We must act now - EDB...Note from Parag Khanna There is no more important time-zone than “Asia time.” Though it spans several hours, it encompasses fully half the world’s population

Asia Pacific's Time

www.pwc.com/asiapacific

We must act now November 2020

Contents

Time to actExecutive Summary5

Shifting paradigms in Asia Pacific

Chapter one11

Growth pillars for successChapter two18

New ways of building a collective future

Chapter three

70

Pillar one Advancing the digital economy 21

Pillar two Enabling regional enterprise growth 32

Pillar three Rebalancing supply chains and fostering innovation 40

Pillar four Expandingandfuture-proofingthelabourforce 49

Pillar five Building climate change resilience towards a net-zero future 60

AsiaPacific'sTime|2

ForewordAsiaPacificisatanimportantjunctureinitsjourney.Thefundamentalsthat underpinned the region’s dramatic growth and prosperity over the pastthreedecadesarenotsufficienttocarryusthroughthiseraofcontinuousdisruption.Governments,businessesandsocietyallneedtotakeamoreproactiveapproachtosecuretheregion’sfutureandfulfilitspotentialtowardsgreaterandmoreinclusivedevelopmentandprosperity.

Wehaveheardfrombusinessleaders acrosstheregion,theseverityofthechallengestheynowface,andtheimportanceofreshapingthedirectionoftheirorganisations.However,manyhavefeelingsofcautionandapprehensioninmakingdecisionsinthistimeofuncertainty.AswealllookbeyondCOVID-19,PwCaspirestoalleviatesomeofthisanxietyandambiguity,andultimatelyhelpourclients build trustandconfidencewiththeirstakeholders.

Followingtherecentsigningoftheworld'slargesttradeagreement,theRegionalComprehensiveEconomicPartnership(RCEP),thisfirstreportinourseriesofperspectivesontheAsiaPacificregion,setsoutfivegrowth pillars that will enable a resilient future and the new roles key stakeholderswillhavetoplay.Acknowledgingtheimmensediversityacrosstheregion,thereportpresentsgrowthstrategiesforAsiaPacificwhilstrecognisingthatlocalcustomisationisnotonlyrequired,butiscriticalforsuccessfulimplementation.

Wearecommittedtoworkingwithyouonthisjourney.PwC’spurposeof building trust in society and solving important problems is even more relevantnow,asindividuals,businesses,societyandnations,looktorecoverandrebuildforaninclusivefuture.AsAsiaPacificemergesfrom2020,arguablythemostchallengingyearofthiscenturysofar,stakeholders from across the region need to rekindle hope by breaking down barriers and working together to shape a brighter future for generationstocome.Theluxuryoftimeisover,wemustactnow.

Note from PwC Asia Pacific Chairman and Senior Partners

Raymund Chao PwCAsiaPacificChairman Chairman,PwCChina

Tom Seymour ChiefExecutiveOfficer,PwCAustralia

Eddy Rintis TerritorySeniorPartner,PwCIndonesia

Koichiro Kimura GroupChairman,PwCJapan

Soo Hoo Khoon Yean TerritorySeniorPartner,PwCMalaysia/Vietnam

Mark Averill ChiefExecutiveOfficer,PwCNewZealand

Alex Cabrera Chairman,PwCPhilippines

Yeoh Oon Jin ExecutiveChairman,PwCSingapore

Joseph Chou Chairman&ChiefExecutiveOfficer,PwCTaiwan

Chanchai Chaiprasit ChiefExecutiveOfficer,PwCThailand

Van Dinh Thi Quynh CountrySeniorPartner,PwCVietnam

AsiaPacific'sTime|3

Note from Parag Khanna

Thereisnomoreimportanttime-zonethan“Asiatime.”Thoughitspansseveralhours,itencompassesfullyhalftheworld’spopulationandnearlyhalfofitsGDP.Thisisnotatransitoryfactbuttheabidingrealityofthe21stcenturyworld.

Particularlysincethe1997-98Asianfinancialcrisis,Asiangovernmentshavelearnedtorespondrapidlytoeconomicshocksandpursuedmonetary,fiscalandtradepolicyreformsthathavefavouredacceleratedregionalinterdependence.Thesestepsprovedcrucialtocushiontheimpactofthe2008globalfinancialcrisisandlaidthefoundationforthecurrenttransitiontowardsregionaltradeintegrationandsupplychainshifts,servicessectorgrowthanddigitisation.

Thisnewreportstronglyadvocatesforpushingaheadwithalloftheseandotherimportantareas:digitaladoptionatthegovernment,businessandconsumerlevel;supportingenterpriseswithaccessiblefinanceandregionalexpansion;strengtheningprocessinnovationinsupplychainsanddistributionnetworks;upskillingtheworkforcethroughpartnershipsacrosstheeducationandindustrialsectors;and investinginclimateresilientinfrastructurefromconstructiontoagriculture.

Another great strength of this publication is emphasizing a multi-stakeholder approach in which policy andexecutionarecollectivelydeterminedthroughtransparentcooperationbetweengovernments,corporates,andcivilsocietyactors.Asiahasleapfroggedineconomicsandtechnology.Itcanensureits continuedsuccessthroughgovernanceinnovationas well.

Dr. Parag Khanna

Founder&ManagingPartner,FutureMap, Author,Connectography and The Future is Asian

AsiaPacific'sTime|4

Singapore

Time to act

Executive Summary

Tokyo, Japan

Time to act

Overthepastthreedecades,theAsiaPacificregionhasgrownsignificantlybasedonstrongfundamentals,includingexpandingconsumermarkets and a maturing manufacturing base thatattractsforeigninvestment.Thesefactorsenabled the region to triple its share of world GrossDomesticProduct(GDP)toalmost40percentsince1960,withpercapitaincomealsorisingsharply,leadingtothecreationofanewmiddleclassandalargedomesticconsumerbase.Thepercentage of the population living in extreme povertyhassteadilydeclinedand,coupledwithgreatimprovementsinhealthcareandeducation,average life expectancy and education levels have grown.Technologyandglobalisationhaveplayedcriticalrolesinthisrapid growth,resultinginAsiaPacificnowaccountingformorethanonethirdofglobalmerchandisetrade.

Historically,thesegrowthfactorshaveenabledthe region to absorb and overcome disruptive eventssuchastheSARSoutbreak,tradewarsandenvironmentaldisasters,allwhilstdealingwithpoliticalandsocialinstability,aswellasweak infrastructureinmanycountries.Thesefactors also provided the region time to transition fromrelativelypassivegrowth,tobeingmoreproactiveandself-determinedgoingforward,addressingopportunitiessuchasIndustry4.0,regionalgrowthandinnovation,labourreskillingandenvironmentalsustainability.1

However,theimpactfromCOVID-19hasacceleratedthenecessitytoact.

Thesignsofslowinggrowthwerebecomingevidentbeforethepandemic,withtradeprotectionism and geopolitical tension already causingshiftsinthemarkets,pushingcompaniesto adopt new strategies to rebalance their supply chains.Furthermore,changingdemographicsinvarious parts of the region are raising employment andproductivityconcerns.Whilesomeeconomiesneed to skill or re-skill their rising youth population tocreateemploymentopportunities,othersfacethe challenge of an ageing workforce that needs urgentattention.

Finally,thedisproportionateimpactofclimatechangeisaffectingfoodsecurityintheregion,and the population’s overall health is under threat fromenvironmentaldisastersandhumanactivity,such as harmful emissions and improper waste management.WhileAsiaPacifichasshowngreatresilienceinthefaceofpastchallenges,gradualchangeisnolongerenough.Almostovernight,opportunitieshavetransformedintourgent needs that must be addressed through strongleadership withafreshvision,supportedbypoliciesthatfacilitategovernment,businessandsocietalcollaboration.

AsiaPacificisnowatacrossroads.Theregioncan no longer hope that the factors which drove itshistoricalstronggrowthwillbesufficienttosteeritthroughthesechallengingtimes.Instead,stakeholdersmusttakenewactionstosupplement global investment with visions and strategiesthatarecentredonAsiaPacific.Theeraofpassivegrowthisover;itisnowtimetoact.It’sAsiaPacific’stime.

Executive Summary

AsiaPacific'sTime|6

The time to act is nowAsiaPacificneedstodriveaction.TheCOVID-19pandemichasseverelyimpactedtheregion,butithasalsoprovidedopportunity for stakeholders to realign their future path based onstrategicintentandfocus.Thiswillrequirecollectiveaction,startingwithestablishingaboldvisioncentredonsustainable,resilientgrowth,thatalsoembracescross-bordercollaborationandinvestments.Itwillrequiregovernments,businesses and society to be prepared to step away from some approaches that made them successful in the past andthinkaboutwhattheyneedfortodayandtomorrow.Stakeholdersmustusethepandemictore-thinktheirpriorities and focus on areas most relevant to the region’s futuresuccess.

ThisreportoutlinesfivegrowthpillarsthatunderpinthefutureofAsiaPacific.Thesepillarsarepositionedassolutionsto the challenges affecting the region and accentuate the strengths that can help it better withstand the uncertainties oftomorrow.Achievingthisresilientgrowthwillrequirestakeholders to drive greater regional attention to their target marketsandvaluechains,whilefocusingondigitalisationandsustainabilitythroughvariousoperationalareas.Peopleandsocietywillremainthemostcriticalfactors,andactionsto upskill the existing and future workforce and build trust among the population need to be considered and incorporatedateverystepofthisjourney.

Business Drives

Government Enables

Society Guides

Growth Pillars

Co-ownership

Resilience

Transparency

Key P

rincip

les

Shared purpose

Digital economy

Environmental sustainability

Social inequalities

Institutionalweaknesses

Infrastructure gaps

COVID-19

Trade andpolitical

tensions

Evolvingdemographics

Enterprise growth

Asia Pacific's Time

TRUST

BU

IL

DING RESILIENT AND AGILE GROW

TH

Future-proof labour force

Net-zeroeconomy

Supply chains and innovation

AsiaPacific'sTime|7

AsiaPacificishighlyvulnerabletoclimatechangeandthereforeneedstochampionthecauseanddriveactiontocreateamoresustainablefuture.Thefirstfocusneedstobeonbuildingsolutionsforacirculareconomytomovetowardsnet-zeroclimateimpact,bypromotingcollaborationbetweengovernments,businessesandsocietytoreduceourenvironmentalimpact.ThesecondfocusisontheneedtopromoteinnovationandgreateradoptionofagritechsolutionsacrossthedevelopedanddevelopingpartsofAsiaPacifictoenhanceagriculturalproductivityandachievegreaterfoodsecurityintheregion.

Advancing the digital economy1

The five pillars outlined in this report are:

Thefivepillarsarenotmutuallyexclusivebutinterconnected.Forexample,advancingthedigitaleconomywillrequireupskillingtheworkforceandwillalsobecriticalforachievingsustainability,aswellasbuildingregionalhubsandinnovationecosystems.Thus,toachieveimpact,thefive pillarsneedtobeconsideredholisticallyforexecution,whilebeingcustomisedandadaptedbasedonthematurityofthespecificcountryandenvironmentinwhichtheyarebeingimplemented.

Pushed by changing industry dynamics and consumer trends,andacceleratedbythepandemic,companiesnowneed to advance the process of digital adoption in order to staycompetitive.Toachievethis,theyneedtofirstidentifythe right areas for digitalisation and then prioritise suitable deployment of technological solutions at appropriate juncturesacrosstheirvaluechain.However,suchrapiddigitalisation also leads to security and data-related risks that needimmediateattention.Thisrequirescompaniestoadoptpreventivemeasuresoncyberresilience,withgovernments facilitating regulations and public-private partnershipstodefendagainstcybercrime.

GrowingopportunitiesacrossAsiaPacific,risinguncertaintiesduetotradetensions,andtheimpactofCOVID-19 have made it imperative for companies to restructure their global supply chains and transition to new regionallyintegratednetworks.Thesetechnology-enabled,regional supply chains will help businesses better manage theirprocurement,productionanddistributionnetworkstoachievehighertransparencyandgreaterresilience.Arapidly changing environment also necessitates reshaping innovation ecosystems to develop hubs that encourage participation from multiple stakeholders — where businesses and start-ups can work together to drive the developmentofnewproductsandsolutions,governmentscanactasfacilitators,academicbodiesascollaborators,and funding bodies as enablers to create and promote futurechampions.

Withglobaluncertaintyrising,enterprisesneedtotakea proactive role in expanding their regional presence to successfully tap into the growing opportunities across Asia Pacific.Thiscanbeachievedbyadoptingacapability-driven regionalisation strategy based on three foundational areas:operationalperformance,productandprocessinnovation,andgo-to-marketexcellence.Digitaladoption,leveragingpartnerships,andstrengtheninglocaltalentandculturearealsocritical,servingasthreekeyenablersforcompaniestogrowregionallyanddrivefasterexecution.Regional expansion in the services sector is a high-potential areathatneedsspecialfocus.Growingdigitalisation,acceleratedbyCOVID-19,iscreatingnewrevenueopportunitiesforregionalfirms,especiallyinareassuchaseducation,healthcare,entertainment,andInformationandCommunicationTechnology(ICT)services.Businessesandgovernments therefore need to focus their efforts towards boostingtradeinservicesacrosstheregion.

