Malaysia's Petronas Twin Towers shine from a distance. How can the region achieve economic recovery and secure long-term growth? (Photo by MOHD RASFAN / AFP)

Malaysia’s Petronas Twin Towers shine from a distance. How can the region achieve economic recovery and secure long-term growth? (Photo by MOHD RASFAN / AFP)

Economic recovery in a post-pandemic Asia: Just what will it take?

An economic recovery starts with growth, jobs, skills, and equity, in an inclusive way — this was the key message by world leaders at the World Economic Forum’s virtual Jobs Reset Summit 2021 earlier this June.

As history has taught us, pandemics have been a key driver for massive societal transformation. 

Not only would it have a social and political impact on people around the world, but it will also transform the way economies function and impact nations at large.

The Covid-19 impact

Although it has been an economically and financially challenging period for most of the world, it has had an exceptionally devastating impact on vulnerable and marginalized communities. Whilst inequalities and inequities have always existed, the pandemic has not just exposed, but also exacerbated them.

This is especially prominent in emerging economies such as those within Southeast Asia (SEA), where impeded access to basic necessities is further compounded by financial and physical restrictions. 

This then signals a dire need for countries to drastically reduce and eliminate inequalities and inequities through strategies such as providing safety nets, social protections, and job opportunities in an inclusive manner. 

With better social mobility and wealth creation opportunities, these communities will stand a fighting chance to thrive and further contribute to economic growth down the road. 

Economic recovery: predicated on job availability

Many countries here still struggle to stimulate economic growth through a workforce that’s forced to function under restrictive, challenging conditions.

Unfortunately, the pandemic has severely affected multitudes of workers and businesses alike as they find that inter and cross-border movement restrictions have impeded their abilities to do business as usual. 

This, of course, negatively impacts the rice bowls of many, especially low-wage, low-skilled, and gig-economy workers, as if it isn’t already enough that these jobs are being threatened by automation and future technologies.

In order for growth to happen, countries often focus on improving the labour productivity of their workforce, such as through job retention, job creation and future-proofing the talent pool.

With the devastating impacts of the pandemic, these, together with private and public sector support such as subsidies and upskilling for workers, will prove to be even more crucial in the coming years. As aptly put by Director-General of the International Labour Organisation (ILO), Guy Ryder,

“To recover better and quicker, governments will need to increase public and private investments in employment-intensive sectors in order to create jobs, and increase labour productivity, consumer confidence and economic growth.”

Collaboration of public and private crucial to growth

According to Ahmed Mazhari, President of Microsoft Asia, the key to Asia’s rapid economic recovery lies in how the public and private sectors closely collaborate and leverage the region’s well-established digital ecosystems.

Businesses in the Asia Pacific (APAC) region comprise a whopping 97% of SMEs, employing over half of the combined regional workforce. 

Additionally, more than a third of the world’s unicorns are from Asia. Unicorns are startups that have a valuation of over US$ 1B.

In ASEAN, many emerging economies are seeing increasing and promising growth of digital sectors such as fintech, digital banking, and e-commerce.

Seen from this perspective, it is imperative that we recognize the critical role that these businesses play as well as their immense impact on these economies, and look towards supporting their growth.

Could startups be the dark horse for the digital economy?

The APAC region has responded and adapted to the pandemic with digital innovation, and many leaders agree that accelerated digital transformation is crucial for rapid economic recovery.

Startups are a prominent stakeholder of the digital economy at large, as their nature lies in the way they innovate and disrupt, often through digital means. Additionally, they often require a highly skilled and digitally savvy talent pool. 

However, some of the largest roadblocks to startup success include problems securing adequate financing, appropriate talent, and institutional backing to support their ability to scale up.

Without good scaling, the growth of these companies will be stymied, hence impacting job availability.

Economic recovery requires strong leadership

This is where Big Tech and the public sector can come in to lead and catalyze the growth of the digital ecosystem. 

As Big Tech possesses the infrastructure, financial capabilities, digital expertise, and experience to weather the pandemic storm, these privileges can be extended towards startups and SMEs to help them quickly recover.

This is particularly important as Big Tech needs to be cognizant of the massive profit gap that has existed prior to the pandemic.

Data by McKinsey & Company in their report “What’s next for consumers, workers, and companies in the post-COVID-19 recovery?” has shown that exacerbation of this profit gap will have dire consequences:

“If this concentration (of the profit gap) persists, there could be a repeat of the “great divide” observed after the global financial crisis when, at best, only a minority of companies, households, and regions enjoy productivity and income growth.

“More businesses will need to share in those gains for the changes prompted by COVID-19 to have significant impact on productivity growth.”

Together with sensible, supportive, and progressive policies by the public sector, this duality of forces will be able to push startups and SMEs to not just survive, but thrive. 

This will create more jobs, future-proof the talent pool with digital skills, and grow digital economies.

Ultimately, in this hyper-digitalized, post-pandemic world, flourishing digital economies will prove critical to a nation’s — and region’s — economic recovery, and eventual long-term prosperity.