3 ways Asia can recover from the Covid-19 pandemic faster
- Countries in the East Asia and Pacific region will benefit from cooperation in three major areas: vaccine deployment, reviving sectors of the regional economy, and building on their close integration into global value chains
It doesn’t have to be this way. As I write this, wrapping up my first visit to Asia since the beginning of the pandemic, I am reminded of the region’s remarkable capacities and resilience.
I also believe that there is one critical element that is not receiving the attention it deserves: regional cooperation. Working together could substantially accelerate the recovery in East Asia and the Pacific.
There are three clear opportunities for collaboration.
Increased coordination could allow for better matching of supply and demand and targeting to where needs are greatest. And this spirit of cooperation could be extended beyond vaccines to other critical supplies, such as personal protective equipment, masks and testing kits.
If countries in the region and globally can better coordinate their fiscal and monetary policies, the impact of their efforts will be greater than the sum of the individual parts – and each will be prepared to do more once neighbours are seen to be sharing the burden.
Once it is safe to do so, countries can consider opening travel bubbles, combined with proof of vaccination and testing requirements, to revive the tourism and hospitality industries. And once the recovery is in full swing, those economies facing labour shortages could look to bringing back workers from neighbouring countries, while improving health and safety conditions to avoid any further outbreaks among these communities.
Such jobs, however, will depend in part on revival of infrastructure investments. While public investment has only dropped marginally, private participation in infrastructure projects in East Asia – which was already low compared to other regions (at 2 per cent versus an average of 20 per cent for developing countries globally excluding China) – plunged 75 per cent in 2020 compared to 2019.
Going forward, we will need a strong commitment from both the public and private sectors to expand sustainable infrastructure. This can be driven by a regional push to tap pools of private capital and debt that are seeking opportunities for green infrastructure investments with reasonable and secure returns, and by improving regional connectivity and logistics to reduce supply chain costs and improve efficiencies.
In addition to hard infrastructure, there is tremendous potential in the region for expanding efforts for nature-based solutions. These are actions to protect, sustainably manage and restore natural and degraded ecosystems – such as forests, mangroves and wetlands – that can provide climate, human well-being and biodiversity benefits.
Three, regional integration could be deepened. Early in the pandemic there was much talk about the disruption of global value chains, as imports were interrupted and some countries faced shortages. World Bank research, by contrast, shows that close integration into global value chains reduced the vulnerability of East Asian economies during the pandemic, and that the Covid-19 shock has in fact deepened the region’s trade integration.
The opportunity now is to build on this, through reforms that would open up protected goods and services sectors to domestic and international competition. Countries like Indonesia, with its structural trade and investment reforms, and the Philippines, which has enhanced tax incentives and is considering liberalising retail and other sectors, are already paving the way.
If countries can move quickly and move together to cooperate on the supply and distribution of vaccines and other critical health supplies, on measures to revive the economy, and on policies to deepen the integration of the region, much of the international trust lost during the pandemic can be restored. Lives will be safer, and livelihoods will be secure. And East Asia and the Pacific can maintain its rightful place as one of the world’s most dynamic, innovative and interconnected regions.
Victoria Kwakwa is Vice-President for East Asia and the Pacific at the World Bank