AchievinggrowthinAsiaPacificwillrequirearelevantandskilledworkforce,bothtodayandinthefuture.Thiscan be achieved through reskilling programs that align to thespecificneedsofcompaniesandemployees,whileencouraging broader partnerships between government andindustrytodriveupskillingeffectiveness.Governmentswill have to take a lead in realigning the education system,firstbyidentifyingitsprioritiesforfuturegrowthandtheassociatedsectorsandskillsrequired,followedby articulating the new roles and responsibilities that everyone willhave,includingthoseineducation,business,andsociety.

Enabling regional enterprise growth2

Rebalancing supply chains and fostering innovation

3

Expanding and future-proofing the labour force4

Building climate change resilience towards a net-zero future5

AsiaPacific'sTime|8

Need for a collective effort by all stakeholders

Thesepillarscomewiththeirownsetsofconsiderationsanddependencies.Geopoliticaltensions,theimpactoftheCOVID-19pandemic,infrastructuralandinstitutionalvoidsinmarkets,aswellasconstraintsaroundissuessuchaswork-force mobility will take time to overcome and can limit the pace of growth that these pillars promise to achieve for theregion.However,thisshouldnotlimitaction;AsiaPacific

Shared purpose1Balancingtheinterestsofallstakeholders,tojointlyachievenot only short term-goals but to also focus on the long term wellbeingofAsiaPacific.

Resilience2Buildingthecapacitytowithstandfutureshocks,andtheabilitytoadjustfor,andrecoverfrom,suddenfluctuations.

Transparency3Efficientinformationsharingofgovernmentpoliciesandbusiness practices while clearly communicating their impact onsocietyandenvironment.

Co-ownership 4Each party contributing through its strengths to collectively achieve results that are individually not possible without inefficientuseoftimeorresources.

musttakeactionnow.Waitingforatimefreeofuncertaintyisfutile.Businessesandgovernmentsmustlivewithcomplexityandprogresstowardsresilience.Successfulimplementationof these pillars can only be achieved through a collaborative approach by all stakeholders centred on re-establishing trust throughfourkey principles.

Resilience Shared purpose Transparency Co ownership


Resilience Shared purpose Transparency Co ownershipResilience Shared purpose Transparency Co ownership

AsiaPacific'sTime|9

Hong Kong SAR

All stakeholders must perform complementary roles in buildingarobustfutureforAsiaPacific,withbusinessesdriving execution and providing new solutions that overcome theexistingandemergingchallengesintheregion.Leadingbusinessesshoulddrivethedigitalisationofvaluechains,prioritising adoption in areas that can enable stronger reliabilityandagility,whilemanagingrisksandensuringcyberreadiness.Companiesalsoneedtobemoreproactiveinexpandingacrosstheregion,byenhancingtheircorecapabilities to improve operational and supply chain performance,innovationandgo-to-marketexcellence.Finally,upskillingandadoptingasustainableapproachtoproductsandbusinessmodelswillbecriticalforsuccess.

Tosupportthis,governmentsmustplayanenablingrolebyworkingwithotherstakeholderstodefineaholisticand inspiring vision for the future and backing that up with effectiveandalignedpolicy-making.Governmentsupportisalsocrucialtoboostingregionaltradeinservices,reducingtradingcosts,strengtheningregulatorycooperationandsharingtechnicalpolicyassistanceacrossmarkets.Anothercriticalroleforgovernmentswillbetosupportupskilling,aswellasenablingaccesstocapitalandexpertiseforfirms,especiallysmallandmediumenterprises(SMEs)sothattheycanexpandregionallyaswellasadoptnewtechnologies.

Governmentsandbusinessesneedtonotethatwhileplanningandstrategisingisimportant,thespeedandagilityofexecutionmakesthedifference.Hencethereneedstobegreaterempowerment,responsibilityandaccountabilityatalllevels,coupledwithafocusonsimplifiedimplementation,movingawayfromunnecessarycomplexityandredtape.Allpoliciesandactionsneedtoconsidersocietyatitscore.

Thefutureoftheregionneedstobeshapedbysmall,alignedstepsthatimprovequalityoflife,notbysudden,majorchanges.Itistheseseriesofmicro-decisionsthatwilldrivemostimpact,aswellasforgethelegacyforgovernmentandbusinessleadersfortheyearsahead.Toachievethis,constantguidanceisneededfromsociety.Citizensneedtoshiftfrombeingpassiveconsumerstoactivepartners,using multiple channels — the most obvious being social media — to ensure governments and businesses hear how demands and priorities are changing and understand the needforconstantdialoguetoensurethereisrelevanceto,andbalancewithsociety.

Binding all this is a crucial need for stakeholder collaboration thatextendsbeyondindividualnations.Collectiveactionat a regional level will become imperative to dealing with theopportunitiesfacingAsiaPacificandstrengtheningprospects for balanced economic and human development goingforward.Thisinterregionalcollaborationneedstobeaction-oriented and should not be limited only to participation fromgovernmentleaders.Sharingexpertiseandworkingtogetheronanydevelopmentalarea,whetheritishealthcare,education,trade,infrastructuredevelopment,e-commerce,orothers,doesnotrequireatop-downapproach.Allcountriesandparticipantshavearoletoplay,rangingfromindividualentrepreneurstosmall,mediumandlargebusinesses,alongwithgovernmentandmulti-lateralagencies,academicinstitutions,andsocialsectororganisations.

Moving forwardAsiaPacificfacesanimmediateneedtocollectivelymovetowardsanewfuture.Guidedbyacommonpurposeandenabledbytechnology,theregioncanpotentiallyachieve afaster pace of positive change and generate greater impact thaneverbefore.Thiswillrequireaunifiedapproach,andthereforeitiscriticalthatgovernments,businessesandsociety collaborate and work together to further accelerate theadoptionofthesefivepillars.Restoringtrustamongpopulationsandsocietieswillalsobecentraltoexecution,and stakeholders need to adopt the key principles of a sharedpurpose,resilience,transparency,andco-ownership.Thesituationisurgent,butaboldvisionandanopenmind-setcanhelpachieveinclusive,sustainableandresilientgrowthforthebillionsofpeopleresidinginAsiaPacific.

The potential of the Asia Pacific region to positively impact the rest of the world is immense. The region can deliver sustainable and inclusive growth by working closely with local, regional, and global stakeholders."

Bob Moritz

GlobalChairmanofthe PwC Network

AsiaPacific'sTime|10

Manila, Philippines

Chapter one


Bangkok, Thailand

Asia Pacific on the moveAsiaPacific*hasrecordedstrongeconomicgrowth over the past six decades — undergoing amajoreconomictransformationfrombeinganagriculture-dependent,low-incomeregioninthe1960s,toaleadingmanufacturingcentre and exporter worldwide — with rising megacities,agrowingworkforceandaformidableconsumerbase.Rapidindustrialisationsincethe1990s helped establish the region as a global manufacturingpowerhouse,featuringfouroftheworld’stenleadingmanufacturers(China,Japan,SouthKorea,India),andrepresenting40percentofglobalmanufacturingvalue-addin 2019.

AsiaPacifichasovertheyearsbecomeamajorsupplierofproducts,focusingnotonlyonlow-tech segments such as textiles and footwear (63% ofworldexports)butalsoonhigh-techproductssuchaselectricalmachinery(66%ofworldexports).2

Asshowninfigures1aand1b,economicgrowthfiguresforAsiaPacifichavebeenfavourableintherecentpast,consistentlystayingabovetheworldaveragesincetheAsianfinancialcrisisof1997-98.Consequently,theregion’sshareofworldGDPhas tripledfrom13percentin1960to39percent in2019.3


Chapter one

Figure 1a Economic growth trends in Asia Pacific and the world

0

10

20

30

40

50

60

70

80

90

1990 1995 2000 2005 2010 2015 2019

GD

P (C

urre

nt p

rices

, US

$), i

n tri

llion

s

Asia Pacific and world GDP (1990 - 2019)

Asia Pacific represents26% of world’s GDP (1990)

Asia Pacific represents39% of world’s GDP (2019)

Asia Pacific World

*AsiaPacificisdefinedbytheUnitedNationsasconsistingofthefollowingsub-regionsandkeymarkets:

• EastAsia(marketssuchasChina,Japan,SouthKorea,amongothers)• SoutheastAsia(marketssuchasIndonesia,Thailand,Singapore,Malaysia,thePhilippines,Vietnam,amongothers)• SouthAsia(marketssuchasIndia,Bangladesh,Pakistan,SriLanka,

among others)• Oceania(marketssuchasAustralia,NewZealand,amongothers)• West&CentralAsia(marketssuchasSaudiArabia,theUnitedArabEmirates,Kazakhstan,amongothers)

However,theInternationalMonetaryFund(IMF)excludesMiddleEasterncountriessuchasSaudiArabiafromitsdefinition,andthereforefiguresfromtheIMFneedtobeconsideredaccordingly

Source:UnitedNations


Multiplefactorshavedefinedtheregion’shistoricalriseintoglobalprominence,includingitshumancapital,availabilityoffinancing,growthintradeflowsandrisingadoptionoftechnologyinrecentyears.

People powerConsistent economic growth has helped strengthen the region’shumancapital,withAsia’spercapitaGDPrisingsignificantlyfromUS$1,729in1990toUS$6,982by2018.Achievements have also been made in improving the people’swellbeing.AccordingtotheUnitedNations,AsiaPacifichaswitnessedthefastestriseinhumandevelopmentindicatorsworldwideinthepastthreedecades.PopulationunderextremepovertyinAsia(earninglessthanUS$1.9perday) has reduced from 68 per cent in 1980 to only 7 per cent in2018.Improvementsinincome,healthandeducationhaveinturnresultedinastrongerworkforceandconsumerclass.Theregiontodayconstitutesamajority(57%)oftheglobalworking-agepopulation.Risingincomeandurbanisationhave further resulted in a growing middle class – increasing fromonly13percentofAsia’spopulationin1980,toaround70percentatpresent.Agrowingeducatedworkforcehashelped attract global investments and an expanding middle classhasenhancedconsumerspending,furtherenergisingtheregion’seconomicrise.However,whileregionalaveragesshowsignificantsuccess,growthhasnotbeenuniformacrossregionalmarkets.Thisnecessitatesgreaterfocusbystakeholdersondrivingmoreinclusivegrowthinthe future.4

Capital strengthAccesstocapitalhasbeenamajorfactorbehindtheregion'shistoricalgrowth.GrossdomesticsavingsforAsiastoodat36.2percentover2010-18,farabovetheworldaverageof25percent.Inwardforeigndirectinvestment(FDI)hasalsoemergedasamajorsourceoffinancingsincethe1990s,withdevelopingAsiaattractingthelargestshare(34%)ofinflowsin2019.WhileglobalFDIisprojectedtofallin2020,thereispotentialforintra-regionalinvestmentstomeetfinancinggaps,consideringAsiaPacificisamajorcontributortooutwardFDIaswell(43%sharein2019).

However,highandrisingdebtinsomeregionaleconomieshavealsobecomepointsofconcern.Whilesuchissuesaresomewhatabatedbystrongfinancialreservesinthesemarkets,thereisaneedforgovernmentstostrengthendomesticpoliciesthatfosterdebttransparency,improvesupervisionofthefinancialsectorandreducecurrencyriskexposureduringuncertain times.5

Trade dominanceTermedasthethirdwaveofglobalisation,globaltradevolumeshavegrownsignificantlysince1995,withAsiaPacificrisingtobecometheworld’slargestmerchandisetradingpartner.Whileglobaltradebeganslowingdownafterthe2008-09financialcrisis,AsiaPacifichassustaineditsstrong presence through improvements in connectivity and newtradecoalitions.ThenumberofFreeTradeAgreements(FTAs)signedbyAsiaPacificnationshasmultipliedfivetimesfrom51intheyear2000to261byQ12020,including multilateral agreements such as the 11-nation ComprehensiveandProgressiveAgreementforTrans-PacificPartnership(CPTPP)signedin2018.Industrialisationandtechnology investments have also driven a move away from commoditiestowardshighervalue-addingexports,withtrade in intermediate goods becoming a key element of Asia Pacific’sgrowthstory.However,risingglobaltradeconcernsnowrequireimprovingregionalcooperation.6

Asia Pacific

Annual GDP Growth Rate (1990- 2020(f))

World

3.5% 3.3% 4.8%4.9%

5.4% 3.4%

-4.4%

5.7% 6.5%5.7%

7.3%8.3%

5.5%

-2.2%

1990 1995 2000 2005 2010 2015

2020 (f)

Figure 1b Economic growth trends in Asia Pacific and the world (continued)

Source:InternationalMonetaryFund(October2020)

Strong socio-economic fundamentals have historically underpinned Asia Pacific's growth, but in an era of ongoing disruption the region needs to quickly adopt a fresh approach to fully achieve its potential."

Liza Maimone

ChiefOperatingOfficer, PwC Australia



Technology adoptionThenumberofinternetusersinAsiaPacifichasgrownsharplyfrom9.5percentofthepopulationin2005to48.4percentin2019.Themobilechannelhasinparticularemergedasamajorplatform,withactivemobilebroadbandadoptionrisingto3.8billionsubscriptionsby2019—farmorethanthe2.6billioncombinedintherestoftheworld.Thisgrowthhasdrivennewwaysofdoingbusiness,furtherexpanding consumer spending while improving the reach of essentialservices.Besidesbeingbolsteredbytheadoptionoftechnology,AsiaPacifichasalsostrengtheneditstechnicalcapabilitiestoinnovate,withSingapore,SouthKorea,HongKongSAR,ChinaandJapanfeaturingamongthetop20innovationeconomiesworldwidein2020.Thisexpandingpool of digitally savvy consumers and technically skilled employees could become a new growth platform for the region,butitrequiresstrongerstakeholdercollaborationtomaximisethescaleandefficacyoftheregion’sefforts.7

Threats to Asia Pacific’s growthWhileAsiaPacifichascertainlymadeitsmarkontheworld stage and presents many growth opportunities forstakeholdersacrosstheregion,disruptionscausedby COVID-19 have shaken historical growth models and seriously questioned the future applicability and viability of traditionalgrowthstrategies.Thesedisruptions,alongwithemergingissues(tradeandpoliticaltensions,changingdemographics)andexistingchallenges(infrastructuregaps,institutionalissues,incomeinequalitiesandsustainability),havecreatedanurgencyforstakeholderstoactnow.

