Asean emerges as China alternative as US role as 'cheerleader' of globalisation fades
The challenges and opportunities for Southeast Asia, as the world emerges from the shadows of the pandemic and faces geopolitical risks, was in focus on the first day of the Post's China Conference: Southeast Asia 2023 in Singapore.
Opening on Wednesday, the two-day event had some 250 people in attendance and focused on topics ranging from the strategies of Southeast Asian economies amid the US-China strategic contest, supply chain diversification and the growth of family offices in Asia. Around 500 people watched the conference online.
In her welcome speech, the Post's chief executive Catherine So said there was a "wealth of opportunity for closer collaboration" between Southeast Asia and Greater China.
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So noted that the 10-member Asean bloc was the world's fifth-largest economy and served as a "central pillar of China's overseas engagement during a time of renewed growth".
Similarly, she said Hong Kong acted as a bridge between mainland China and the rest of the world, while connecting Southeast Asia with key sectors and capital markets in the Greater Bay Area.
"The purpose of the conference is to help with bringing us all one step closer to realising our vision of a prosperous, sustainable future in Asia," So said.
The conference line-up features 46 speakers, including Hong Kong's Financial Secretary Paul Chan Mo-po, Singapore's Home Affairs and Law Minister K Shanmugam, and Malaysia's Minister for International Trade and Industry Tengku Zafrul Aziz.
This was the first major overseas conference organised by the Post since 2019. The 2020 and 2021 editions were held virtually amid the Covid-19 pandemic, while the 2022 edition was held in hybrid format.
On Wednesday, panellists discussed the US' role as the international driver of globalisation and how Southeast Asian states would deal with US-China tensions.
Danny Quah, an economics professor and dean at Singapore's Lee Kuan Yew School of Public Policy, said Washington's withdrawal as the "cheerleader" and driver of an increasingly globalised world had been the "most critical change in the last 20 years".
"We might say that America remains committed to a system of exchange, but it's a very different kind of exchange than the globalisation that we had in these last 20 years," he said.
On whether Southeast Asia had the capacity to step up as an alternative to China and act as a host for businesses, supply chains and factories, Marc Mealy, senior vice-president of policy at the US-Asean Business Council, said the region had definitely become a front runner.
"For multinationals not looking to leave China but looking to diversify their networks to have a ... (China-plus strategy), there's no question that for Asean member states, that's been one of the biggest opportunities," he said.
However, this did not necessarily mean the region would replace China, said another panellist.
Alicia Garcia Herrero, chief economist for Asia-Pacific at Natixis Corporate and Investment Bank, said: "There is plenty of room for Southeast Asia but also India to increase the role, while China still keeps a very important role in the supply chain, simply because we're talking about the new flows as opposed to what is already in existence."
Meanwhile, another panel discussed how Asia would diversify its supply chain in the next decade and how some states in the region, such as Vietnam, were having success in capturing businesses looking to diversify their supply chains.
Justin Kent, president of supply chain solutions at Li and Fung, said retailers were focused on good costs, quality, innovation and speed, regardless of whether it was a Chinese, Indian or Southeast Asian manufacturer.
"They're doing different things to respond to that need, like lower quantities, sharper costs, reducing margin and maybe holding inventory in Asia for those reasons," he said.
Vietnam had emerged as a strong candidate for Chinese manufacturers looking to diversify their supply chains because of its close location to China and cultural similarities, Kent said, though he noted that there were some limitations due to its size.
Echoing his sentiments, Fion Ng, chief operating officer at logistics properties provider BW Industrial, said the interest in Vietnam was not a new one, with Japanese, South Korean and Taiwanese businesses having turned to Vietnam as early as 15 years ago.
When asked about the strategies Southeast Asian states were taking to add resilience to supply chains for semiconductors - as the US rolls out increasingly stringent restrictions on Chinese chip manufacturers - Kent stressed that expertise and knowledge building were key.
"You don't just move from Taiwan to China to Indonesia to Vietnam without having a thorough plan for raw materials, land and also talent. It's the efficiency of the labour force," he said.
This article originally appeared on the South China Morning Post (SCMP).
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