A big question looms in the aftermath of unprecedented shutdowns of industry in nations around the world and that is, quite simply, ‘what now’? As I’m responsible for new business sales in the APAC region, I thought to give my opinions and focus this article on the ASEAN region (the Association of South East Asian Nations) countries.
Firstly, even within South East Asia, it’s important to acknowledge that there are big differences between one country and another, so the ‘bundling’ into ASEAN for the purposes of this article is more a matter of convenience than reflected reality. There will therefore be uneven impacts from the virus and its recovery.
What is apparent in the short term at least, the blow to tourism, a major industry across the world and particularly this region, is severe and may persist for some time.
For manufacturing and construction however, it is a different story for multiple reasons. There is and will be a significant impact, though this is hopefully unlikely to go on for long (even though there are significant differences similar to past events like Severe Acute Respiratory Syndrome “SARS” demonstrated this).
After COVID-19, there will no doubt be at least the intention by most countries around the world to internalize their supply chains and harden their boarders as far as possible. Perhaps even have a bias away from China. To do this it’s not enough to just have the intention, it must be coupled with structural changes to economies to make them more competitive. This will take time and market forces will still drive demand to a great degree, at least in the short to medium term.
Considering China is already the biggest external source of demand for raw materials, products and services for these ASEAN nations, with labor costs across many ASEAN countries comparable or even more competitive than those of China.
Near neighbors include the Asian Tiger economies of Hong Kong, Singapore, South Korea and Taiwan as well as India, Japan, Australia and New Zealand, the combined populations and economies of which represent a great deal of consumption, demand and therefore production out of necessity.
The potential for less interdependence between US and China will most likely be further reduced after an event like this (considering the manageable but ever-present tensions between the two countries). The competitive economies within the ASEAN group may be very attractive to US interests should the current trade tensions not ease.
The ASEAN “Tiger Cub” economies like, Malaysia, Thailand and Vietnam will undoubtedly be very keen to fill any gaps in supply, perhaps having weathered the supply disruptions far better than their northern Asian neighbors. Maybe to a lesser extent, Indonesia and the Philippines, as much depends on how well they come through the current pandemic. Given that they are very much at earlier stages as developing countries with informal employment and poverty, they may struggle to recover as well as the others.
Many of these countries in this region have also joined The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (ex TPP) with Thailand just announcing recently it is joining. There is still a chance for the US to join, adding greatly to the potential of the organization and its member countries.
Accelerated change… and fenestration capacity
So, while in the recent past we’ve considered the world largely in terms of the markets of China and the USA (‘if the USA sneezes, the rest of the world catches a cold’), the future may well look different. Things were already changing and it’s arguable that after the coronavirus cards fall, the changes will accelerate.
Certainly, I’ve seen it in the building industry and my focus on fenestration. The ASEAN region needs solutions to deliver the domestic demands of governments and consumers, as well as the growing demands of export. Through our technology we aim to provide the solutions in some part through our V6 software platform, giving façade window and door companies the ability to digitize many of their processes, allowing efficiencies and the ability to scale.
The ASEAN region is building capacity and technical expertise faster than ever before. As people continue experiencing the widespread social impacts and poverty alleviation which follows the introduction of market economy principles, domestic demand for manufactured products, housing and more is following (and the region is home to some 670 million people), combining with intense international demand from those close neighbors and elsewhere after COVID-19.
You’ve had the long of it, now here’s the short. Yes, there is short term and widespread pain and disruption from COVID-19. But in its wake, I expect the ASEAN region countries to continue their growth unabated.