Figure 2 Key challenges impacting growth prospects for Asia Pacific

COVID-19 – An era defining event

Lockdowns and drops in consumer demand have led to a sharp decline in economic growth, with high job losses

Trade and political tensions

Economic protectionism is on the rise, with COVID-19-related tradelosses and political tensions influencing business prospects

Evolving demographics

Growing youth population is intensifying the need for job creation in some markets, with other ageing countries facing cost and productivity issues

Environmental sustainability

Climate change and declining resources pose significant threats to livelihoods in the world’s most populous and disaster prone region

Social inequalities

Regional differences in performance on health and education metrics, and widening income inequality within countries can influence social cohesion

Institutional weaknesses

Institutional differences(e.g. regulatory quality, Intellectual Property (IP) laws) between emerging and developed economies hinder inclusive growth

Source: PwC analysis

Infrastructure gaps

Existing gaps in physical and digital infrastructure impact the cost of doing business and market competitiveness, especially in emerging markets


COVID-19: An era-defining event TheCOVID-19pandemichasstronglyimpactedAsiaPacific’sgrowthprojections,withtheensuingmarketlockdownsandresulting drop in consumer demand expected to generate sharpdeclinesinannualGDPgrowth—afallof2.2percent on average across the region in 2020 (as per October 2020estimates).Thoughtheregionisexpectedtorecoverandachievepositivegrowthin2021,itwilltakelongerforGDPoutputtoreachpre-pandemiclevelsformanynations.Forecastsalsoremainuncertainandfigurescouldvarybasedonhowthepandemicprogresses.8

MacroeconomictrendsaredecliningwithCOVID-19havingamajorimpactongovernmentspending,corporategrowthandindividuallivelihoods.Governmentsarebeingmadetore-prioritisebudgetaryallocationsandincreasedebt,spending to minimise the initial shock and enable survival forthemostvulnerable.Companiesarefacingashortageofworkingcapital,whileneedingtopayemployeesandserviceloans,withsmallandmicroenterprises(<50employees),inparticular,beingseverelyimpacted.Manysegmentsofsocietyarealsofacingthethreatofanuncertainfuture,withthoseintheinformaleconomy,daily-wageearners,home-based workers and migrant labourers already seeing a significantdeclineintheirincomes.

AccordingtotheAsianDevelopmentBank,overathreetosixmonthperiod,morethan100millionjobscouldbelostinAsiaduetoCOVID,leavingmanyhouseholdsinneedofexternalsupport.Goingforward,morepeople-centricconsiderations such as looking after personal and family wellbeing,orimprovingaccesstoeducationandhealthcareareexpectedtoinfluenceconsumerbehaviour,businessinvestmentsandgovernmentpolicysignificantly.Besidesfocusingonenablinganeconomicrecovery,AsiaPacificalso needs to be better prepared for similar disruptions in the future – requiring targeted interventions to reduce an economicdividethathasbeenwidenedby COVID-19.9

Trade and political tensionsTradeprotectionismhasbeenrisingglobally,leadingtonewgrowthrisksforexport-driveneconomies.AccordingtotheWorldTradeOrganization,globalmarketsimposed102 new trade-restrictive measures between October 2018 andOctober2019,includingtariffincreases,quantitativerestrictions,strictercustomsprocedures,importtaxesandexportduties.TheWorldTradeUncertaintyIndexfurtherhighlighteduncertaintyinglobaltradepolicy,reaching,bytheendof2019,17timesthepeakslastseeninthe1990s.Asiahasalsoseenadeclineintrade,fallingfrom10percentgrowthin2018to-4percentin2019.10Aprojecteddropintradeofgoodscausedbythepandemic(between13%and32%,basedontheseverityofthescenario)hasfurtherworsenedthesituationfortradedependenteconomies.

While the economic ties of trade were historically meant to mitigategeopoliticalrisks,theyarenowcausingabroaderfracturingintoamulti-nodalworld.Globaltradetensions,already high are expected to intensify in the aftermath of the COVID-19crisis.Risinggeopoliticalandsecurityconcernsin different parts of the region are also expected to make businesses feel uncertain over policy direction and therefore seek new partnerships to reduce their overdependence on specificpartners.

Theheadwindsofprotectionistpoliciesareexpectedtoreappear as a more immediate reaction to a COVID-19-inducedeconomicslowdown.Inviewoftheseevolvingtrends,regionaleconomiesthatrelymoreheavilyontrade(hightradetoGDPratios)needtorebalancetheirfuturegrowthmodels,exploringnewavenuesofgrowthwithagreatersenseofurgency.11

Evolving demographicsEvolving demographics are leading to dichotomous growth prioritiesinAsiaPacific,withasetofmarketscontinuingtoseeasurgeintheiryoungerpopulation,andtheotherfacingagrowingolderproportion.Theworking-agepopulationinIndia,Indonesia,Philippines,Malaysia,Myanmar,Vietnam,Cambodia,LaoPDRandBruneiDarussalamisprojectedtocontinuerising,collectivelyadding14millionpeopletotheworkforceeveryyearthrough2030.Whilethisriseispopularlyquotedasa"demographicdividend",realisingthepositiveimpactofsuchaboomalsorequiresnewjobs—notonlyinquantitybutalsoinquality.Job-creationalreadyremainsamajorissueinthesemarkets,andaprojectedriseinjobseekers,coupledwithaCOVID-19-inducedeconomicslowdown,couldmakeitmorechallenginginthefuture.12

Ontheotherhand,Singapore,HongKongSAR,Thailand,SouthKorea,Japan,NewZealand,AustraliaandChinaarefacinganageingdemographic,potentiallyleadingtoslower growth in labour productivity and rising healthcare andretirementcosts.Old-agedependencyratiosforthesecountriesareprojectedtosurpasstheworldaverage(18%)by2030,withJapanleadingat53percent.Risingsocialcosts,coupledwithaCOVID-19-drivenreductionintaxrevenuesandaneedforstimulusspending,couldnegativelyimpactfiscalstabilityintheyearsahead.Toaddresswideningworkforcegaps,thesemarketsneedtostartrelyingmoreondigitalsolutionsandinwardmigrantflows.Skilldevelopmentalsorequiresmoreattentionacrosstheregion,withtheemergence of next-gen technologies necessitating new skills toremaincompetitive.AskillsmismatchcouldcostUS$4.3trillioninunrealisedrevenueacrossAsiaPacificby2030,highlightingthevitalneedtoact.13

COVID-19 has deeply impacted Asia Pacific economically. This has led to cash flow disruptions for many companies, millions of jobs lost and a widening education gap for students, which can have a long term implication on economic and human development. Fiscal stimulus has been critical to get us through the crisis. In countries with limited fiscal capacity, governments need to create room by prioritising crisis related spending and reducing wasteful spending."

Jochen Schmittmann

DeputyHeadIMFOfficeforAsiaandthePacific


Infrastructure gaps Infrastructuregapsareanothermajorconcern,impactingindustriessuchaspower,utilities,thesocialsector(housing,healthandeducation),logisticsanddigitalconnectivity.Besideslimitingtheproductivecapacityoftheworkforce,infrastructure gaps increase the cost of doing business for companies,therebyimpactingcompetitivenesswhilelimitingmarketaccessandsocialwellbeing.Thescaleofinvestmentsrequiredisquitesignificant.AccordingtotheAsianDevelopmentBank,developingnationsinAsiaaloneneedtoinvestUS$1.7trillionperyearininfrastructureovertheperiodspanning2016to2030,withthepowerandtransportsectorsaccountingformorethan80percentofthe requirements.14

Besidesthis,improvementindigitalinfrastructureisnecessary to drive adoption of new operating models thatenhancegrowthwhilebuildingresilience.Countriesneed to strengthen their digital backbone and data centre infrastructuretoimprovelocalandinternationalconnectivity,while investing in new devices and digital security measures thatsupportemergingtechnologies.AccordingtotheAsianInfrastructureInvestmentBank,withgrowingonlineadoptionandtheadventofIndustry4.0solutionsand5Gconnectivity,annualinvestmentsworthUS$241billionareneededtomeetregionalrequirementsby2030,risingtoUS$512billionby2040.Itisessentialthatgovernmentsreviewtheirinvestment priorities to drive infrastructure development andlaythefoundationforfuturegrowth.Theseinvestmentsneed to be further supported by greater intra-regional collaborationtoaddressneedsforfinancingandprojectmanagement expertise.15

Institutional weaknessesTohelpachievemoreinclusivegrowth,bridgingtheinstitutional differences between regional markets needs carefulconsideration.Forexample,intermsofregulatoryquality,whileeconomiessuchasSingapore,HongKongSAR,NewZealandandAustraliawereamongleadingglobalperformersontheWorldBank’sGovernanceIndicators(2019),othercountriessuchasChina,India,IndonesiaandVietnamfeaturedbelowthetop100marketsworldwide.Similarly,strengthoftheinnovationecosystemdenotesamajorgrowthdriverforglobaleconomies,withthepresenceof robust intellectual property (IP) laws being key to attracting investments.Thereissignificantscopeforimprovementonthisfrontaswell.Accordingtothe2020InternationalIPIndex,Japan,Singapore,SouthKoreaandAustraliaweretheonlyAsiaPacificmarketsrankedamongthetop15performersglobally,whileVietnam,ThailandandIndonesiawererankedmuchbelow.16

Improving regional performance on such parameters has becomenecessary,asinstitutionalgapscouldweakeninvestorconfidenceandtheregion’sgrowthpace,andmoresoduringperiodsofglobaluncertainty.Itisalsoessentialto keep governance up to date with a rapidly evolving world,suchasbyboostingtechnologyadoptiontoimprovethescaleandefficacyofpublicservices.Existingregionaldisparities showcase a unique opportunity for governments in developedmarketstonowtakealeadonthisfront,andworkwith their developing counterparts to strengthen their quality ofpolicy-makingandgovernancestandards.


Seoul, South Korea

Social inequalitiesChallengesrelatingtosocialinequalityremainsignificantfortheregion,andwithinindividualnationsaswell.WhileAsiaPacificasawholehasmovedtowardsprosperity,differencesremain in the economic and social wellbeing of individual markets(seefigure3),whichrequiresagreaterfocusondeliveringmoreinclusivegrowth.Incomeinequalityremainsagrowingconcern,withthetop10percentofincomeearnersrepresentingasignificant47.5percentofnationalincomeinAsia–andanevenhigher56.6percentinthePacificcountries.Overthepastfewdecades,theinequalitygaphasalsobeenwideninginleadingmarketssuchasChina,IndiaandIndonesia,indicatingtheneedfornewwaystomakethebenefitsofeconomicgrowthpermeatethebottomofthe pyramid.17

Environmental sustainability Environmental challenges pose serious growth risks for the region.Ifleftunchecked,climatechangeanditsnegativeimpactonresourceavailability,cropyieldsandcross-bordertradecouldshrinktheregionaleconomyby2.6percentby2050unlessurgentinterventionsaremadetoexistingwaysofworking.Almosthalfoftheregion’spopulationistoday estimated to be living in low-lying coastal zones and floodplains—areasthatareincreasinglyatriskofflooding,leadingtodamagestoinfrastructureandlivelihoods.Frequent weather disruptions are also a concern in terms offoodsecurity.AccordingtotheUnitedNations,annualeconomiclossesduetonaturaldisasterswereUS$675billion(or2.4%ofregionalGDP)in2019.Ofthis,60percentwasrepresentedbydrought-relatedagriculturallosses,whichimpacts the rural poor disproportionately and could further widenincomedisparitiesintheregion.18

While historically Asian governments may have prioritised economicpotentialoverenvironmentalsustainabilitytogenerateconsistentlyhighGDPgrowth,climate risk mitigation is now a fundamental necessity to protectbusinessesandsavelivelihoods.Beingapopulousanddisaster-proneregion,climatechangethreatsarehigherforAsiaPacificthananyotherregionworldwide.Theregionthereforeneedstotakealeadingrole ingeneratingawareness and driving global action towards creating a net-zeroeconomyandachievingasustainablefuture.

