Like most countries, Japan struggled to find its economic footing in 2021, as it continued to deal with pandemic-related restrictions and prevailing supply chain disruptions around the world.
Despite the challenges brought on by the Covid-19 pandemic, the world’s third-biggest economy is poised to recover, supported by the 56 trillion yen (US$493 billion) economic stimulus unveiled by newly-elected Japanese Prime Minister Fumio Kishida in November. The package will offer cash handouts to families with children under 18, support small businesses and implement measures to offset rising fuel prices. The country’s largest spending reflects the government’s resolve to boost growth and redistribute wealth to households.
“Growth is on course to regain momentum, supported by macroeconomic policies and progress in vaccination,” the Organisation of Economic Cooperation and Development said in a report in December. “Significant progress in vaccination and falling rates of infection are now supporting the resumption of stronger consumption growth and lifting investment, as supply chain disruptions are resolved. A new economic policy package will boost activity.”
While the Japanese economy is expected to accelerate its expansion in fiscal 2022 to 3.4%, corporate leaders must remain vigilant amid the lingering impact of Covid-19. The nation’s corporate CEOs will have to remain steadfast and be prepared for the unexpected, Yuzaburo Mogi, Chairman and Honorary CEO of Kikkoman Corporation, says. CEOs need to be forward-looking and be able to anticipate what lies ahead and act decisively, he adds.
Guided by this philosophy, Mogi has spearheaded Kikkoman’s overseas expansion since the 1970s. Today, the company’s main soy sauce product is enjoyed in over 100 countries, with around 75% of the group’s profits coming from its international business.
As supply chains normalize, Japanese firms are also looking to tap the growing demand for electronics devices and components. One company that’s emerging stronger from the pandemic-induced slump is THK Co., Ltd.—a supplier of industrial machinery, robotics and automation solutions.
THK is benefitting from robust electronics demand driven by advances in automation and robotics, and a boom in the automotive industry as the switch towards electric vehicles gains pace. The firm aims to leverage digital technologies, such as artificial intelligence, Internet of Things and robotics, to boost the efficiency of its manufacturing processes over the next three years.
The strong rebound in the electronics and automotive sectors also bodes well for Alps Alpine Co., a Japanese manufacturer of sensors, touchpads and switches. With a mission to “perfect the art of electronics,” the group’s global network of 100 companies supply components and devices to the automotive, infotainment, and related logistics services industries.
Japan’s economic resurgence in the coming years will be underpinned by its inherent strengths and the resilience and innovation of its dynamic companies. The long-term outlook for the Land of the Rising Sun is looking brighter than ever.
Investors are keen to ride on Indonesia’s rebound.
As Indonesia emerges from the pandemic, businesses and investors are looking to ride on the country’s rebound from an unprecedented crisis. According to the Asian Development Bank (ADB) in a report released late September, the Indonesian economy is expected to grow by 3.5% in 2021, and by 4.8% in 2022, underpinned by robust exports and government spending. Supportive fiscal policy and accommodative monetary policy will also help boost growth.
Meanwhile, private consumption is projected to recover modestly before rising by 5% next year, ADB said. Investment should also strengthen in 2022 as conditions stabilize and the business climate improves.
Indonesia’s economy had a relatively mild downturn in 2020, thanks to the government’s bold, timely policies to provide fiscal stimulus and social assistance to the vulnerable to prevent long-term economic scarring. It continued to recover in the first half of 2021 due to those same policies and strong exports,” said Jiro Tominaga, ADB Country Director for Indonesia.
Keen Investor Interest
The confidence in Southeast Asia’s largest economy is reflected in rising investment in the country’s dynamic tech sector. Indonesia’s digital economy is projected to grow by almost 50% this year on the back of rapid development in the e-commerce segment, a trend that is expected to continue until at least 2025 according to the “e-Conomy SEA 2021” report by Google, Temasek and Bain & Company. The report estimates that Indonesia’s internet economy—measured in gross merchandise value—will grow to US$70 billion this year, up 49% from US$47 billion last year.
Venture capital (VC) firm Alpha JWC Ventures has capitalized on keen investor interest in tech start-ups to continue its winning streak in Indonesia over the past year. With three Indonesia-based unicorns already in its portfolio, the firm’s portfolio of companies managed to raise over a billion dollars so far in 2021 amid the pandemic.
