The initial efforts of the countries in the world to contain coronavirus was to act alone, seizing borders and implying lockdowns which led to disruption in global supply chains and fall in regional economic activities. However, it soon became clear that only acting together will meet the challenges of the crisis.
International organizations and regional integrations have called for collective approaches at the regional and global level. The ASEAN members including their three plus counterparts held video conferences to act collectively on the containment of the virus and mitigation of challenges posed by COVID-19 pandemic. Similarly, the SAARC countries conducted a video conferencing on 15th March 2020 where COVID-19 emergency fund worth of $
It is promising that such efforts and initiations are being made, however greater international cooperation is needed to ensure these efforts to produce the best outcomes. SAARC and ASEAN being the most important regional organization in Asia should come together. The crisis offers an opportunity to learn from each other, show unity, strength and solidarity. This webinar on ‘SAARC-ASEAN on COVID-19 Impacts in the Economy’ intends to invoke leaders from both regional organizations to work collectively to respond and mitigate the upcoming economic threats being posed by the COVID-19 pandemic.
SESSION I- COVID 19 and its impact ASEAN economy
The Association of South-East Asian Nations, popularised as the ASEAN has seen a collaboration of ten countries with an aim to improve economic growth and maintain regional stability. However, much like every other sector that has been significantly affected by the outbreak of the Coronavirus pandemic, the fatal virus is set to leave its grim imprints on the ASEAN economy too. With stringent social distancing measures and stay-at-home orders, there has been a subsequent shift to digital diplomacy. The global recession resultant of the pandemic is reminiscent of the Asian Financial Crisis (1997-1998). However, unlike the fallout of the Asian Financial Crisis, ASEAN countries today are better equipped to combat the repercussions of the pandemic.
With the implementation of social distancing and containment strategies, global supply chains have been disrupted, global demand has been significantly impacted and the stage is set in south-east Asia for welcoming an economic tsunami.
The economic fallout of the Covid-19 pandemic is expected to adversely impact the following three sectors:
ASEAN economy is a major contributor to the global economy and trade. With an abrupt halt to tourism in the wake of the pandemic, Singapore and Thailand might emerge as the worst-hit countries. Until the advent of a global vaccination to eliminate the virus, exports from countries like Vietnam, Philippines, Singapore, etc. shall remain at a standstill. Finally, with the implementation of strict social distancing measures and containment orders, domestic demand shall significantly drop in the region. At a time when the global future seems uncertain, it is imperative for the ASEAN economies to come together and revisit the scope of regional cooperation.
Mr. Bounphieng PHEUAPHETLANGSY, Deputy Director, Division of Strategic and International Studies, Institute of Foreign Affairs, Lao PDR
Ms. Jessica Wau, Assistant Director, ASEAN, Singapore Institute of International Affairs (SIIA), Singapore
SESSION II-COVID-19 and impact on SAARC economy
A recent survey conducted by the World Bank puts South Asia on the verge of facing the worst economic fallout due to the pandemic- something not witnessed in the last 40 years. The unprecedented and unfortunate crisis, which has wreaked havoc worldwide, has called in all SAARC countries to collaborate in terms of international travel bans, implementation of strict containment strategies, announcement of relief packages and so on. One of the largest among the SAARC group is India- a $
Meanwhile, a SAARC Joint Emergency Relief Fund has been set up where member countries have pledged to donate.(India: $
India, for instance, has cut the interest rate and provided a three-months' moratorium on loan repayment. Pakistan's Imran Khan has announced a Rs. 1.2 lakh crore relief package for vulnerable groups and a Rs. 7,500 crore package allotted to small, medium business enterprises. According to Sheikh Hasina, Bangladesh has offered a relief package amounting to nearly 3.5% of the country's GDP. Sri Lanka, one of the worst economically affected, is thinking in terms of a brief engagement with the Reserve Bank of India. With no tourists on the go, Nepal's hotel business has witnessed a 90% decline in income and a $
Mr. Kamal Dev Bhattarai, Current Affairs editor at The Annapurna Express
Mr. Kithmina Hewage, Research Economist, Institute of Policy Studies of Sri Lanka (IPS), Sri Lanka
SESSION III- SAARC and ASEAN relations during COVID-19
COVID-19 has successfully exposed the frailties of the globalised world in combating a lethal virus of mass destruction. As South Asia emerges as an epicentres of the Coronavirus pandemic, it has called for a coordinated response from the world order. In the light of mitigating the crisis emanating from the Covid-19 pandemic, the SAARC and ASEAN have joined hands to announce coordinated regional relief measures. Child agencies such as Child Fund, SOS Children's Villages, Child Rights Coalition Asia, Plan International and so on, have urged the SAARC and ASEAN to formulate and implement policies aimed at protection of children in the midst of a pandemic.
Regional Executive Director of Child's Rights Coalition Asia, Amihan V. Abueva said, "We have received extremely worrying reports from several counties that domestic violence is on the rise. Governments of ASEAN and SAARC must put children’s well-being at the centre of the pandemic response." Regional responses framed by the associations will be exemplary to the world, which is still grappling with the pandemic infused repercussions.