Figure 3 Performance of Asia Pacific markets on health, education and income related parameters

Lower life expectancy at birth and high mean schooling

Source: United Nations Development Programme

Life expectancy at birth (in years), 2018

Thailand

New ZealandAustralia

Japan

SingaporeSouth Korea

Malaysia

Brunei DarussalamHong Kong SAR

World average: 8.4ChinaVietnam

Philippines

Indonesia

India

CambodiaLao PDR

Myanmar

Wor

ld a

vera

ge: 7

2.6

Mea

n sc

hoo

ling

(in

year

s), 2

018

Higher and lower income nations (GDP per capita) in Asia Pacific are cluttered along the two

extremes in human development performance

Bubble size indicates GDP per capita(US$, 2018)

High life expectancy at birth and lower mean schooling

Low life expectancy at birth and lower mean schooling

0

2

65 67 69 71 73 75 77 79 81 83 85

4

6

8

10

12

14

16High life expectancy at birth and high mean schooling

Asia Pacific needs to prioritise and accelerate digitalisation, skills development and innovation in order to capitalise on shifts in global value chains and maintain its strong economic growth."Sridharan Nair,

PwCAsiaPacific ViceChairman,Markets


Growth pillars for success

Chapter two

Mu Cang Chai, Vietnam

Growth pillars for success

Chapter two

With the advent of the COVID-19 pandemic and a growing burden of managing other existing andemergingchallenges,areasthathavebeenpreviously considered to be opportunities have transformedintourgentneeds,requiringregionalstakeholders to shift from traditional approaches tobuildingnewgrowthpillarsforthe future.

FivekeypillarswillbecriticaltoAsiaPacific’sjourneyoverthenext10years.Eachofthesepillars cover two aspects — or sub-pillars — that highlight areas of intervention that need to be prioritisedtoachieveastrongand visibleimpactinthefuture.


a. Developingbalancedandresilientregionalsupplychains

b.Fosteringacollaborativeinnovationecosystem

3

Advancing the digital economy

a. Buildingdigitalvaluechainsforresilience

b.Fromdigitalrisktodigitaltrust—collectivelyenablingthepathway

1

Enabling regional enterprise growth

a. PropellingcompaniesforgrowthwithinAsiaPacific

b.Boostingregionaltradeinservicesasanewgrowthlever

2

Expanding and future-proofing the labour force

a. Upskillingtodaytoberelevanttomorrow

b.Preparingtheemployeesoftomorrow

4

Building climate change resilience towards a net-zero future

a. Buildingsolutionsforanet-zerocirculareconomy

b.Adoptingtechnologytoaddressfoodandagricultureconcerns

5


Thesepillarsactnotonlyassolutionstoregionalchallenges,butalsoasleverstoaccentuateAsiaPacific’sstrengths,thusenabling the region to emerge as more competitive in the uncertainworldoftomorrow.Sinceimpactfromthesepillarsisholisticandfar-reaching,allstakeholders—governments,businesses,andsociety—tojoinforcestodeliver change.

Delivering noticeable transformation in a region as extensiveanddiverseasAsiaPacificisnotexpectedtobestraightforward,andcombiningthiswiththeneedtoensurea robust recovery from the health and economic crisis only complicatesitfurther.However,theCOVID-19pandemichasalsoprovidedAsiaPacificwithachancetorepairandrebuildforthefuture,requiringregionalmarketsandstakeholderstoco-developsolutionsforlasting change.

Governmentshaveakeyroletoplayindevelopingaclearanddeterminedvisionforthefuture,balancingeconomictargetswithsocialimprovementsandcitizenwellbeing.Inconsultationwithotherstakeholders,governmentsneedtodefinegoalsandidentifystrategicgrowthareasthatneedtobeprioritisedtoachievethem,creatingnewpathwaysforthecorporatesectortoparticipateinnationbuilding.Businesses,bothlargeandsmall,thenneedtoaligntheirgrowthstrategies with broader industry and national development plans,andleadimplementationofthesegrowthpillarsinthedaysahead.

Improving resilience to possible disruption has now become amustforallfuturestrategies,requiringbusinessestobuildmore digitalised value chains while restructuring globally fragmented networks into more regionally integrated supply chains.Businessesalsohaveanurgentandcriticalneedtoexpandbeyondmatureglobaleconomiesand“goregional”bytargetingAsiaPacific’sstrongandgrowingconsumerbase.Theservicessectorinparticulariswellpositionedforcross-borderexpansion,allowingnationstocreateanew growth lever for trade by addressing regional needs forhealthcare,education,constructionorInformationTechnology(IT)services.CompaniesalsohaveamajorroletoplayindrivingmoreagileinnovationandpreparingtheirSMEvaluechainpartnersforthefuture.However,whiledoingso,they need to be conscious of a growing societal shift towards environmentalsustainability,andthereforeadoptbusinesspracticestoremainrelevantforthe future.

Allthroughthesepillars,governmentsneedtoactasfacilitators,helpingstrengthendigitaltrust,appropriatelyskill the workforce of tomorrow and design incentives for all to participate in building a net-zero emission economy withinAsiaPacific.Societyneedstobethefocalpointforallchange,requiringbothgovernmentsandbusinessestoconstantly engage with the people in understanding their growthaspirations,addressingchangingconsumerneeds,making interventions to modify old consumer habits and transforming lives for the better by expanding their reach to thosewhohavehistoricallybeenleftbehind.

Asia Pacific stands at a decisive point, facing an urgent need to overhaul its old economic, social and political constructs. This is the time to lay the foundations of a resilient, sustainable future.”Blair Sheppard

GlobalLeader,StrategyandLeadership,PwC


Mt. Taranaki, New Zealand

Tomeetitschangingmarketrequirements,AsiaPacifichasbeenexperiencingadigitalevolution.Spurredbyhighsmartphonepenetration,risingconsumer acceptance of technology and a growingwillingnessofcompaniestoinnovate,thepromiseofdigitalhasbeengainingmomentum.TheonsetofCOVID-19hasfast-trackedthetrend,leaving governments and businesses without the luxuryoftimeto completethistransformation.

Thepandemichasmovedtheofflineworldintoonlinemodealmostovernight,whilereducingtheneed for physical proximity to consume goods andservices.Thishascreatednewopportunitiesfordigitalpathways,accompaniedbyevolvingdigital risks.

Technologicalreadinessandanabilitytogatherandusereal-timedata,whichhavebeenpushedalongbyCOVID-19,arenowfastbecomingnewsourcesofcompetitiveadvantageinAsiaPacific.

While large companies are at the forefront of theshift,smallerplayerscannotaffordtostayreactive and need to prepare themselves for changeorlosebusinesstocompetition.Duringthistransition,itisalsoimportanttorealisetheheterogeneouscharacteristicofAsiaPacificinthisregard,consideringthatdigitalisationhasoccurred at varying speeds across the region (see figure 4).Yet,whilecertaincountriesareintheearlystagesoftheirdigitaljourney,digitalisationisafundamentalpillaroftheregion’sfuturegrowth.19

Withdigitalcompetitivenessgrowing,theneedtomanagedigitalriskshasbecomeinescapable.Digitalisation can add value but only if adopted withintherightprocesses,attherighttimeandintherightpartofanorganisation,whilepaying special attention to cyber security to manage the breaches that are expected to rise as more consumers and businesses adopt digital technology.

Advancing the digital economy

Pillar one

NeedforIndustry4.0solutionstoboostproductivityhadalreadybeenontherise,buthasbecomeavitalrequirementwithCOVID-19-relateddisruptionsmakingresilienceacorenecessity.

Oldhabitshavebeenmodifiedduringthepandemic,movingmanymoreconsumersandprocurementfunctionsonlineforthefirsttime.Businesses mustcatertochangingmarketneedswithgreateragility.

ExponentialgrowthindigitalconnectivityinAsiaPacifichasincreasedrisksfromcyberthreats,requiringurgentinterventiontobuilddigitaltrusttomaximisefuturepotential.

Why now?

01

02

03

Enabling the digital imperative


Figure 4 Digital readiness in key Asia Pacific markets

Digital Readiness Index 2019 (Best - 25.0)

Digital Readiness Index is measured in seven components – basic needs, human capital, ease of doing business, business and government investment, start-up environment, technology infrastructure and technology adoption.Index score not available for Hong Kong SAR, Taiwan and Brunei DarussalamSource: Cisco Digital Readiness Index 2019

Myanmar 8.1

8.6

9.3

9.5

11.0

11.7

12.1

13.2

13.2

14.3

17.7

17.8

17.9

18.2

20.3

Lao PDR

Cambodia

India

Philippines

Indonesia

Vietnam

Thailand

China

Malaysia

Japan

New Zealand

Australia

South Korea

Singapore

The pandemic has solidified the need for digital adoption for businesses and governments across Asia Pacific and the world. Organisations now need to execute these digital transformation projects with a sense of urgency to stay ahead of competition and be more resilient against rising macroeconomic disruptions such as trade tensions and climate change."

Surina Shukri

ChiefExecutiveOfficer, MalaysiaDigitalEconomy Corporation (MDEC)


Kuala Lumpur, Malaysia

Building digital value chains for resilience

Shift from relationships to reliability — a call for resilienceEvenbeforetheCOVID-19pandemic,optimisingefficiencywasbecomingincreasinglyimportanttoprofitability.Digitalenablement across the value chain and adapting to a more digitalisedconsumerjourneywerekeystrategiesforsuccess.Thepandemichasaddedresiliencetothislistofgrowthobjectives,tothepointofmakingtheabilitytowithstandsudden disruptions and suitably manage future risks a key priorityalongsidetraditionalprofitabilitymetrics.Customersand value chain partners who were already demanding greater personalisation and convenience are now also prioritisingreliabilityaboverelationships,makingitevenmoreimportant to strengthen resilience through digital adoption thaneverbefore.20

Commencing the digitalisation journey Digitalisationhasbecomecrucialforfuturegrowth,thoughsome companies have been able to adopt digital solutions faster than others based on their current capabilities (systems,processesandpeople).However,theurgentpushtowards digitalisation brought about by COVID-19 can result indigitalsolutionsbeingadoptedinappropriately.Assuch,acceleratingdigitalisationthroughinappropriatesolutions,orinpartsofabusiness'valuechainwhereitwouldbeleasteffective,couldreducevalueandcustomerexperience.Companiesmustthereforebegintheirdigitalisationjourneysdiligently,basedonthefollowing:

Why?

What is the core need to be addressed by digitalisation?

Where?

Which parts of the value chain need to bedigitalisedonpriority?

What?

What technology is most applicable given the existing processes and future needs?

Inappropriate digitalisation threatens an organisation internally,especiallyinAsiaPacificwherealargeproportionoffamily-ownedbusinesseshaveconventionalITinfrastructurethatislesssuitablefornewtechnologies.Therefore,beforeimplementingdigitalinitiatives,organisations need to assess their existing digital readiness in order to effectively and securely unleash the opportunities presentedbynewtechnologies.

Sub-pillar 1 For conglomerates with diverse businesses like ours, accelerated digitalisation can become a burden if it is not integrated correctly with existing processes. We prioritise enhancing our user experience and strengthening the foundation of our work processes before undertaking digital transformation projects. We are also trying to decentralise technology and encourage our business units to rethink processes and propose how technology can improve efficiency and enable things to turn from good to great."

Alex Ng

ChiefExecutiveOfficer, KerryExpressThailand

Company action


Hanoi, Vietnam

Fundamental shifts

Challenges in specific parts of the value chain

Rising input costs in traditional production centres

Growing cost of regulatory compliance and supply chain management

Need for product development agility to cope with demand for more personalised products and fast-changing customer preferences

Costly manufacturing re-works during the development process


Procurement inefficiencies and payment hassles due to inadequate infrastructure and multiple suppliers

Need for supply chain resilience exacerbated by COVID-19 / trade tensions

Rising pressure from consumers towards increased visibility over supply chains

Maintaining quality of supply from multiple suppliers

Decreasing labour productivity due to ageing workforce and rising labour cost in a few Asia Pacific economies

Increasing production costs and transaction inefficiencies impacting competitive advantage

Rising pressure from consumers towards increased traceability and visibility over supply chains

Need to regionalise supply chain networks to support faster fulfilment as manufacturers move closer to consumers

Gap in warehouse efficiencies and payment methods due to inadequate infrastructure, leading to sub-optimised finished goods inventory

Rising pressure from consumers towards increased reliability and visibility over supply chains, for delivery and sustainability concerns

Difficulty in targeting diverse customer segments in the heterogenous Asia Pacific region

Increasing consumer preference for secure, convenient and remote payment options – exacerbated by the COVID-19 pandemic

Need to offer value adding solutions for higher margins amidst increasing competition

Growing competition from regional and local firms

Emergence of lower-cost manufacturinglocations increasing competition

Changing consumer habits, demanding greater product customization

Need for faster fulfilment and more visibility over the supply chain

Research andDevelopment

Sourcing ProductionStorage andDistribution

Marketing andSales

Digitalising the right parts of the value chain — “the where” A key element of understanding one’s digital readiness is the adoptionofaholisticvaluechainapproachtodigitalisation,which considers how technology can be suitably deployed attherightpointsacrossanentirevaluechain.Businessesdo not necessarily need to digitalise an entire value chain at thesametime,butshouldprioritiseadoptioninareasthatenable strongerreliability,visibilityandagilityinmanagingmarketneeds.

Businesses tend to restrict digital adoption to customer-facingfunctionssuchasmarketingandsales,butnowneedto expand focus to other functions as well to maximise impact.Figures5aand5bhighlightthechallengesbeingfacedacrossthevaluechain,anddigitalsolutionsthatcanhelpmitigatethese.