Going forward, Alpha JWC Ventures plans to double down on Indonesia’s tech sector. With the recent close of its latest, and largest fund, the firm will be able to increase its investment ticket size significantly, and partner with its portfolio companies for longer periods. The VC’s Indonesia-focused investment approach has been validated by global organizations such as the World Bank’s International Finance Corporation and Morgan Stanley Alternative Investment Partners, who have invested in the latest fund.
Domestic Leaders Continue to Dominate
Meanwhile, Indonesian companies in more traditional sectors have also prospered during this challenging time. As the largest and most successful bread company in Indonesia, PT Nippon Indosari Corpindo Tbk continued its domestic dominance, commanding a 90% share of the country’s mass-produced bread market.
Indonesian SMEs are leveraging digitalization to find new avenues of growth.
The company’s strategy to focus on developing Indonesia’s bread market has yielded positive results, and the company’s quarterly sales are already returning to pre-pandemic levels, boosted by wider distribution coverage and higher penetration. Profitability margins are also set to expand, underpinned by improved productivity and efficient cost management.
PT Arwana Citramulia Tbk, Indonesia’s ceramic tile industry leader, is another case in point. The company’s early decision to spread out its manufacturing to five locations around the country has kept costs low and its operations efficient, helping it to navigate the turbulence and maintain its leadership position. The company is also expanding into new market segments. Its latest plant, for instance, was set up to produce a new product, glazed porcelain tiles, called ARNA.
Transforming to Fuel Growth
Other companies have also pivoted their businesses to adjust to changing customer and market needs. Indonesian conglomerate Emtek Group, for instance, has managed to stay ahead of the competition by transforming from a conventional free-to-air television broadcaster into a multi-channel, multi-platform digital media company.
Today, the group owns three free-to-air television stations, one direct-to-home satellite television operator, a leading over-the-top streaming platform, an ecosystem of digital publishers, and a series of content and production companies, among other assets.
While Emtek has helped Indonesian businesses by providing them multiple platforms to showcase their products, its associate company Bukalapak is helping small businesses in the country grow. Enterprises that sign up to the Bukalapak app have access to buying millions of different products at the best wholesale prices for resale into their local community, as well as the ability to offer digital services to their customers; including paying utility bills, moving remittance money, buying travel tickets and even investing in digital gold.
Access to innovative financial solutions will play a key role in driving Indonesia’s long term economic expansion. In this regard, Bank Mandiri, the largest financial institution in Indonesia, is committed to delivering relevant financial products and services to its customers around the country. This is part of the bank’s broader mission to seamlessly integrate its financial solutions into its customers’ lives by delivering fast and simple digital banking solutions.
Pertamina is utilising solar panels at its refinery in Central Java.
In the energy sector, Indonesia’s Pertamina is also committed to transforming its operations to contribute to a low-carbon economy as it works towards building a sustainable business by transitioning to greater use of clean energy. In particular, the country’s national energy provider has set its sights on the development of geothermal, hydro- and solar-based power generation. As part of this transition, it has announced plans to support the nation’s effort to decarbonize, starting with reducing its greenhouse gas emissions, mainly carbon dioxide, by 30% before 2030.
These progressive companies have leveraged technology and innovation to grow sustainable businesses, and will lead Indonesia’s recovery as it shakes off the effects of the pandemic in the coming years.
Malaysia is on track for a resilient recovery after the disruption caused by the pandemic.
Buoyed by a high vaccination rate that has surpassed 90% among the country’s adult population, and the pledge by the government to boost the economy, Malaysia is on track to recover strongly from the disruption brought about by the Covid-19 pandemic.
In its latest report on Malaysia’s economy, Bank Negara Malaysia noted that the economy grew by 16.1% in the second quarter compared to a contraction of 0.5% in the first quarter of 2021. It also said that the economic performance was supported mainly by the improvement in domestic demand and continued robust exports performance.
Bank Negara Malaysia says the Malaysian economy is projected to expand by between 3% and 4% in 2021. It believes that the expected reopening of the economy will support a gradual recovery in the fourth quarter this year, with higher global growth and sustained policy support providing a further lift to economic growth.
“Malaysia’s growth recovery is expected to broadly resume in the latter part of the second half of 2021 and improve going into 2022,” says Nor Shamsiah Mohd Yunus, Governor of Bank Negara Malaysia.
