There is a growing sense that the global economy is moving towards a more competitive era as countries are reshoring. Many are bringing their supply chains back home to reduce risks from disruptions. Others are deploying tariffs and other barriers to advance their domestic agenda.
Issues around climate change and rivalry around frontier technology (artificial intelligence, big data, internet of things) are increasingly being discussed as issues of national security.
To address these issues, the 10 countries of the Association of Southeast Asian Nations (ASEAN) must work collectively to achieve their goals of a better economic future of their people and the protection of their national interest. A particular focus on trade, digitalization and connectivity is needed.
Trade is likely to be focused on services, which covers cross-border transactions under finance, telecom, travel, transport and other business services, like professionals and consultancy services. Each of these plays an important role in ASEAN countries in terms of job creation and economic growth. Post-COVID-19, in the face of a slowdown in goods trade, trade in services showed positive momentum and even positioned ASEAN as a net exporter of services.
Travel services, particularly, hold promise for ASEAN as it underscores ASEAN’s attractiveness as a tourist destination. Hence, while aiming to deliver a competitive tourism sector, the ASEAN countries are expected to collectively work on tourism enablers like infrastructure, skills development, marketing promotion, product development and others to increase intra-regional travel in ASEAN, which currently constitutes more than 40% of ASEAN’s total international tourism, adding to the economic resilience of the region.
The digital economy (including e-commerce, e-health, e-payments, customs automation) at the regional level is expected to grow from $300 billion to almost $1 trillion by 2030. This is reported to reach $2 trillion if the right kind of digital connectivity policies are put in place through regional cooperation.
Member countries should consider their collective actions as a regional public good, where benefits from greater trade, travel, digitalization, and connectivity will deliver on sustainable and resilient outcomes for people residing in the region.
The Digital Economy Framework Agreement is a key element of this cooperation. It centers around digital standards, data flow, cybersecurity, digital trade, talent mobility and other digital public infrastructure.
Additional benefits from digital cooperation are expected through positive climate impact, creating $12-30 billion in social cost savings, enhancing resilience, creating new employment and improving accessibility of people to educational and healthcare resources.
Finally, connectivity that is both physical and institutional in nature is expected to serve the economic competitiveness of ASEAN countries, raising their capacity to engage better with bigger economies of Asia and elsewhere. Sustainable infrastructure – clean energy, low-carbon transport and improved energy efficiency for urban infrastructure – is gaining traction.
Combining this with greater cooperation around digitalization, seamless cross-border logistics and supply chains, facilitating the cross-border movement of goods, services and people will safeguard the environment and foster resilience of the countries in the region.
The collective thinking about sustainable infrastructure is helpful for ASEAN member countries that have committed to the Paris Agreement and have submitted their Nationally Determined Contributions targeting net zero carbon dioxide (CO2) emissions by 2050 and net zero greenhouse gas emissions by 2065, to limit temperature increases of no more than 1.5°C.
It is opportune for ASEAN policymakers to think afresh on ways to work together. Although there are signs of economic fragmentation at a global level, there are also areas that require cross-border cooperation.
Economic independence has grown over time in the region. With emerging pressing issues of digitalization and climate change, mismanaged interdependence may result in costs and lead to economic setbacks.
Therefore, for the next term of ASEAN regional cooperation 2045, the member countries should consider their collective actions as a regional public good, where benefits from greater trade, travel, digitalization, connectivity will deliver sustainable and resilient outcomes for people in the region.
Source: Asian Developement Blogs