Figure 5a Digitalisation of the value chain - key challenges



Generativedesigning(e.g.Computer AidedDesign (CAD) software)

Smart contracts(e.g. Applicationlogic contracts)

Smart factory(e.g. Predictive maintenance, asset tracking and optimisation)

Warehouse automation(e.g. Cloud-baseddata warehouse solutions)

Digital marketing analytics(e.g. Social listening softwares, cloud-based customer relations management software)

Digital supply chain(e.g. Cognitive robots, drones, collaborative load and route planning)

Digital traceability(e.g. Radio Frequency Identification tracking, real-time sensors, distributed ledger)

E-commerce(e.g. AI based productrecommendations)

Digital payments(e.g. Digital wallet)

ArtificialIntelligence (AI)

Robotics/Cobotics

Advancedanalytics Blockchain

Internet ofThings

CloudComputing

Major frontier technologies

Research andDevelopment

Sourcing ProductionStorage andDistribution

Marketing andSales

Research and Development

Withdigitalisation,theboundariesforideationcanexpandwaybeyondtraditionalsources,accessinginspirationandbestpracticesfromusersandinnovatorsworldwide.Theincreasingneedforagilityinproductdevelopmentisalsotraditionallymetwithcostlymanufacturingre-works.However,AI-poweredgenerativedesigncannowdeliverthousandsofiterationsinafractionofthetime.Manpowercanbefreedfrommundaneandrepetitivetasks,whilesimulation and testing features can be built into the design processtoavoidadditionalcosts.

Sourcing

Rebalancing global value chains with more regional networks acrossAsiaPacificarecreatingnewopportunities.However,thisalsoattractscompetition,makingitimportanttoefficientlymanagemultiplestakeholders.Digitalisationcanaddress this need through blockchain-based smart contracts thatreducecomplexitythroughautomatedverificationandexecutionofmultiplecontracts.Smartcontractscanalsoenhancetrustbyensuringadecentralised,immutablerecordthatistransparenttoallparties.Providingreal-timevisibility,theyallowgreaterefficiencyandagilitywhilestrengtheningrelationshipsacrossthevaluechain.

Figure 5b Digitalisation of the value chain - key solutions


Production

Tosustaingrowthinapost-COVID-19world,factoriesneedto operate in an unpredictable environment — strengthening the need for agility in production — to address sudden fluctuationsindemandwhileavoidingcostsassociatedwithmaintaininglargeinventories.Factoriescanbegindrivingintelligentmanufacturinginmanyways.Forinstance,they can use AI to analyse data captured by sensors on equipmentenabledbytheInternetofThings(IoT),toidentifyefficiencygainsorconductpredictivemaintenance.Theycan also adopt robotics to perform repetitive tasks previously undertakenbyhumanlabour.

Storage and Distribution

Supplychainsareneedingtomanagesuddenchangesindemand,increasedregulationandaheightenedcustomerneedforvisibility.Someofthesedemandscanbeaddressedwithashiftfromajust-in-timetoajust-in-casemindset,whichbuildsinredundancybuthashighcosts.Therefore,there is now a strong need to adopt more cost-optimal digital solutions,whereIoTdevicescancollectreal-timedata;cloud computing can allow multiple stakeholders to leverage real-timeinformationforcollaboration;producttrackingandcompliance management is made more transparent with blockchain;andwarehouseautomationhelpsreduceorderturnaroundtimeandlowersoperatingcosts.

Marketing and Sales

AsiaPacific’sexponentialgrowthine-commercehasbrought about new challenges in targeting the region’s diversecustomersandmeetingtheirever-changingneeds.ThelockdownsimposedbyCOVID-19haveexacerbatedmanypeople’sneedforanonlinepresence,withmanynewcustomers,suchasolderagegroups,beingintroducedtoonlineshopping,whileexistingshoppershavespentmoretime online — factors that have increased pressure on firmstogodigitaltoremaincompetitive.E-commercealsoshows great potential to transform the buying experience byimprovingmarketreach—especiallysince,duringthepandemic,thishasbeenasaferoptionthantraditionalretail.

Besidesthis,digitalmarketinganalyticscanhelpmanagedisparatedatasetsandderivedeeperinsights,allowingcompanies to achieve better customer segmentation and target-based marketing within a heterogeneous region such asAsiaPacific.Digitalpaymentscanalsohelpfacilitateconvenienceandaccessibility.Whileallowingcompaniestoachievegreaterreach,thesesolutionscanalsoenablestronger traceability as details of payments are stored in merchant-specificdatabases.

Case example

Digital adoption across select segments of the value chain in Japan

Research and Development

DaiwaHouseIndustry,amajorconstructionfirminJapanspecialisinginindustrializedhousinghasadopted generative design solutions that simulate buildingrequirementssuchasdesignobjectives,materials,manufacturingmethodsandcostrestrictionsto produce multiple design iterations that help optimise land space – addressing a key urbanisation challenge inJapan.Automationhasbeenhelpfulinimprovingtheefficiencyandaccuracyofthedesignprocess,allowingthefirmtocreateandcomparemultipleoptionswithlower cost and time requirements as compared to manualprocesses.21

Sourcing

JapanGibierPromotionAssociation,adivisionoftheJapaneseMinistryofAgriculture,ForestryandFisherieshas adopted a blockchain solution to store and track transactions executed across the supply chain for gamemeat.Sincethetransactionsareupdatedinrealtimeandcannotbealtered,thesolutionprovidesgreater transparency and traceability over the entire supplychain,andensurestighterqualitycontrolfortheperishableproduct.22

Production

OkumaCorporation,amachinetoolbuilderinJapanhasadoptedIoTsolutionsinitsfactorytocollectreal-timedataonlabour,materialandmachineryrelatedmetrics.Thishasallowedgreatervisibilityoverfacilityoperations,enablingthecompanytooptimizemanufacturing processes and reduce production lead timeby50%foritsmajorproductlines.23

Digitalisation has been an integral part of our competitive advantage. Implementing the ‘Plus Internet’ strategy, we have continued to invest in digital upgrading across the value chain through smart production, e-commerce and business intelligence solutions - in a bid to accurately grasp consumer needs and deliver the right products to the right person, at the right place and time."

James Wei

ChiefExecutiveOfficer, MasterKong


Case example

Digital adoption across select segments of the value chain in China

Storage and Distribution

Drivenbyrisingcompetition,FAWGroup,anautomobileand auto parts manufacturer in China has installed autonomous forklifts to optimise its logistics operations inChangchun.Deployedinthecompany’shigh-risewarehousetomanageheavy-loadautoparts,thesolutionisusedforautonomousstorageandretrieval,materialhandling,mechanicalarmcollaborationandconveyorlineintegration–significantlyimprovingprocessefficiencywithlowerlabourrequirements,higheroperationalaccuracyandbetterriskmanagement.24

Marketing and Sales

Huitongda,aChinesedigitalservicesplatformaimstoincreasethereachofe-commerceinruralChina.Workingacross18provinces,thecompanyprovidesmerchandisingandmarketingsolutionstoretailersinruralareas,enabling them to buy quality products at better prices and eventually sell them to rural consumers through its e-commerceplatform.AsofOctober2020,thecompanyhasincorporatedmorethan80,000retailstoresacrossChinaintoits network.25


Chengdu, China

From digital risk to digital trust — collectively enabling the pathway

Digital trust, a necessity in the post COVID-19 digital economyThepandemichasacceleratedtheideaofdigitaladoptiononanunprecedentedscale,whichalsoposessignificantrisks.Forcompaniestocompete,usingdataeffectivelyhasbecomecritical.Risingdigitalisationismakingorganisationsincreasinglydata-rich,leadingtogreatercyberthreatstargetedatthatdataandtheirdigitalidentities.ThesethreatshavealsobecomemoresophisticatedandapparentacrossAsiaPacificduetoitslargelyunregulatedandexponentialgrowthinconnectivity.Thishasmade risk mitigation by establishing digital trust more important thanever.26

Forthis,governmentsnotonlyhavearoletoplayindeveloping the right policy environment but also in helping SMEs,whichmakeupasignificantpartofeconomiesacrossAsiaPacific,toascendthedigitalisationcurve.Ifleftunchecked,growingdigitaldominancebyglobalcompaniesthat are ready to adopt more advanced digital solutions couldmakeregionalSMEssignificantlylesscompetitive.Againstthisbackdrop,businessesofallsizesneedtoadoptanewcyber-resilientmindset,refocusingeffortsfrompureprevention to actively monitoring and becoming better preparedtorespondtocyberthreats.27

Government's role in facilitating digital trust and adoption While evaluating digital readiness is within an organisation’s control,thereareanumberoffactorsforwhichcompaniesneedtodependuponexternalplayers.Establishingdigitaltrust is one such area where governments need to take thelead.GovernmentsinAsiaPacificneedtoplayamorecentralroleinspurringsocialconfidencebytakingstepsthatenableorganisationstobecomedigitallyreadyandsecure.TheCOVID-19lockdownshaveseenincreaseduseofe-commerceanddigitalsolutionsinAsiaPacific—arecentconsumersurveyreportedthat52percentofrespondentsinAsiaPacificsaidtheyhadmoreplanstoshoponlineduetothepandemic—buttosupportcommercialactivity,thegovernment now needs to convince the people of online safetyanddigitalsecurity.28

Toappropriatelyseizetheopportunityforchangepresentedbythepandemic,thereareanumberofkeyfocusareasforthegovernment.

Provide balanced digital governance

Thechallengeforgovernmentsnowistoprovideapolicyenvironmentthatallowsbusinessestoinnovate,maximisingthe potential of digital solutions while managing associated cyberrisks,promotingcompetitionandbuildingdigitaltrust.Thisisbecauseifregulationsaretoostrict,theyinhibitalargecorporate’smotivationtoinnovate;however,iftheyaretooopen,theygiverisetodigitaldominancewhereSMEsareunabletosurvive.PwC’sAsiaPacificBusinessLeadersSurvey,2019,showsregionalbusinessleadersalsoagree(70%responding“yes”)thatadditionalregulationisneededtoincreasepublictrustincybersecurity,AIanddataprivacy.29

Foster regional harmonisation of regulations

Withrisingglobaluncertainties,thereisstrongopportunityforcompaniestolookwithinAsiaPacificforgrowthandforgovernments to create the conditions for e-commerce to prosperregionally.However,thisalsocreatesadditionalrisks.Mostcyberattackstodayarecross-borderoperations,butregulatoryapproachestocybersecurityinAsiaPacificarevariedandlocalised.Goingforward,thekeytocombatingcross-border digital threats is for regional governments to pursue greater harmonisation of laws against cybercrime and establish regional standards that foster cross-border dataflowsandstrengthendataprivacy.Thiscanbefurtherenhancedbysharingpolicyexpertiseandbestpractices.AsiaPacificnowhasanopportunitytotakealeadonthisfront and showcase the effectiveness of such regional collaborationtotherestoftheworld.

Support SMEs in digitalising with confidence

Smallerfirmsoftenfacesignificantchallengesindigitalisingtheiroperations,whichthegovernmentcansupportinacollectiveway.Besidesofferingfinancialsupport,ithasbecome increasingly important for governments to enhance awareness of cyber-hygiene practices to improve cyber-readinesswithinSMEs.Thisisalsoimportantforlarge-scalefirms,astheyneeddigitallyreadysupplierstooptimisetheirvaluechains.However,buildingacyber-resilientorganisationrequiresexperienceandtechnicalexpertise,bothofwhichareinshortsupplyinAsiaPacific.Therefore,itisessentialforgovernments,largebusinessesandeducationalinstitutionsto collaboratively build new capability development platforms suchascyberlabs,trainingonindustrybest-practicesandupskilling programs that can strengthen regional expertise andenableSMEstoaccesstherighttalent.

Sub-pillar 2


A holistic approach of actions required to build trust into the fabric of an organisation’s digital operations

As threats evolve, organisations put continuous efforts to improve and build agile processes


Identify

Identify what matters most to the organisation and pinpoint assets and processes that need protection

Protect

Put measures in place to ensure key elements of the business (i.e. digital identity and data) are safe

Detect

Install agile capabilities to detect evolving threats targeting the organisation in a timely fashion

Respond and Recover

Initiate post-attack response to effectively react and minimise negative impact of an incident

BecomeCyber Resilient

Figure 6 Four step approach to establishing digital trust

Transition to becoming cyber-resilientDigitaladoptionbringswithitarangeofrisks,manyofwhichareinevitable,suchasattacksondigitalidentitiesanddata.Byacceleratingtheneedfordigitalisation,COVID-19hasfurtheraccentuatedtheserisks,requiringorganisationstostronglyemphasisecybersecurity.Asorganisationsseektoestablishdigitaltrustandbecomecyber-resilient,itisimportanttoembracethemantraof“assumedbreach”,which supposes that both digital identities and data will

be breached at some point in time — more so amid hasty effortstodigitalisepost-COVID-19—and,onthatpremise,organisations ought to adopt a four-step approach (see figure6)tomitigatelosses.Thismindsetrefocusesanorganisation’s efforts away from pure prevention to one thatmonitorsforthreats,detectsbreachesandrespondseffectivelytominimiseanynegativeimpact.30

Forexample,theCyberSecurityAgencyofSingaporeconducted its third sector-level cyber crisis management exercisein2019toimproveSingapore’sreadiness.Over250publicandprivatesectorcompanieswentthroughasequenceofscenarioplanningsessions,workshopsandtable-top discussions to develop and test their incident management and remediation plans in response to simulated cyberattacks.Scenariosexercisedincludeddisruptionsininternetconnectivity,thecommunicationsnetworkandcompromiseofindustrialcontrolsystems.31

Support in the form of the right policy environment and the endorsement of our product by the government helped enhance digital trust among users, leading to increased adoption of our mobile-based healthcare platform. During the pandemic, Halodoc is also collaborating with the Ministry of Health for the Komunikasi, Informasi, dan Edukasi (KIE) program to provide various verified information related to COVID-19. In addition, we also collaborated with our medical facility partners to provide the COVID-19 tests, aligned with the government's program in pushing forward the COVID-19 test to map out the COVID-19 transmission in the country."

