ASEAN, or the Association of Southeast Asian Nations, is a diverse and dynamic region that has seen strong economic growth in recent years. However, despite this progress, a new report from the Asian Development Bank (ADB) warns that ASEAN must take urgent action to strengthen its position in global value chains. The report highlights the challenges faced by the region in the wake of the COVID-19 pandemic and calls on ASEAN countries to work together to build resilience and competitiveness in key sectors. In this article, we will explore the key findings of the ADB report and the steps that ASEAN must take to secure its place in the global economy.
The Association of Southeast Asian Nations (ASEAN) must strengthen its position in global value chains to build resilience against new challenges that include geopolitical instability, climate change, and future pandemics. This is according to a report released by the Asian Development Bank (ADB) titled “ASEAN and Global Value Chains: Locking in Resilience and Sustainability.” The report highlights the challenges and opportunities that countries in Southeast Asia face as they seek to build greater resilience and promote sustainable and green development.
The report was launched at the Southeast Asia Development Symposium (SEADS) held in Bali, Indonesia. The event gathers leaders from various sectors to explore innovative solutions to critical development issues, such as climate change and technology development. This year’s theme, “Imagining a Net-Zero ASEAN,” focuses on how the region can make the transition to net zero and achieve climate resilience while ensuring economic prosperity.
The report finds that global value chains proved more resilient to the impacts of Covid-19 than expected, even as firms had to adjust to the disruption due to their dependence on only a few suppliers for essential inputs and goods. As such, the ASEAN region needs to build stronger resilience in its global value chain segments while expanding trade, investment, and regional integration.
Moreover, the report notes that the competitive advantage of employing low-skilled labor is diminishing as new technology continues to upgrade global value chains. It is therefore imperative that the region creates a critical mass of workers equipped with new technology and technological skills.
ASEAN economies also need to go “green.” Policies promoting decarbonisation should also strengthen ASEAN’s global value chains. The region should accelerate trade digitalisation and promote climate-smart trade, green transport infrastructure, and carbon pricing. Doing so will promote economic development while ensuring sustainability and reducing the region’s carbon footprint.
Furthermore, the report highlights that the stakes are high for ASEAN economies. Recent global shocks and geopolitical trade protectionism could disrupt growth in ASEAN and elsewhere. The report explores the sizable policy impact and benefits of deepening Asia’s trade cooperation and expanding it to include other regions.
ADB President Masatsugu Asakawa emphasized the importance of ensuring that economic revitalization happens in a greener and more sustainable way. “This report proposes concrete measures that governments and businesses can adopt to decarbonize global value chains. Investments in renewable energy and improved efficiency, incentives to reduce trading costs for climate-smart goods, and the acceleration of digitalization can all contribute to greener and more sustainable value chains in ASEAN and beyond.”
ADB has been committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while eradicating extreme poverty since its establishment in 1966. It is owned by 68 members, 49 of whom are from the region.
In conclusion, the report by ADB highlights the importance of ASEAN economies strengthening their positions in global value chains to build resilience against new challenges such as future pandemics, geopolitical instability, and climate change. Employing new technology, creating a critical mass of workers equipped with technological skills, and going “green” through policies that promote decarbonization will all contribute to ASEAN’s global value chains’ resilience and sustainability.