Meanwhile, the Organization for Economic Co-operation and Development says that Malaysia remains a business-friendly country that attracts large flows of foreign direct investment and is well-integrated in global value chains.
According to its Ministry of Finance, Malaysia is registering net foreign capital inflows thanks to the positive progress on the National Recovery Plan. “For the month of August, a total of US$1.8 billion was registered in terms of foreign portfolio flows, marking the highest monthly net inflow since June 2020, and offsetting the declines in the two preceding months,” it said.
Seizing Opportunities
Many businesses had to adapt to changes as a result of the pandemic, and one company that did well was MedTech startup BookDoc. The six-year-old startup pivoted to help Malaysia cope with Covid-19 and at the same time diversified its business.
The company adapted its BookDoc app to become a booking platform that supported 500 government clinics and helped them manage queues and practice social distancing when Malaysia was going through its lockdowns.
Malaysia has gained an international reputation as a safe and trusted healthcare destination.
It also introduced innovative services such as “lab uberization”—conducting real-time PCR tests by going to people’s homes and offices instead of waiting for them to come into test centers. This helped BookDoc to diversify and weather the storm during the tough months.
As the economy continues to open up in 2021 and 2022, Malaysia Healthcare Travel Council (MHTC), an agency under the Ministry of Health, will continue to move forward with greater industry resilience to enhance the health tourism sector.
There is great potential for Malaysia’s medical tourism market as it has grown from around US$130 million to nearly US$400 million, an average of 16% in annual growth, between 2011 and 2019.
MHTC continues to actively promote medical tourism as it believes Malaysia is not only a safe and trusted healthcare destination but also offers strong value propositions. These include hospital fees being regulated by the government, world-class medical facilities that are easily accessible with a short waiting time, and specialty fields ranging from fertility, cardiology and oncology to orthopedics, neurology and health screenings.
Capitalizing on Technology
Malaysia has always been quick to capitalize on the power of technology, and one company at the forefront of developing smart cities is Cyberview, which is currently building three technology clusters centered on Smart Mobility, Smart Healthcare and Digital Creative spread across four zones in Cyberjaya. The project is estimated to contribute US$60 billion to Malaysia’s GDP and potentially create 87,000 job opportunities by 2045.
An aerial view of Cyberjaya, Malaysia’s premier smart city, where plans are in place to transform it into a global technology hub.
Cyberview believes that it has all the ingredients, from infrastructure to talent and policies, to strengthen Cyberjaya’s position as a global technology hub. After all, the likes of China Mobile International, Dell, Ericsson, HTC Global, Huawei and Modality Systems have made Cyberjaya Malaysia’s premier technology investment destination for decades.
Another company capitalizing on technology is Silverlake Axis, which is taking on newer, nimbler, fast-growing financial technology (fintech) companies at their own game. The company has just won a major digitalization project from a bank in Thailand that involves transforming a traditional operating model for banks into a digital one without affecting its legacy infrastructure.
This will help the Thai bank embark on their digital transformation with peace of mind as Silverlake Axis has the expertise to understand how banks work and is suited to helping them to transform through their digital journey.
Recognized Globally
Internationalizing Malaysia as a brand is one of the key strategies in reviving Malaysia’s economic fortunes for 2022. This is why the Halal Development Corporation (HDC) and the Malaysia External Trade Development Corporation are co-hosting the Halal Cluster Week at Dubai’s World Expo in November in a quest to attract US$80 million in potential trade and investment.
HDC plans to take its initiatives global through the introduction of its new Muslim Friendly Guidelines, a set of standards and regulations for the halal industry covering the retail, tourism and medical sectors. It also plans to undertake a halal ecosystem assessment in 22 countries in collaboration with the Islamic Development Bank. The study will help to identify key components of the halal industry in the countries involved, including best practices and gap analysis.
Meanwhile, the world’s largest glove maker, Top Glove, is setting its sights on going further by focusing on Environmental, Social and Corporate Governance (ESG) goals.
Top Glove realizes that it cannot just be good at producing gloves but also needs to be the best at producing these products in a sustainable way. With its emphasis on ESG, the company plans to reduce its carbon emissions and water consumption by 25% and 34%, respectively, by 2025, and reduce waste being sent to landfills by 10%. It has also committed to consulting experts on labor issues such as the worker recruitment process, employment terms, training and workplace safety, among others.
Looking Ahead
As Malaysia continues to look to the future, RHB Bank’s quarterly economic outlook report notes that a few key events are likely to support increase in consumption by the end of 2021 into early next year.