Jonathan Sudharta

ChiefExecutiveOfficer, Halodoc


Moving forward Rising competition amid changing industry forces is making digitalisationamajordifferentiatorforbusinessesinAsiaPacific,withtheCOVID-19pandemicfurtheracceleratingtheneedtodigitalise.Totrulyunlocktheirpotential,itis critical for companies to conduct a robust internal evaluation to understand their digital readiness and adopt a holistic value chain approach to identify focus areas for adoption.Buildingdigitaltrustalsoneedstobeprioritisedtosafeguardbusinessesandconsumerinterests,requiringgovernmentstocreatesuitablepoliciesandassistSMEstobecomedigitallyreadyandcyberresilient.Whilebusinessesare required to shift focus from prevention to proactively detectingandrespondingtocyberattacks,effectivemitigation also calls for continuous efforts to build agile processestocounterconstantlyevolvingdigital threats.

Case example

Protection against cyber threats by an Indian conglomerateJSWGroup,anIndianconglomeratewithapresenceinsteel,energy,cementandinfrastructuresectors,hasshifteditsfocusfromsecuringtheperimetersofmachinesthatcontaincriticalinformationtosecuringtheinformationitself.

Source: The Economic Times

Raising internal awareness through

workshops on how to protect company

information

Identifying and alerting the company against malware or

phishing mails

Ensuring that data remains safe while

sharing files on third-party cloud storage platforms

Minimising the use of public WiFi networks when viewing critical

information

Looking at ‘hacker bots’ to plug potential

gaps faster than humans

Key actions taken to shield against cyber threats:

Source: The Economic Times


Hanoi, Vietnam

Businesses need to conduct robust internal due diligence to understand theirdigitalreadiness,andidentifyingthecoreneedtobeaddressedbydigitalisation,withintherightpartoftheirvaluechains.

Companiesneedtofollowaholisticvaluechainapproachtodigitalisation,prioritisingadoptioninareasthatcanenablestrongerreliabilityandagility,whileexpandingfocusbeyondcustomer-facingfunctions.

Forthedigitaleconomytoflourish,governmentsneedtobuilddigitaltrustbyharmonisingregionallawsoncybercrime,establishingregionaldatastandardsandpreparingSMEsfordigitaladoption.

Businesses must consider digital risks as an enterprise-level priority to get aunifiedviewofthreats,andfollowafour-stepapproach(identify,protect,detect,respondandrecover)toenhancecyber readiness.

What actions are needed?

Key takeaways

The COVID-19 pandemic has drastically changed consumer expectations, accelerating the need for diligent digital adoption. Strengthening digital fitness across the value chain will be crucial for companies to achieve desired results.”

Wilson Chow

GlobalTechnology,MediaandTelecommunicationsIndustryLeader,PwC


Almostovernight,AsiaPacific’sfuturehasbeenbroughtforwardbyatleastadecade,ifnotmore,byCOVID-19.Howpeoplework,whattheysell,howtheyconsume,howtheypayandeventheirendurance levels have changed — and that has necessitated a shift in how businesses operate andgrow.DuringAsiaPacific’srise,companieshave typically targeted more mature global marketsforgrowth.Family-ownedfirmsandSMEsinAsiaPacifichaveventuredonlyselectivelyoutsidetheirdomesticbases,restrictingthemselves mainly to mature European and Americanmarkets,inwhichtheyfounditeasierto operate.

However,evolvingmarketconditions,acceleratedbyCOVID-19,haveunexpectedlychangedthistrend,pressingcompaniestolookmorewithinAsiaPacificforgrowth.NewconsumermarketscontinuetoemergewithinAsiaPacific,supportedby rising income levels and a stronger recovery fromtheCOVID-19crisis.

Withrisingglobaluncertainties,SMEsandfamilybusinesses now have an urgent need to ‘go regional’,prioritisingthosemarketswithlowercultural,administrative,geographicandeconomic(or“CAGE”)differencesthanothers.32

Lookingatgrowthareas,theservicessector,inparticular,showssignificantpotentialforregionalcross-borderexpansion,allowingcompaniesand countries to develop a new lever to boost tradebyaddressingAsiaPacific’sdiverseandevolvingrequirements.Growingdigitalisationhasfurther reduced the need for physical proximity to deliverservicessuchashealthcare,educationorentertainment,openingevengreateropportunitiesforservicesexports.Withregionalmarketssharingcomplementarystrengths,thepotentialforgrowthisimmense,butrequiresfocusedactionfromgovernments to create a policy environment that fostersandsafeguardscross-bordertransactions.

Enabling regional enterprise growth

Pillar two

Domestic disruptions caused by the pandemic have strongly accelerated theneedtolookbeyondlocalmarketsforgrowth,targetingoverseasexpansionfornewsalesopportunities.

GlobaluncertaintiesandCOVID-19havenegativelyimpactedmorematureglobalmarketstargetedhistoricallyforexpansion,withAsiaPacificshowingstrongergrowthprospects.

Rising cross-border tradability of services due to digitalisation offers new exportopportunities,moresowithregionalmarketshavingsignificantpotentialtosharecomplementarystrengths.

Why now?

01

02

03

The growing need for regional expansion


Figure 8: Foundations of a capability driven internationalisation strategy for Asia Pacific

Operational performanceImprove operational efficiencies while serving most profitable customers

Go-to-market excellenceDevelop agile and flexible go-to-market

capabilities to manage fast changing needs

InnovationLocalise ability to design products, making innovation more agile and organic

Capability foundations

Propelling companies for growth within Asia Pacific

The need for an Asia Pacific model — nowEconomic growth has created new opportunities for companiestoexpandacrossAsiaPacific,especiallyfor“glocal”firmsthathaveexperienceinglobalmarketsandunderstandtheneedforlocalisedcapability-building.However,AsiaPacificisnothomogenous,hostingvaryingconsumer segments and disparate business and institutional environments.Therefore,strategiesthathavebeensuccessful in certain home or mature global markets often fallshortwhenappliedtoothermarketsintheregion.Goingforward,organisationsneedtorealigntheirbusinessmodelsby adopting a capability-driven regionalisation strategy that is relevantforAsiaPacific,supportedbyenablerssuchastherighttechnologyinfrastructurepartnershipsand culture.

Adopting a capability-driven regionalisation strategy Typically,companiesfinditeasiertooperateintheirhomemarkets.Enabledbydeepmarketknowledgeandsupportedbydomesticpartners,localcompaniesareabletocircumventcomplicationsandachieveprofitablegrowth.However,thesestrengthsareusuallynot“translatable”duetopeculiaritiesofdifferentAsiaPacificmarkets,anditbecomesdifficulttoreplicatetheirsuccessacross borders.

Toenablecross-bordergrowthwhilemanagingrisinguncertainties,companiesneedtolearnwaystolocalisebutbeagile—toremainstructuredbutalsobecomeflexible.Thisrequiresacapability-drivenregionalexpansionstrategyalignedtothecompany’soverallambition,thevalueitseekstodeliverandthecorestrengthsthatdefineitsDNA.Inparticular,companiesneedtofocusonthreefoundationalareas—operationalperformance,innovationandgo-to-market excellence — to create a differentiated strategy and outmanoeuvrecompetitioninforeignmarkets.33

Sub-pillar 1

Figure 7 Foundations of a capability-driven regionalisation strategy for Asia Pacific

Advanced Western economies have for a long time invested in manufacturing and exporting through Asia Pacific, leading to the economic growth of many Asian economies. However, the recent trade tensions and the ongoing pandemic have caused a shift in this model – if Western capital is less accessible, Asian countries will have to look internally and regionally to foster growth."

Tom Rafferty

RegionalDirector,Asia,TheEconomistIntelligenceUnit (EIU)

Source:PwC,WinninginMaturingMarkets,2017


Singapore

Operational performance

WiththeonsetoftheCOVID-19pandemic,theneedtoimproveoperationalperformancehasincreasedsignificantly,both as a lever to differentiate and as a tool to maintain profitability.ThisisespeciallyrelevantformanyAsiaPacificmarkets that lack adequate infrastructure and present significantoperationalchallenges.Withgovernmentsexpected to increase regulatory scrutiny in the post-COVID-19world,managingrisingcompliancecostswithoperationalimprovementshasalsobecomemoreimportant.Toidentifyleversofchange,companiesinAsiaPacificfirstneed to differentiate between the impact of controllable internalfactors(suchaswages,suppliersormaterials)andexternalelements(suchasregulatorycompliance,interestratesortaxationnorms),andbenchmarktheircurrentcostandotheroperationalmetricstobest-in-classperformers.Companies can then consider multiple levers to help improve operationalefficiencies,lookingatcostoptimisationintheshortterm,footprintrealignmentinthemedium-termandsupplierimprovementsinthelonger-term.34

Innovation

Localisinginnovationhasbecomeessentialforcompaniestargetingregionalexpansion.Tosucceedinaconsumption-heavyanddiverseregionsuchasAsiaPacific,companiesneed to anticipate and adapt to changing market conditions withgreateragility.Tobecompetitiveinnewregionalmarkets,companiesneedtodevelopastronginnovation-driven mindset supported by an understanding of target consumer behaviour — to best suit their products to the needsofthelocalmarket.Speed-to-marketisalsoimportanttocatertofast-changingconsumerneedsinAsiaPacific.Thiscanbeachievedwithacontinuousagileapproachtowardsproductorprocessimprovement,withcompaniesacquiringnewcapabilitiesalongtheway.Theseincludeenhancedcustomerintelligence,newcross-sectorandinternationalbusinessrelationships,knowledgeofmoreflexibleandadaptiveoperatingmodels,andimprovedhumancapitalandIP.EnablingagileandorganicinnovationhasbecomecriticalforgrowthinAsiaPacific,shiftingawayfrom the longer-cycle periods followed historically in mature globalmarkets.

Go-to-market excellence

Companies looking at new regional markets for expansion also need to rethink their existing go-to-market capabilities inresponsetorapidlychangingconsumerbehaviour,theemergenceofnewtechnologies,andgrowingcompetitiveandregulatorypressuresacrossAsiaPacific.Enablingaquick response to emerging trends has become crucial for marketsuccessintheregion,requiringcompaniestoshiftfromrigidstructurestomoreagileandflexibleoperationalmodels.Whiletherisingsophisticationofmiddle-classconsumersinAsiaPacificcreatesopportunitiesformoreaspirationalproducts,consumersinmanyregionalmarketsalso remain highly price-sensitive despite strong familiarity withbrands.Totacklethecomplexitiesarisingduetogrowingfragmentation of preferences across different regional socio demographics,companiesneedtoaddresson-the-groundmarketdynamics.Thiscanbeachievedbyleveragingrelevant capabilities that have helped drive success in their homemarkets,whilebridginggapsbybuildingnewoneseitherin-houseorthroughstrategicpartnerships.35

Innovation comes from an agile mind-set rooted into the company’s culture and leadership. An organisational pursuit of innovation also needs to be supported by an ecosystem wherein new ideas can be explored and experimented in a protected environment, without excessive fear of the risk of failure."

KV Rao

ResidentDirector,TataSons–ASEAN&Chair/BoardMemberofTataRegionalSubsidiaries



Strengthening key enablers to support regional expansionInadditiontobuildingcorecapabilities,organisationsinAsiaPacificalsoneedtostrengthencertainenablerstoadequatelysupporttheirregionalexpansionstrategy.Theseenablers can range from enhancing digital capabilities andinfrastructure,topursuingstrategicpartnershipsandmergersandacquisitions,orstrengtheninglocaltalentandorganisationalculture.

Ofallofthese,digitalisationhasrisentobecomeanimperativeenablertofuturegrowthinAsiaPacificbymakingproductionandsupplychainsmoreefficientandenhancingmarket-reachandcustomerexperience.Todigitaliseeffectively,companiesneedtobuildtherightsupportinfrastructure,cateringtoanaccentuatedneedtosupport real-time interactions across business functions whileintegratingwithexternalsupplychainpartners.Companies must follow a stepwise approach to technology implementation — incorporating pilot exercises with detailed roll-out plans and prioritising implementation for specificsegments(customers,revenuestreamsorregions),while establishing clear schedules for decommissioning of older systems.