Dr. Sreeradha Dutta, Centre Head & Senior Fellow, Neighborhood Studies, VIF, India
Dr. Juita Mohamad, Head of the Economics, Trade and Regional Integration Program, ISIS Malaysia, Malaysia
Mr. Him Raksmey, Research Fellow, Cambodia Institute for Cooperation and Peace, Cambodia
SESSION IV- SAARC and ASEAN relations post COVID-19
The post Covid global order will inevitably set the stage for increased regional cooperation and collective multilateral efforts. Coronavirus will be a game changer in international politics in a non Covid world. The pandemic has already sparked off distrust across economies and geographies. A post Covid world is all set to build a stage for increasing regional integration where regional blocs like BIMSTEC, SAARC and ASEAN are set to play a major role.
The indispensable relationship between regional organisations has been visible since time immemorial. For instance, the African Union (AU) and the Food and Agricultural Organisation (FAO) of the UN had come together to ensure food security in Africa. The Covid pandemic has absorbed the world in a trail of health diplomacy and virtual diplomacy. Considering the severe effects of the pandemic, neither bloc has been able to put up collective mitigation strategies against the virus. Moreover, with the freshly erupted border issues such as between India and China or India and Nepal, the functioning of regional blocs is all set to take an alternative turn. What the future holds is still uncertain. However, assessing their importance and role, it is time now for them to come together and mould a global governance.
Dr. Masuma Hasan, Chairman, The Pakistan Institute of International Affairs (PIIA)
Dr. Chu Minh Thao, Deputy Director, Center for Security and Development, Diplomatic Academic of Vietnam, Vietnam
Deputy Director, Division of Strategic and International Studies, Institute of Foreign Affairs, Lao PDR
Deputy Director, Center for Security and Development, Diplomatic Academic of Vietnam, Vietnam
Head of the Economics, Trade and Regional Integration Program, ISIS Malaysia, Malaysia
ASEAN, Singapore Institute of International Affairs (SIIA), Singapore
This webinar was organized by the Asian Institute of Diplomacy and International Affairs (AIDIA) in collaboration with Institute of Foreign Affairs (IFA), Lao PDR, centred around the impacts of COVID-19 on economies of SAARC and ASEAN region. The session was moderated by Mr. Shyam KC, Research and Development Director, AIDIA, who welcomed the speakers.
The session opened with remarks from H.E Mr Mai SAYAVONGS , Director General, Institute of Foreign Affairs, Lao PDR. He highlighted the challenges presented by the COVID situation which has diverted the attentions of the national governments from regional developments to domestic dynamics. Ambassador Mai emphasised the fact that even though Laos has declared itself COVID-free and has not seen any new cases in weeks, but the country has been affected by the overall impact on global economy. He further highlighted the importance of learning good practices from successful countries, deepening digital economy and diplomacy, increasing people-to-people contact and concluded with wishing good health to everyone in these difficult times.
Next, Mr. Bounphieng Pheuaphetlangsy, Deputy Director, Division of Strategic and International Studies, Institute of Foreign Affairs, Lao PDR started his briefing with the statistics related to ASEAN’s involvement in the global economy and trade. He highlighted the impact of COVID on tourism sector of ASEAN and Laos which received 5 million tourists last year but has seen a sharp dip in tourists now, and how the economy of Laos, which was expected to grow by 6-7% this year, has been now forecasted to grow only 1-1.5% due to the COVID pandemic, which will be the lowest growth rate for Laos in the last three decades. Further, the issue of more than 100,000 migrants returning, mainly from Thailand, due to job losses, and a resulting loss of about million remittances per month was stresses upon. While concluding, the speaker emphasized on the need of reforming the public health system, building robust infrastructure, and enhancing regional cooperation.
Following this, Ms. Jessica Wau, Assistant Director, ASEAN, Singapore Institute of International Affairs (SIIA), Singapore started her presentation by highlighting the economic impact of COVID-19 in immediate and outgoing terms. She mentioned that the economic activities have come to a standstill in all sectors like travel, production and retail. The unintended consequences of this has been the supply chain shocks and sluggish commodity prices. Further, she explained that the most affected sectors are the hospitality sector, the informal economy, and the MSMEs. She laid emphasis on digital economy to remain connected and harness technology to map out supply chains and focus on essential business travel in order to share expertise and continue investments. She concluded with defining the future considerations regarding how increasing contact tracing capabilities, its interoperability among ASEAN nations can deepen and defend multilateralism which is under threat in present times.
Next, Mr. Kamal Dev Bhattarai, Current Affairs editor at The Annapurna Express briefed on the impact of COVID-19 on SAARC region which comprised of destruction of supply chains, drying up of tourism revenue, collapse of garment industries, and reduction of consumer demand to a minimum. He further highlighted the fact that growth projections have been downgraded for all SAARC countries and unemployment has been increasing in huge proportions. The speaker explained that this situation has provided an opportunity to revive the agriculture sector which can utilize the unemployed youth returning from other countries and previously involved in other sectors. He also stressed on the fact that movement of migrant workers has been severely impacted and resultingly, the construction and development projects have halted. Further, tourism for medical reasons has also been badly affected. In conclusion, he explained that in Nepal, more than half million people have lost their jobs, and the first victims were people working in the informal sector, also, 2020 which was supposed to be a “Visit Nepal year” is now facing a growth rate which has shrunk to 1.5 to 1.8% this year instead of an expected growth rate of more than 5%.
