost two years, cases in China and ASEAN have declined dramatically and the number of vaccinated populations progressed. There were rising global COVID-19 cases and the emergence of a highly-mutated Omicron suggests a looming shadow of uncertainty.
China-ASEAN as mutual largest trade partners – Despite the COVID-19 backdrop, the global merchandise trade shrank by 5.3 per cent, however bilateral trade between China and ASEAN increased by 6.7 per cent, with a new Regional Cooperation Economic Partnership (RCEP) signed amongst the 15 nations. Since January 2020, cumulative trade between China and ASEAN has maintained year-on-year growth, while cumulative trade between China and the European Union, the United States and Japan contracted for the first three quarters of last year. Economic activity in ASEAN+3 is projected to expand by an aggregate 6.1 per cent in 2021, down from the 6.7 per cent forecast earlier this year, after posting flat growth in 2020, according to the ASEAN+3 Macroeconomic Research Office (AMRO). ASEAN region’s growth forecasts are broadly unchanged at 7.0 per cent in 2021 and 5.3 per cent in 2022. Inflation is moderate at 2.1 per cent in 2021 and 2.7 per cent in 2022.
Return to Normalcy of Businesses – There is a resumption of activities in the region as countries transits towards endemics situation with international borders opening through vaccinated travel lanes (VTL). Many reciprocal arrangements across countries have seen normalizing of leisure travel and extension towards business travels. Though many businesses are acquainted to work-from-home (WFH) concepts and teleconferences through communication platform.
Reconfiguration of Supply Chain – 2021 saw a disruption of supply chain owing to COVID-19. While many industries saw a reconfiguration of Supply Chain to pre-empt tariffs caused by US-China trade war. This sees many firms from US and China reallocating investments into ASEAN countries like Vietnam, Indonesia, Philippines, and Singapore. Notably we see manufacturing firms reallocating to Vietnam, while Pfizer planning the new vaccines biomedical plant in Singapore.
Sustainability as the new Gold – Post COP26 sees a record number of countries pledging to reduced carbon emission, as well as, creating new opportunities for climate financing. The sector sees a plethora of new ventures, green bonds, climate ventures funnelling into sustainability projects. In this regard, ASEAN announced a pan-regional power grid, while Hyundai is anticipating new demand with its regional first EV vehicles manufacturing plant in Singapore.
As everyone is immersing into the year-end festivities, planning for the economic new opportunities in 2022, it is my absolute pleasure to represent our CABA council members and panel of advisors in wishing you a successful and fruitful year ahead!
Victor Tay
Chief Executive Officer
China-ASEAN Business Alliance
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