Exploring partnerships and mergers and acquisitions to addresscapabilityandresourcegapsdenotesanothermajorgrowth enabler — helping companies improve operational performanceinnewtargetmarkets,innovateforlocalrequirements and overcome any fear of the unknown to establishamorerobustgo-to-marketstrategy.Alliancescanalso help companies in countering key barriers to entry in regionalmarkets(suchasregulatoryrequirements,customerpreferences),whilesharingmarket-developmentcostsandriskswithpartnerfirms.Largerfirmswithgreaterinvestmentcapacity can also consider strategic acquisitions to gain quickeraccesstocapabilitiessuchasinnovativeproducts,strong research and development skills or a loyal customer base,whichcanmorestronglypositionthecompanyfor success.36

Finally,theavailabilityandqualityoflocaltalenthavebecomekey drivers for site selection and strategy formulation when expandingacrossAsiaPacific.RecenteventssuchastheCOVID-19 pandemic have caused employees to re-evaluate whatisimportant,therebycreatinganopportunityforcompanies to review their employee value propositions and makethemmorepersonalandlocalised.Culturalresistanceremainsamajorbarriertoforeignexpansion.Totacklethischallenge,hiringinnewmarketsmustremainalignedtothecompany’scorevalues,buttheoverallworkcultureshouldbeflexibleenoughtoadoptdifferentcommunicationandworkingstylesinlocalmarkets.COVID-19hasaccelerateda shift in Asian organisations from a relationship-focused and highly face-to-face oriented work environment to one thatembracesvirtualengagement.Buildingtherightsupportculture that continues to address employee needs and retain talent in this new environment has become crucial for future success.37


Hong Kong SAR

Boosting regional trade in services as a new growth lever

Need for a new regional trade driverTheservicessectorstandsoutintermsoffuturepotentialfor regional expansion and addresses the urgent need for AsiaPacifictolookfornewleversforgrowth,relevanttotheemergingpost-COVID-19world.Technologicalforceshave reduced the need for physical delivery of certain servicescategories,withgrowingtradabilityofdigitalisedservices opening new revenue opportunities for regional firms.Thisisespeciallythecaseinareassuchaseducation,healthcare,entertainment,professionalandtechnicalservices,andICTservices.Furthermore,COVID-19haspresented an opportune time for companies to increase their focus on services trade and building conditions for more inclusivegrowth.Alreadymarkedwithsignificantdemandwithintheregion,AsiaPacificneedstoprioritiseeffortsto boost regional services trade by focusing on sharing complementarities to reduce dependence on an uncertain globallandscape.38

Preparing companies to enhance services' exports MarketfiguresindicateamajorpotentialforAsiaPacifictofocusonservicestrade.Asshowninfigure8,whilemanyregional economies have a strong focus on the services sector(morethan50%shareofGDP),thesegmentcontinuestolagtheworldaverageinitsshareinoverallexports,especiallyinJapan,HongKongSAR,Australia,China,Malaysia,SouthKoreaandThailand.Onaverage,servicesrepresentedonly18percentofoverallAsianexportsin2018,farbelowtheglobalfigureof25percent.Bybridgingthisgapasashort-termpriority,AsiaPacificcanaimtoboostitspotentialevenfurtherinthelonger-term.39

Sub-pillar 2

Figure 8 Presence of services sector in overall economy and exports for Asia Pacific markets

TheroleoftheservicessectorwillevolvedifferentlyacrossmarketsinAsiaPacific.Demographicsarebecomingakeydeterminantofdemand.Marketswithagrowingproportionofolder age groups are expected to witness higher growth for healthcare,insuranceandreal-estateservices,whiledemandforeducation,entertainment,transportandtravelisexpectedtoremainstrongforrelativelyyoungereconomies.Similarly,higher-income economies show potential to become centres of more sophisticated segments such as research anddevelopmentandfinancialservices,whiledevelopingmarkets could see consistent demand for business and constructionservicestosupportgrowth.Finally,morematuremanufacturinglocations(e.g.China,partsofSoutheastAsia)

could be at the forefront of adopting a product-as-a-service model,withtraditionalbusinessesshiftingfocusfromsellingtheproducttosellingaccesstotheproductasaservice.40

However,toexploitthisexportopportunity,companiesmuststartactingnow.Digitalservicesfirmsneedtochecktheirexport readiness in terms of access to the right payment platforms or cloud infrastructure to support cross-border business.Marketentrantsalsoneedtobuildtheirbrandpresencetocompetewithincumbentsinregionalmarkets.Working with their national trade agencies or industry associations has become highly important in this regard to promotethenationaleconomyasaleaderintheirspace.41

Australia

Brunei Darussalam

Cambodia

China

Hong Kong SAR

India

Indonesia

Japan

South KoreaLao PDR

Malaysia

Myanmar

New Zealand

Philippines

Bubble size indicates trade in services (US$ 000s, 2018)

Singapore

Thailand

Vietnam

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

35%

Source: ITC Trade Map, World Bank

40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90%

Ser

vice

s ex

port

s as

% o

f tot

al,

2018

Services value add as % of GDP, 2018

Low share of services in economy, High share of services in exports

Low share of services in economy, Low share of services in exports

High share of services in economy, High share of services in exports

High share of services in economy, Low share of services in exports

World average: 25%


Increasing intra-regional cooperation in services trade ServicestradeisalsoimportantforAsiaPacificgovernmentstohelpaddresscriticalandevolvingdomesticneeds.Widelyregardedasanenablerofinclusivegrowth,theservicessectorcanhelpspreadthebenefitsofeconomicprosperitytolesstappedsegments.Thelowerinvestmentsrequiredtoruna services business as compared to building new products makes it more favourable for groups with limited access to finance,thusboostingtheSMEsectorandcreatingnewjobs.DifferentAsiaPacificmarketsarealsoexperiencingarangeofrequirementsintheirdomesticeconomies,suchasrisingcostsofageingorgapsintheeducationsystem,makingitessentialtoworktogether.Forexample,developedcountriesmay need greater support in health services for their ageing populations,whilekeepingcostsundercontrol,thusenablingscopeforcooperationwithdevelopingmarkets.Tradeinservices could therefore become imperative to satisfying suchvaryingregionalneedseffectivelyinthecomingyears.42

However,thepresenceofastrongtradingopportunitywithinAsiaPacificisnotenough,andserviceprovidersalsoneedtorelyonafavourablepolicyclimatetostaycompetitive.Thisrequires regional governments to work together to reduce tradingbarriers.Tradecostsforservicesremainalmosttwicethoseforgoods,whichnecessitatesastrongintervention.Aspriorityareas,strengtheningregulatorycooperationacrossregional markets has become key to establishing common standards,improvinginformationexchangeanddevelopingsharedpolicyobjectives.Establishingmechanismsforcountrytradeofficestoworkwithsector-levelregulatorscanalsohelpboostservicesexports.Finally,sharingtechnicalassistancewithless-developedmarketsinAsiaPacificcan help these countries draft policies that support market liberalisation while strengthening the regulator’s capacity to monitorimpact.43

Moving forward EnablingregionalexpansionacrossAsiaPacific,especiallythroughservicestrade,hasbecomepivotaltodrivingfuturegrowth.However,companieslookingtointernationaliseneedtobesensitivetogeopoliticaltensions,protectionistpoliciesand other regulatory constraints while prioritising regional marketsforexpansion.Governmentsupporthasthereforebecomecriticaltoboostingopportunitiesforregionalgrowth,helpingdomesticfirmsprepareforsuccessinoverseasmarketsinAsiaPacific,whilestrengtheningregulatorycooperation with their regional counterparts to reduce entry barriersandcosts.Businesses,ontheotherhand,needtobe moreproactiveintargetingopportunitieswithinAsiaPacific,focusingonbrandbuildingandofferinglocalisedsolutionswithgreateragilitytobecomecompetitive inregionalmarkets.

With challenges of affordability and access to healthcare services, regional cooperation is not a choice but an essential need for Asia Pacific. Many innovative technology solutions have invented affordable and effective healthcare services, and it is now time for regulatory bodies and investors across Asia Pacific to join hands and build a regional ecosystem for these solutions to scale."

Snehal Patel

Chief Executive Officer,MyDoc


Singapore

Case example

Complementary focus areas for services' trade in Asia PacificIndividualmarketsinAsiaPacificshownotablecomplementarystrengthsindifferentservicescategories,which indicates a strong scope for them to collaborate regionally.Thiswiderangeofspecialisationcanbeamajorfactorinbringingmarketstogether,withdifferentcountriesleveraging their individual competitive advantages to targetregionaldemand.Highlightedbelowinthemapareregional markets that feature as leading services exporters today,indicatingsegmentswheretheycouldalsoleadtradeinAsiaPacific.Forexample,China,SouthKoreaandJapancanexporttheirexpertiseinconstructionservicestotherestoftheregion,whileIndiaandSingaporecanemergeasregionalprovidersofICTandprofessionalservices(seefigure9).44

Thesedifferentpocketsofexpertiseneedtostartworkingtogethertobolsterregionalgrowth.

AsiaPacificcanalsolearnfromothermultilateralcoalitionstoimproveonthisaspect,withthe11-nationComprehensive and Progressive Agreement for Trans- PacificPartnership(CPTPP)beingarecentexample.Theagreementfocusesondevelopingmechanisms to boost services trade by improving cross-bordermobilityofpersonnel,relaxingdatalocalisationrequirements,strengtheninglawsononline-consumerprotection and promoting collaboration in tackling cybersecurity.Italsofocusesonopeningservicestradeinsectorsclosedhistorically,suchashealthcare.Undertheagreement,companiescanentertheprivatehealthsector in a signatory nation under multiple modes — as medicalserviceproviders(physicalordigital),investorsoroperatorsorconstructionfirms—enablingmarketsto address healthcare gaps through greater cross-border collaboration.45

Figure 9 Leading services' exporters in Asia Pacific and major export categories

Financial Services Professional ServicesInformation and Communications Technology (ICT)

TravelResearch and Development (R&D) IP exports

Transport Construction Manufacturing Services

Source – ITC Trade Map

Categories for which country features amongst top 5 exporters worldwide

Categories for which country features amongst top 6-20 exporters worldwide

Figures indicate % share accounted for by country in global exports of the services category

India

11% 10%

4% 3%

3%

Singapore

8% 6% 6% 2% 2%

South Korea

12% 2% 1%Thailand

4%

Vietnam

9%

Philippines

Hong Kong SAR 4%

Australia

4%

China

26% 16% 8% 5%

Japan

12% 10% 4% 3% 3% 2%

Note: Markets highlighted only include Asia Pacific markets that feature amongst top 20 global exporters for key services segments depicted in the graphic.


BusinessesneedtobemoreproactiveindrivingAsiaPacificexpansion,developing greater agility by strengthening core capabilities of operational performance,innovationandgo-to-marketexcellence.

Governmentsneedtoactasenablersofregionalexpansion,supportingcompanies(especiallySMEs)inidentifyingpotentialmarketsforgrowthinAsiaPacific,andpreparingthemforsuccessoutsidedomesticmarkets.

Servicesfirmsmustbuildtheirbrandpresenceinoverseasmarkets,working with local industry bodies while ensuring access to the right infrastructuretosupportdigitaltrade.

Governmentsupportiscrucialtoboostregionaltradeinservices,bytakingstepstoreducetradingcosts,strengthenregulatorycooperationandsharetechnicalpolicyassistanceacrossmarkets.


Key takeaways

Indonesia's strong consumerism is indicative of the opportunities within Asia Pacific. Companies need to seek new growth outside of their domestic markets, adopting localised strategies to address diverse and evolving consumer needs."

Ay Tjhing Phan

MarketsLeader,PwC Indonesia


Borobudur, Indonesia


Pillar three

Geopoliticalandtradetensionshaveenhanceduncertainties,leadingsomefirmstoexplorenewsupplierlocationstomanageregulatorycosts–therebyincreasingnetworkcomplexity.

Supplychainriskshaveincreasedsignificantlyovertimewithglobalnetworksbecomingmorefragmentedandcomplex,andCOVID-19-leddisruptionsfurtherstrengtheningtheneedforresilience.

Rebalancing of global operations with regional presence offers potential to mitigaterisks,butrequirescompaniesandcountriestoinnovatetooffergreatervalueaspartofregionalnetworks.

Why now?

01

02

03

Reviewing and rebalancing business models as well as manufacturing and supply chain footprints has become a higher priority for business leaders acrossAsiaPacific.Sincetheonsetoftradeliberalisationinthe1990s,companieshavebeenspreading their production and supply networks worldwide.However,forthepastdecade,supplychain risks have also been on the rise due to factorssuchasrisingmanufacturingcosts,stricterregulations,maturingsuppliersindevelopingcountries and the emergence of new consumer markets.Togetherthishasresultedinnetworksbecoming more fragmented and complex than everbefore.Consumptiondynamicshaveexacerbatedtheburdenfurther,withgreaterdemandforordervisibility,fasterdeliveryandproduct choice leading to additional costs and risks.Morerecently,disruptionscausedbyCOVID-19,combinedwithemergingforcessuchastradeuncertaintiesandgeopoliticaltensions,have further accelerated a reversal of globalisation

trends towards more regional models that accommodate balanced and resilient sourcing and manufacturing.46

CompaniesinAsiaPacificnowneedtobetterprepare themselves for changing industry dynamics and consumer needs in order to offer greater value-add to brands establishing new regionalsupplychains.Thisrequiresagreaterfocus on innovation that enhances agility and productivitywhilecateringtoAsiaPacific’sneedforchange.Regionalenterprisesneedto capitalise on the window of opportunity provided by COVID-19 to redesign old systems and build new innovative solutions that enable morerobustgrowth.Thoughbusinessesneedtodrivetheinnovationagenda,governmentsupport will also be crucial in building a stronger innovation ecosystem by enhancing infrastructure and improving policy support to boost stakeholder collaboration.

Compelling need for resilience and agility


Companies need to differentiate and strengthen their value propositions to stay ahead of competition. This requires building resilience in supply chains, as well as continuous innovation in business models, products and services. Companies need not explore innovation on their own. They can enter partnerships and be plugged into innovation ecosystems in local and international markets. Such partnerships expand companies’ innovation capacities and capabilities, and strengthen their resilience."