With working capacity increasing to 100% and business operating hours normalized as states recover, broader industries that were deemed non-essential and high-risk should gradually be reopened.
Coupled with the opening of international travel, which will support tourism-related segments, mobility should improve, which lends support to the labor market and private consumption recovery.
“Consumer spending is already well positioned to capitalize on the reopening of the economy. Household savings have significantly built up during the pandemic due to mobility restrictions, moratoriums and cash support. The increased savings are arguably involuntary, and mostly in liquid assets, which may likely be drawn upon when consumer confidence improves,” the report noted.
The Philippines has always prevailed through major challenges, from natural disasters to political uncertainties. However, the lingering socio-economic impact of the Covid-19 pandemic could strain the country’s much vaunted resilience now more than ever. Though still rocky, a path to recovery does lie ahead.
GDP growth significantly rebounded in the second quarter of 2021, surging 11.8% compared to the previous year, the highest growth in more than three decades. Among major sectors, manufacturing expanded by 22.3%, construction by 25.7%, and services by 9.6%. These figures have already brightened the economy’s full-year growth outlook despite some expected bumps due to the continuing spread of coronavirus variants. The government’s goal of vaccinating all adults—70% of the population—by the end of the year is crucial for the economy to sustain its growth trajectory. More than 42 million total vaccine doses have been administered so far.
Vaccine distribution may be uneven across the country, but in Metro Manila at least, the rollout seems to be proceeding briskly. The National Capital Region—which accounts for around 36% of the national economy—seems to be moving towards herd immunity. As of late September, almost 70% of the region’s target residents have been fully vaccinated, while almost 90% have already received their first dose.
The efforts of the private sector, such as global port management company International Container Terminal Services, Inc., have been instrumental in procuring and distributing the vaccines. SM Investments, the country’s largest conglomerate, provided free vaccines not only to its workforce, but also stakeholders and business partners, offering its properties as vaccination and testing hubs.
Prudent financial policies and vital reforms are expected to clear the way for further recovery, with growth expected to pick up by the last quarter of 2021 and into next year. With several high-impact infrastructure projects slated for completion in 2022, job opportunities are bound to expand and the country’s competitiveness will improve. These are also supporting the appreciation of real estate values in major cities, providing investors with unprecedented opportunities. Rebounding exports and remittances, and increased spending ahead of next year’s general elections, are also expected to boost domestic consumer demand.
The increasing adoption of digital technology and online transactions has greatly accelerated over the past year, boosting efficiency and the ease of doing business. Growth has now been more decentralized, with the government focusing on decongesting the capital and stepping up digitalization initiatives to sustain economic activity. Indicators point to a Philippines that will bounce back better, with more inclusive and sustainable growth, supported by robust infrastructure, and a resilient population that’s more digitally savvy.
The pandemic has impacted countries all over the world, and each nation has been faced with its own unique challenges across various sectors. In Thailand, the tourism industry, which usually represents approximately 20% of the country’s GDP, has been hit particularly hard.
Goods and services exports, another of the Thai economy’s cornerstones at about 60% of GDP in 2019, was also significantly affected initially. However, the sector has since recovered, spurred by the weakest baht level in three years, to achieve 43.8% year-on-year growth in 2021—the largest increase in 11 years, according to the Kasikorn Bank Research Center.
In terms of direct foreign investment, supply chain disruptions brought on by the pandemic have encouraged foreign investors to move from China-centric to more regionalized production, and Kasikorn expects inflows to Thailand to increase by 0.7% to 0.8% from 2021 to 2022.
Moreover, in July, the Asian Development Bank estimated that Thailand’s GDP will grow by 3% in 2021 and 4.5% in 2022, so the outlook is improving as the world begins to see light at the end of the pandemic tunnel.
Despite the headwinds of the past two years, some sectors and companies have continued to fulfil their growth ambitions, as this special supplement highlights.
The German digital security company cyan recently chose Thailand as their first step in entering the Asian market, forming a partnership with Thailand’s leading mobile network operator to provide cybersecurity for mobile users.
Thailand’s PTT Global Chemical, meanwhile, has pressed forward with its global expansion, acquiring Germany’s Allnex Holding in a landmark €4 billion (US$4.75 billion) deal that significantly expands the state-owned company’s international reach, as well as its production and product development capabilities.