The webinar then proceeded towards Mr. Kithmina Hewage, Research Economist, Institute of Policy Studies of Sri Lanka (IPS), Sri Lanka, who highlighted that in Sri Lanka things are getting back to normal and there have been no cases in past 50 days, thus making Sri Lanka a nation which has done relatively well in containing the virus. He stressed on the fact that despite of these achievements and the fact that schools are supposed to open next week, Sri Lanka is also struggling with the problem like all other countries related to unemployment and economic slowdown. He proceeded with a briefing on the policies that Sri Lanka has adopted to counter the situation, which includes providing access to finance by decreasing interest rates, and providing more avenues for loans. Further, he explained that Sri Lanka is heavily reliant on revenue from garment export and the main markets are US and Europe which are the hardest hit markets due to COVID pandemic and since female participation is greater in this sector, there is a greater impact on the females in the country. However, the country is trying to recover through manufacturing PPEs and other medical garments to replace traditional garments. He concluded with mentioning that due to parliamentary elections coming up in April, many unpopular but necessary decision to recover from the pandemic might not be taken at the moment.
Next, Dr Sreeradha Dutta, Centre Head & Senior Fellow, Neighbourhood Studies, VIF, India, highlighted the fact that the time has come to ask the question on how SAARC nations can work together and with the ASEAN nations as there hasn’t been too many occasions where South Asia as a group has had much interaction. She also stressed on the fact that SAARC countries are at very different phases of development and that is one of the reasons of failure of closer cooperation. Further, on the aspect of working together, the speaker mentioned that the heavy-handedness of government sector has held SAARC back and going forward, establishment of smaller clusters for integration of efforts and convergence of interests will be of utmost importance for SAARC nations to work together.
Dr Juita Mohamad, Head of the Economics, Trade and Regional Integration Program, ISIS Malaysia highlighted that Malaysia has the third highest youth unemployment rates in ASEAN region and this has increased up to 30% due to the pandemic. She emphasized that a reform in education sector is needed going forward, to resolve the issues related to creating skilled jobs as at present, semi-skilled and unskilled jobs are more available. Also, labour mobility among the ASEAN and SAARC nations needs to be encouraged for low skilled labour to provide avenues of employment.
Mr. Him Raksmey, Research Fellow, Cambodia Institute for Cooperation and Peace, Cambodia started his briefing with recalling the historical formation of ASEAN and SAARC and how these groupings have been able to converge the interests of the nations of these regions. He proceeded with highlighting that no high-level meeting has been held between ASEAN and SAARC lately due to political disturbances and this explains the gap that exists between the potential and reality in sphere of cooperation. He also mentioned that bilateral talks have taken place during the ongoing COVID crisis but the ground implementation still remains to be seen. In conclusion, the speaker mentioned that ASEAN and SAARC should upgrade formal relations and hold high level summits to establish cooperation. Similarly, SAARC should establish joint efforts with ASEAN for coordination in tackling the COVID pandemic. ASEAN and SAARC if combined consist of a population of 2 billion and a coordinated and strengthened effort can provide huge benefits.
Next, Dr Chu Minh Thao, Deputy Director, Centre highlighted the fact that although according to short-term aspect, the worst impact on global economy is over, it is hard to predict when the economies will be back to normal. She also stressed on the fact that during the current times when regionalisation has been on rise and globalization is receding, and a general trend of shifting supply chains away from china is being seen, this may create hurdles in consolidating a united economic action. Also, she mentioned that as India has decided to leave the Regional Comprehensive Economic Partnership, it will have to find some other channel of engaging with the ASEAN. In conclusion, she emphasized that ASEAN is ready for sharing its experiences with SAARC and as SAARC countries like India and ASEAN countries like Singapore have an advantage in digital technology sector, coordination between the two regions will provide hugely beneficial results for the people of these regions.
Following this, Dr Masuma Hasan, Chairman, The Pakistan Institute of International Affairs (PIIA), started the briefing with the WHO advisory that the COVID pandemic is expected to get worse in the coming next months. The speaker highlighted that SAARC has not been able to work efficiently in the last half decade due to political differences, SAARC needs to come up with a mechanism to work together during this crisis and also in a post-COVID world. She also emphasized that the nations of the region need to work towards minimizing the poverty in order to limit the impacts of future similar pandemics. In conclusion, she highlighted the fact that thinking beyond the economic solutions, South Asian nations will need to create the region a nuclear weapons region zone to be able to unshackle the locks on cooperation between the countries.
The closing remarks was made by Mr. Sunil KC, Founder and CEO, AIDIA. All the speakers were thanked for their contribution towards the seminar and highlighted the optimism that the process of sharing ideas through mechanisms like Track 1.5 diplomacy would be beneficial for people in the regions of both South Asia and South-East Asia.
Instititute of Foereign Affairs (IFA) Lao PDR