Subject
Impact of the COVID-19 outbreak on South-east Asia.
Significance
South-east Asia is uniquely exposed to the economic risks associated with COVID-19 because the region’s supply chains, labour flows and tourism industries are heavily reliant on China, where the virus originated and has had the greatest impact. Meanwhile, the threat to public health from the spread of the virus brings political risks for the region’s governments.
Impacts
Countries with weak healthcare systems, such as Myanmar and Laos, would struggle to deal with severe COVID-19 outbreaks.
South-east Asian governments will put in place more expansive travel bans and stricter quarantine measures as the virus spreads.
Across the region, mitigation packages put together by governments in response to COVID-19 will drive deficit spending this year.
Subject
Port and shipping infrastructure in South-east Asia.
Significance
South-east Asia is likely to experience a recovery in freight shipping this year, after cargo traffic volumes grew in the fourth quarter of 2016. However, this rebound will put further pressure on congested ports and the region’s logistical capability.
Impacts
Port congestion should ease as more capacity comes online, but secondary gateways will see little improvement.
Regulatory reforms are lagging expansion plans, depriving the industry of much-needed investment.
More investment will be needed in road and rail networks to link ports to supply chains.
This chapter identifies the production network participation gap of the ‘PNP gap’ between South Asia and East Asia and within South Asia. It argues that although the newer theories of international trade associated with production networks and supply chains have both costs as well as benefits, the latter outweigh the former and there are significant dynamic network externalities associated with participating in supply chain trade. The chapter then argues that South Asian countries should implement the second round of ‘Look East’ Policies (LEP2) to (i) link themselves to production networks in East Asia and (ii) develop production networks in manufacturing and services within their region. An econometric analysis performed in this chapter helps us to identify the key determinants of supply chain trade and the components of the LEP2 that South Asian countries should implement. These are (i) improving the business environment by completing the reform process begun in the early 1990s, (ii) reducing logistics cost including promoting trade facilitation, (iii) joining and participating in various ongoing regional trade and financial cooperation efforts in East Asia, (iv) reducing communication and coordination costs in managing supply chains by improving Information Communication Technology (ICT), and (v) enhancing regional physical connectivity mainly through transport hardware.
Subject
COVID-19 situation in South-east Asia.
Significance
South-east Asia has less than 12,000 active cases of COVID-19 and less than 600 deaths have been recorded from the disease in the region. These numbers appear relatively small, but they probably reflect a lack of testing in most of the region’s countries. Many South-east Asian governments are bracing for intensifying outbreaks.
Impacts
Some of South-east Asia’s state-owned enterprises face insolvency.
The region’s supply chains and labour flows will likely remain paralysed for months.
Emergency powers could remain in place in certain South-east Asian countries for over a year and be exploited by authoritarian governments.
Global and Regional Supply Chains in East-Asia and the Evolving ASEAN Regionalism