After a period of global gloom, it seems that a new, and hopefully improved, normal is emerging. Mass vaccination is key to winning the battle against Covid-19, and Thailand is striving to achieve this despite some initial difficulties. As of late August, medical authorities in Thailand had administered more than 28 million doses of the vaccine, and as the supply increases dramatically in the last four months of 2021, the country should be able to reach its goal of vaccinating more than half of its population by the end of the year.
In fact, Thailand’s well developed sense of community served the country well in minimizing the impact of Covid-19 in the first year of the pandemic, bringing the infection rate down to less than 10 per day for more than three months in 2020. Despite the recent uptick in third wave infections, Thailand is ready and able to rise to the challenge, and to step forward confidently into post pandemic prosperity.
Last year should have been a banner year for Japan, with the Tokyo Olympic Games set to follow the country’s successful hosting of Asia’s first Rugby World Cup and the enthronement of its new emperor in 2019. While the pandemic did force the postponement of the prestigious sporting competition amid a slumping global economy, Japan is poised to make up for lost time in 2021.
Japan’s GDP returned to growth in the third quarter last year as foreign demand for Japanese goods fueled a trade surplus. This rebound, which represents the fastest pace of growth in more than 50 years, is expected to continue; in October, the IMF predicted Japan’s economy will expand by 2.3% this year.
Overcoming adversity to achieve success is nothing new for Japanese industry, and leading companies such as Canon, Kikkoman Corporation and Mobile Internet Capital (MIC) have once again displayed their ability to adapt and innovate during periods of volatility.
Canon Chairman and CEO Fujio Mitarai, who has led the company since 1995, is helping the company weather short-term uncertainty by focusing on strategies for positive transformation and long-term growth. While the pandemic posed challenges for Canon’s businesses—technicians have had to quarantine for weeks when travelling overseas, for example—Mitarai has kept the firm’s historic evolution into a strategically diversified imaging solutions provider on course.
While growing its traditional camera and printer businesses, Mitarai has also significantly expanded Canon’s medical and industrial equipment arms. The company is also innovating in sectors such as diagnostic imaging equipment and nanoimprint lithography, and plans to invest heavily in OLED display manufacturing equipment for smartphones and TVs.
Yuzaburo Mogi, Honorary CEO and Chairman of the Board of Kikkoman, is another corporate leader adept at adapting to changing conditions. Since he made the then-revolutionary decision to build a factory for the soy sauce maker in the U.S. in the 1970s, he has embraced innovative thinking to ensure Kikkoman’s continuing success.
Resolute in his belief that the most resilient firms are those that learn from experience to become stronger and smarter, Mogi sees the current environment as a time for strong leadership to leverage the company’s collective wisdom to achieve the best results.
As Japan’s first technology-focused venture capital firm, MIC has built its impressive reputation on looking to the future, and the company is helping drive the transformation of society by investing more than US$240 million in promising startups. Kan Ebisawa, President and CEO of MIC, is confident that technology will not only foster economic growth, but also provide a bridge between Japan and the rest of the globe.
As the world attempts to adapt to the new normal, companies—and leaders—such as these are well placed to face challenges head on and drive Japan’s future success.
In the face of a once-in-a-generation crisis, Indonesia is proactively taking steps to mitigate the impact of the coronavirus on its people and economy.
Among other steps, the government has rolled out a series of measures to support hard-hit businesses and industries. These include 35.3 trillion rupiah (US$2.26 billion) in new tax incentives for 18 sectors such as tourism, food and beverage, and healthcare. The authorities have also expanded social assistance programs for low-income citizens across the country to help them meet their basic needs and maintain their purchasing power.
Meanwhile, the recently approved Omnibus Law on Job Creation is expected to make it easier to do business in Indonesia by cutting red tape, easing restrictions on foreign investment and providing more incentives to free-trade zones. According to Fitch Ratings, the new law should significantly enhance the business climate and improve the country’s international competitiveness over time if the changes are fully realized.
In particular, the reforms will help Indonesia capitalize on shifts in global manufacturing supply chains. Many multinationals are looking to diversify their supply chains in response to uncertainties created by ongoing U.S.-China trade tensions. Some have relocated operations to Indonesia in recent years, and the new measures introduced by the government are aimed at accelerating this trend.
