Charting a sustainable future; Risks, opportunities and transition await Singapore and the region

One common denominator for everyone during this crisis has been the need to adapt at pace. And this dynamism is here to stay. As South-east Asia emerges from the shadow of Covid-19, there's a real opportunity to use these transitions to our advantage.

But success will require resilience, reconnection and reimagining across the region.

Here are the areas that need closest attention this year and beyond for Singapore and South-east Asia.

EMBRACING A PIVOT TO SOUTH-EAST ASIA

Asia is the world's growth engine, and South-east has been within its epicentre for several years. But in terms of foreign investment, export and infrastructure-driven growth, Asean has been hit harder by Covid-19 compared with the rest of Asia.

The pandemic will change some things permanently. South-east Asia, already a manufacturing hub, will emerge less dependent on external markets for consumption and investment. The new intra-regional consumer markets that manufacturers developed when demand fell in Europe and North America will remain.

Unfortunately, ongoing uncertainties mean long-term plans are difficult to set. But government policy reform can help grease the wheels by simplifying non-tariff barriers.

Ratifying the Regional Comprehensive Economic Partnership agreement will help to drive export growth, as it seeks to eliminate many of these barriers while opening the region to more trade activity, such as with China.

The region also needs to reignite foreign direct investment. This can be done by revisions of negative investment lists, tax incentives for certain sectors, and processes to speed up investment approvals.

BUSINESSES CAN'T GO 'HALFWAY' WITH TECHNOLOGY INVESTMENT

Technology saved businesses last year. It enabled continuity, redefined customer and supplier connectivity, and will shape the future of resilient businesses.

Last year, businesses pivoted in response to lockdowns. They adopted online purchase platforms and faster delivery and online product trackers. In the back end, companies were using digital channels to conduct payment online, using digital dashboards for liquidity management and placing suppliers on digital platforms.

But many of the changes were introduced in haste to stay afloat. Going forward, businesses of varying sizes will need to invest in developing their digital capabilities further to secure future resilience with the growing e-commerce population.

Last year alone, 40 million people in South-east Asia came online for the first time, according to a Google, Bain and Temasek report.

Today, there are 400 million Internet users across the region.

While HSBC's Navigator survey reveals that 80 per cent of Asean businesses plan to maintain or increase their investment in innovation, it's critical that these plans shift into reality.

For example, we have seen how technology has revolutionised supply chains. Yet, business transformation will not be driven by one technology, it will take a combination - bringing together artificial intelligence, analytics, the Internet of Things, 5G and distributed ledger technology.

But business can't do this alone.

Sufficient cooperation across jurisdictions by fully implementing frameworks like the Asean Digital Integration Framework Action Plan and the Asean Framework on Digital Data Governance is essential.

GENERATING WEALTH, LIFTING COMMUNITIES

Technology can enable and catalyse economic growth, but there is also a danger of excluding those that lack the resources and education necessary to capture these opportunities.

Improving the digital literacy of Singapore and the region's workforce will be imperative. There are three clear cascading benefits.

First, an educated population equipped with the latest digital skills will be more employable, adaptable and financially resilient as industries and sectors evolve. Second, financial technology will empower more segments of society to grow their wealth through investment. This includes families, small business owners and family offices. And lastly, digital platforms enable customers to explore a broad range of investment and protection solutions that can help provide for their children, elderly parents, retirement, and even secure a legacy.

As they gain experience, individual investors learn how to build their wealth using tailored investment, protection and wealth planning insights. For more sophisticated investors, technology will also enable them to seek more tailored investment, protection and wealth planning solutions.

Improving society by making technology embedded in more of the Asean population needs to be a government priority this year and beyond.

As we rebuild our economies, we need to remember that an unsustainable recovery will not be a true recovery. But while great strides have been made in green investment in Asean, there's still a void when it comes to the use of dedicated sustainable finance by mainstream businesses and society.

A solution to address this disconnect could be through the governments of South-east Asia linking their future infrastructure projects with green and sustainable principles. This will, in turn, channel more private investment from around the world into these projects.

REIMAGINING AND BUILDING RESILIENCE TO CLIMATE RISKS

The pandemic has alerted us to another looming threat - the growing risk of climate change to our communities and livelihoods.

Asean is one of the most susceptible regions in the world to climate risk, and if it is not addressed by its nations by 2030, the region will see an 11 per cent hit to gross domestic product by 2100.

Rapid action is needed across all areas: energy, transport, urban buildings, industrial and land. But there are also opportunities.

The next decade is crucial. As we rebuild our economies, we need to remember that an unsustainable recovery will not be a true recovery.

But while great strides have been made in green investment in Asean, there's still a void when it comes to the use of dedicated sustainable finance by mainstream businesses and society.

A solution to address this disconnect could be through the governments of South-east Asia linking their future infrastructure projects with green and sustainable principles. This will, in turn, channel more private investment from around the world into these projects.

RISKS AND OPPORTUNITIES

The prosperity and growth that Singapore and South-east Asia have enjoyed over the past two decades were built on a spirit of openness and connectedness. And we need to get back to these roots.

The structural fallout from the pandemic, as well as climate change and technological advancements, presents both risk and opportunity which will require building resilience and reimagining how we do things in future. But I'd like to see this as a chance to reset our goals and ambitions.

We can build a better, more connected and more inclusive future. And "better" means acting together, in these moments of transition.

A contribution piece by Tony Cripps, CEO HSBC Singapore, was first published in The Business Times on 15th February 2021.

This is the first of a five-part series on the key pillars that will drive sustainable prosperity for the Asean region, including Singapore, in the coming decade or more.