“We believe that the law will bolster Indonesia’s long-term economic growth prospects. All else being equal, faster growth would have a positive effect on the sovereign’s public debt metrics, boosting fiscal inflows and reducing debt-to-GDP ratios,” said Fitch in its October report.
“Perhaps more importantly, the potential boost in Indonesia’s manufacturing exports and FDI inflows could make the country less dependent on commodity exports and on portfolio flows to finance its current-account deficit.”
State-owned enterprises such as Pertamina continue to play their part in supporting economic growth. The energy giant has a key role in developing Indonesia’s energy security and self-sufficiency. According to Nicke Widyawati, President Director and CEO of Pertamina, the company not only seeks profit, but also to serve as an engine of economic expansion and a driving force for the growth of the country’s small and midsized businesses.
On the manufacturing front, Indonesian corporates such as apparel maker Pan Brothers continue to keep their production lines running to meet global demand. The company’s targeted production capacity in 2021 is 130 million garment pieces annually.
Over the longer term, Indonesia’s plans to focus on infrastructure—including new airports, power plants and transportation projects—and the booming digital economy will help fuel the country’s growth in the post-crisis period and lead to new opportunities for businesses and investors.
In its latest report on Malaysia’s economy, the central bank noted GDP improved significantly, marking a smaller contraction of 2.7% in the third quarter compared with the 17.1% dip the previous quarter. The government expects the rebound will continue, projecting the economy will grow up to 7.5% next year.
According to the Ministry of Finance (MoF), production and trade picked up over July to September, combined with a rise in private consumption, while unemployment fell over the same period. Meanwhile, stimulus packages unveiled by the government to ease the economic fallout from Covid-19 are expected to contribute over four percentage points to the nation’s GDP growth.
Malaysia has moved quickly to accelerate digital adoption by businesses, education and society. This will help the nation’s industries, from manufacturing, healthcare, electrical and electronics to e-commerce, support the country’s recovery.
Amid a global call for more medical protective gear, which increases competition in the market, Top Glove, the world’s largest rubber glove maker, believes it can stay ahead of the game. Not content to rest on its laurels, Top Glove’s goal is to continue to dominate global market share—solidifying its No. 1 status in the rubber glove industry—and become one of the world’s top 500 companies by 2035.
Silverlake Group is another homegrown company that intends to push ahead with expansion plans. Its revenue rose to US$161 million in the year ended in June, with a compound annual growth rate of 8% since 2011.
Math is the basis for its latest cloud computing solutions as the company helps its customers detect, manage and combat fraud in the banking, finance and insurance industries. Silverlake Group is poised for further growth in 2021 on the back of its partnership with an institutional investor.
Going regional is also on the cards for BookDoc. The five-year-old medtech startup is ramping up its business to expand its footprint by complementing its patient-doctor booking system and healthmetrics monitoring system with chat-based medical teleconsultations.
The company has tied up with China’s WeDoctor, a global healthcare platform that boasts 700 million users. BookDoc uses WeDoctor’s AI technology to screen calls and offer teleconsultation services to patients in its ecosystem seeking advice for a range of medical concerns, including Covid-19.
Moving forward, the central bank believes the economy will improve in tandem with stronger global demand and domestic policy support that includes government-targeted wage subsidies, public projects and low interest rates. It also anticipates the economic impact of Covid-19 containment measures reintroduced in October will be less severe compared with earlier restrictions as businesses have been allowed to continue to operate.
Noting that Malaysia’s economic fundamentals are still strong and its economic base is sufficiently diversified to weather the storm, the MoF says it will continue to closely work with the private sector and the public to foster sustainable growth in 2021.
The Kingdom of Saudi Arabia is busy working toward its mission to diversify its economy as part of its Vision 2030. Tourism plays a major role in its development plans. As an example of one of many projects, in November, Saudi’s Ministry of Culture announced an initiative to establish a world-class center dedicated to the management, restoration and protection of underwater cultural heritage in the Red Sea and the Arabian Gulf. The center will be affiliated with the Ministry’s Heritage Commission and will be responsible for developing the tourism sector in Saudi Arabia and the region.
Saudi is also seeking to play a main role in strengthening the global economy. In November, Saudi hosted the G20 Leaders’ Summit for the first time in its history, chaired by His Majesty King Salman bin Abdulaziz Al Saud.
The G20 Leaders’ Summit, which was kicked off in the wake of the 2008 global financial crisis, occurred this year amid exceptional circumstances as world leaders urged solidarity against the backdrop of the Covid-19 pandemic. G20 economies are expected to contract by about 4% to reach US$65.8 trillion in 2020, down from US$68.6 trillion a year ago. Members of the group represent around 80% of the world’s economic output, which is projected to be worth US$83.8 trillion in 2020, two-thirds of the global population, and 75% of international trade. They represent the voices of 4.6 billion people around the world.
The pandemic crisis, healthcare plans and the recovery of the global economy were at the top of the G20 agenda this year. Saudi hosted an exceptional virtual meeting to discuss the Covid-19 outbreak. “At this critical time, with the world facing the coronavirus pandemic, which affects humans, health systems and the global economy, we meet with the G20 in an exceptional summit; to come up with initiatives that fulfill the hopes of our people, strengthen the role of our governments, and unite our efforts to confront this pandemic,” said His Majesty King Salman bin Abdulaziz Al Saud on Twitter in March.
The G20 meetings also touched on enhancing trading ties. “In these challenging times, the need for an open, fair and rules-based multilateral trading system is critical to support global economic recovery,” said Majid bin Abdullah Al Qassabi, Minister of Commerce and Investment of the Kingdom of Saudi Arabia at an earlier virtual G20 trade and investment ministerial meeting.
So far G20 countries have contributed over US$21 billion to support the production, distribution and access to diagnostics, therapeutics, and vaccines; injected over US$11 trillion into safeguarding the global economy; and launched a debt suspension initiative for the least developed countries that allowed beneficiary countries to defer US$14 billion in debt payments due this year and use the funds instead for financing their health systems and social programs. As 2020 comes to a close, the world will be watching and waiting to see what further help is coming.
In this report exploring the future of Saudi Arabia, some of its key influential business leaders share their insights on the impact of Vision 2030 and Saudi’s ambitious plans.
The Philippine central bank governor, Benjamin Diokno, in a recent speech affirmed that the country’s economy remains robust, characterized by strong fundamentals that include low interest rates, a strong currency, record gross international reserves, low debt ratios, stable inflation and improving employment figures.
Public infrastructure projects, agriculture and high technology are driving the economic recovery. Among the services sector, domestic tourism is poised for a rebound, led by the Department of Tourism’s efforts to ensure the careful reopening of top local destinations. “We hope that this will soon make way for greater inter-regional travel,” says Tourism Secretary Bernadette Romulo- Puyat. “But visitors from all over the Philippines can now enjoy some of the world’s best islands at their safest and most tranquil.”
A diverse range of industries, from food manufacturing to financial services, continue to stay buoyant. The business process outsourcing sector (BPO) also remains optimistic, with increased demand for outsourced health-related services encouraging some BPO companies to expand. The pandemic has prompted greater work flexibility in the sector, with almost 70% of its labor force now working from home, according to the Information Technology and Business Process Association of the Philippines. This means multi-use developments, such as those offered by Alveo Land, remain attractive for both tenants and investors. “Our projects offer dynamic configurations that balance residential, lifestyle options and workspaces,” explains Alveo Land President Robert Lao. “They can easily adapt to the demands of the new normal, where convenience and innovation are key.”
With crises also come opportunities, as seen in the dramatic rise in digital banking during the quarantine period. Increased financial digitalization has enabled greater access to financial services and quicker capital turnaround, thus accelerating income growth. By strengthening their e-commerce operations, companies such as SM Investments Corporation are evolving with the circumstances while positioning themselves for a post-recovery future. “Even across different platforms, we’ve managed to keep our brand front and center,” says SM President and CEO Frederic DyBuncio. “This assures our customers that they can count on us, whatever the situation.”
The Philippine central bank expects GDP to bounce back and grow by 6.5% to 7.5% in 2021 and 2022. The Asian Development Bank also expects growth to accelerate in 2021 with effective fiscal support and monetary policies keeping the economy on track. JPMorgan Chase is even more bullish on the country. In August, it increased its 2021 growth forecast to 9.5%, which would be among the strongest in the region.
Southeast Asia may have seen a decrease in foreign direct investment (FDI) in the first half of this year, but the Philippines managed to buck this trend. The central bank reported FDI net inflows increased for the fourth consecutive month in August, expanding 47% from a year earlier, while net equity capital investments rose by 33%. This show of confidence by investors demonstrates the country’s sound financial management, effective pandemic control efforts and unshakeable resilience.