Png Cheong Boon

ChiefExecutiveOfficer, EnterpriseSingapore

Developing balanced and resilient regional supply chains

Need for a more balanced and resilient modelDisruptionscausedbyrecenttradeconflictsandtheCOVID-19pandemichaveintensifiedagrowingriskconsciousnessamonggovernmentsandcompanies,makinga strong and urgent case to adopt supply chain models thataremorebalancedandresilient.Companiesnowneedto focus on diversifying their manufacturing and supplier portfolio to become less dependent on a small number of markets,butalsoensurethatnewsuppliersmeettheirqualitystandardsandarereliableandresilienttodisruptiveevents,thereby strengthening the need for network visibility and minimising the response and recovery time from potential bottlenecks.Asshowninfigure10,certainmarketsinAsiaPacificwithahighdependenceontradeandsignificantparticipationinglobalsupplychains,suchasSingapore,Malaysia,Philippines,HongKongSARandSouthKorea,areexpected to be at the forefront of this shift towards greater regionalisationandintegrationofproductsupplynetworks.47

Sub-pillar 1

Figure 10 Trade dependence and participation in global supply chains for key Asia Pacific markets

Indonesia

25%

30%

35%

40%

45%

50%

55%

60%

65%

70%

75%

0

Source: ITC Trade Map, UNCTAD-EORA GVC DatabaseNote: The GVC participation index highlights how much an economy is connected to global value chains for its foreign trade. It includes two components - imports of foreign inputs toproduce goods and services (backward GVC participation) and exports of domestically produced inputs to partners in charge of downstream production stages (forward GVC participation)

0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 ~3.00

Glo

bal

Val

ue C

hain

(GV

C) p

artic

ipat

ion

ind

ex, 2

018

Trade to GDP ratio, 2018

Low trade dependence,low GVC participation

High trade dependence,high GVC participation

High trade dependence,lower GVC participation

~4.00

80%

India

Japan

ChinaAustralia

New ZealandMyanmar

Lao PDR

Brunei DarussalamThailand

Cambodia

Vietnam

Malaysia

South Korea

Philippines

Singapore

Hong Kong SAR

Bubble size indicates GDP per capita(US$ 000s, 2018)

Wor

ld a

vera

ge: 0

.59

World average: 57%


Rebalancing risks through regional networksAsiaPacific’sgrowingneedforresilienceishavingamajorimpactonthespanofsupplychains,drivingashiftawayfromacost-drivenglobalisedapproach,towardsarisk-drivenregionalmindsettofindingnetworkpartners.Inadditiontolocalisation,companiesalsoneedtoassesstheirvulnerabilities and reduce overdependence on a single supply source.Therefore,companiesinAsiaPacifichavestartedfocusing on building greater redundancy in their supply chains toguaranteedeliverytokeycustomers,whilesimultaneouslylookingforalternativeregionalsuppliersanddeliverypartners.Rising competitive pressures and changing consumer needs increasingly require companies to move closer to regional demandcentres.Inaddition,aneedtoimprovemonitoring(e.g.tomeetstricterstandards)isresultinginagrowingpreferenceforregionalprocurementoverdistantlocations.However,thisdoesnotindicateacompletereplacementofglobalsupplychainsbyregionalnetworks,andthefuturewilllikely be more of a hybrid between the two — though with anincreasingnumberoffirmsexploringregionaloptionstostrengthenresilience.48

Ascompaniesseektore-balancetheirsupplychains,certainconsiderations need to be kept in mind for both multinational firmsseekingnewregionalpartnersandlocalfirmslookingtoparticipateintheseemergingregionalnetworks(seefigure11).MultinationalsplanningtosourcefromAsiaPacifictoaddresstheirregionalconsumers’demands,willneedtoestablish a regional procurement network managed by a “controltower”,andconductadetailedassessmenttoidentify

sourcingmarketsandpartnerfirms.Ontheotherhand,risingcompetition among regional suppliers has made it imperative forlocalfirmstostartpreparingthemselvesbyadoptingappropriatedigitalsolutions,participatingininnovationinitiatives and strengthening workers’ skills to become preferredpartnersforleadingglobalbrands.49

Africa andMiddle East

Europe Asia Pacific North America South America

Companies need to focus on key market and partner-related activities as they shift towards new regional supply chains. Changing market conditions and

COVID-19 disruptions are pushing companies to move towards regional supply chains

What companies need to do to move towards regional supply networks

Seeking new regional supply partners

• Understand regulatory factors, political differences and security risks to prioritise new trading locations

• Consider cultural elements, social norms and language differences to understand ease of working

• Assess partner’s business performance, ability to meet requirements (quality, price, capacity, lead time) and capabilities to manage risks (financial, technological, regulatory, reputation)

Entering regional supply chains

• Implement required quality standards through certifications and accreditations

• Offer differentiated proposition besides lower cost – looking at areas such as product or technology, leadership, engineering excellence, customer service levels or faster delivery time

• Partner with government and incubators to access technology readiness and initiate transformation

Regionalisation is on the rise due to growing trade and geopolitical tensions. In line with these changing trends, we are also focusing on realigning our footprint to lower trade and other operational costs - mainly by diversifying presence to new regional locations to serve markets outside China. Expansion to Southeast Asian countries such as Thailand and Vietnam is being evaluated in this regard, while maintaining our presence within China to serve its large local market."

Allen Huang

ChiefExecutiveOfficer, MerryElectronics

Figure 11 Shift from global to regional supply chains and considerations for industry players

Source:PwCanalysis


Shifting to an integrated supply chain structure Tofurtherenhanceresilience,supplychainsneedtorebalancetowardsaregionallyintegratedmodel.Drivenbytheneedfortransparency,companieswantgreatervisibilityovertheirsupplychainpartners,whichrequiresgreaterintegrationamongstnetworkparticipants.Todevelopaneffectiveandagilestructure,multinationalsneedtotakealeadandestablishatechnology-driven“controltower”(orsupplychainhub) to centrally manage their regional production plants andsupplynetworks.Suchacontroltowerisequippedwitha data analytics engine to monitor and manage regional networks,whichislinkedinreal-timewithdifferentelementsofthesupplychainthroughemergingtechnologysolutions.Building such an integrated network also requires new data processestobeestablishedforeffectiveinformationsharing,while strengthening collaboration among various risk functions (compliance,audit,cybersecurity),bothwithinafirmandwithexternalparties,tominimisetheblindspotsandbuildgreater trust.50

Lookingahead,moreadvancedtradingandlogisticscentressuchasHongKongSAR,Shanghai,Singapore,andBusancan take a lead in becoming future-ready hubs for regional supplychains.Theselocationsareequippedwithstrongerinfrastructure,institutionalcapacitiesandsupportservicestomaximisetheimpactofanintegratedmodel.Multipleinitiatives have been launched by governments to develop next-generationinfrastructureintheselocations,andsomemultinationals have already initiated steps to build regionally integratednetworkscentredonthesehubs.

Case example

Digitally enabled regional supply chainsSeveralgovernmentsacrossAsiaPacifichavelaunchedkey digitalisation initiatives to support corporates developfuture-readysupplychains.

InFebruary2020,HongKongSARlaunchedaprogramworthUS$44.5milliontoextendsubsidiestothird-partylogistics(3PL)serviceprovidersinordertoenabledthemtoadoptproductivityenhancingdigitaltechnologies.SingaporehasbeenimplementingaLogisticsIndustryTransformationMapsince2017,tohelpthesectoradvancetowardsmoredigitallyenabledsupplychains.In2019,theSouthKoreangovernmentinvestedinablock chain-based inter-terminal transportation system atBusanPortandallocatedafurtherUS$132millionforasmartportlogisticssystem.51


Tokyo, Japan

Fostering a collaborative innovation ecosystem

A need for faster innovationCompaniesinAsiaPacificneedtourgentlystartpreparingthemselves to support emerging regional supply chains by building more innovative propositions than can help differentiateandenhancevalue-addition.Thisinturnrequires regional stakeholders to work together to build amoreeffectiveinnovationecosystemforthefuture.Thecurrent economic and health crisis is quickly proving to be a catalyst for innovation across corporate and government organisations.Businessandconsumerneedshavebecomemoreurgentandhavethepotentialtochangeevenfaster,consideringtheregion’ssignificantSMEandentrepreneurialbase.Reactingtothesequicklyevolvingrequirements,driving faster and more localised innovation has become a critical component of the region’s growth model that requires innovation to become an organic process executed frequently ratherthanaone-offproject.Thereisalsosignificantroomforimprovement.OnlytwoAsiaPacificmarketsfeatureinthetop10oftheGlobalInnovationIndexRankings,indicatinganeedforchange.However,achievingavisibleshiftforaregionasvastasAsiaPacificrequiresagreatercollectiveeffortamongmultiplestakeholderstodeliveratangibleimpact.52

Sub-pillar 2

Figure 12 Asia Pacific markets in the Top 50 Global Innovation Index rankings, 2020

Singapore

South Korea

Hong Kong SAR

China

Japan

Australia

New Zealand

Malaysia

Vietnam

Thailand

India

Philippines

8

10

11

14

16

23

26

33

42

44

48

50

Global rank (2020)

Asia Pacific market

8

10

11

4250

48

14

16

23

26

33

44

Source:Cornell,INSEADandWorldIntellectualPropertyOrganisation,GlobalInnovationIndex,2020

Emerging technologies such as Artificial Intelligence are enhancing productivity and bringing cost efficiencies to a wide range of industries. However, to leverage the full potential of these technologies, companies both large and small will need to work together through partnerships and open source programmes to facilitate sharing of ideas and encourage innovation that mutually benefits their interests."

Will Zhang

President of CorporateStrategyDepartment,Huawei


Establishing collaborative agile innovation ecosystems Inordertobeagile,AsiaPacificneedstodevelopaninnovation ecosystem — an enabling environment in which multiple entities can combine their strengths in pursuit of a sharedobjective.Suchecosystems,bybeingmoresector-focused,canrespondquicklytonewchallenges.Insteadofaspiring to build a single large-scale innovation ecosystem akintoaSiliconValleyintheregion,companiesandcountriesshouldconsiderbuildingsmaller,more-focusedcollaborativeecosystems that align to a country’s future vision for the sectorsthatwilldriveitsfutureeconomy.

Thismayinvolvesteppingawayfromthepast,andthereforesuccess will depend upon greater coordination among stakeholders that requires governments to identify and supportinnovationareasthatcandrivetheeconomyforward,while inviting foreign direct investment and collaboration fromcompaniesandeducationalinstitutions.Havingamulti-stakeholder focus will ensure broader alignment and helpbuildasenseofco-ownership,allowingforsynergiestoachieveatargetedoutcome.Inaddition,thecompactnessoftheecosystemwillprovidegreateragilitytoexplorenew,innovativedirections.

Innovation requires an exchange of ideas at regional and global levels. This can be achieved through partnerships and synergies among stakeholders such as large industry players, SMEs, investors and educational institutions. However, governments must take a lead in building such ecosystems by formulating policies that align the varied interests of the players involved."

Le Hong Minh

Chairman and Chief ExecutiveOfficer,VNGCorporation

Governmentsdonotnecessarilyneedtodrivethisobjective,as innovation can be led by the business sector while being supportedbypolicymakers.Typically,innovationhubshavebeendevelopedalongoneoffivepathwaysasshowninfigure13.Goingforward,thecorporate,academicorgovernment-led models are expected to primarily drive the creationofnewecosystemsacrosstheregion.

Figure 13 Typical pathways for developing innovation ecosystems

Source:PwCanalysis

Universities cultivatetalent and provide R&D infrastructure that attracts companies, entrepreneurial ventures and start-ups

Typically involves funding agencies, banks and / or venture capitalists

•

•

•

•

•

•

•

•

•

•

•


Government-led initiatives to nurture local talent and attract investment from foreign players byoffering land, fundingand other incentives

The objective is usually to grow existing capabilities or establish a completely new ecosystem

Driven by industry heavyweights who establish large-scale operations in a particular area

Promotes ecosystem of start-ups and outsourcing providers in periphery

Driven by combined government and business initiative

Governments usually provide land and funding; investments come in from private players

No clear leader – developed organically and evolves over time

Aided by soft factors, including culture, climate, quality of life and entrepreneurial activity

Can involve different permutations of other four pathways

Academia-led

Cha

ract

eris

tics

Government-led Business-led Led by Public-Private Partnerships

Hybrid / Organic

• Innovation ecosystems have historically developed along one of 5 pathways• Along each pathway, the development is led by one dominant force

1 2 3 4 5


Businesses - Drivers

Includes large corporations (local and multinationals), SMEs and start-ups. Businesses play a driving role in upskilling talent and working with academia and government to boost research and development and develop a path towards commercialisation of innovative solutions.

Academic and training institutions — CollaboratorsIncludes universities and colleges, vocational centres and other training institutions. They play a collaborator role, liaising between stakeholders on innovation ideas — promoting regional collaboration and inviting grants for innovation and research and development to grow the host region for the institution. They are also a source of talent across levels and roles and play a key supporting role for future skill enhancement.

Government and non-government agencies — EnablersIncludes policymakers and regulators, investment promotion agencies, and industry associations and think-tanks. They play an enabling role by promoting a growth vision, establishing support infrastructure, strengthening priority areas through policy, funding projects before economies of scale can be realised, and building trust by making the country known for its performance in certain aspects.

Funding bodies — Scouts and acceleratorsIncludes private equity firms, venture capitalists and angel investors, and banks and funding agencies. They play the role of scouts and accelerators, actively searching for entrepreneurial ideas, bringing these to innovation hubs for enhancement and scale, and providing the funding for transforming an idea into a commercially viable product or service.

Innovation ecosystem

Thegovernment-ledmodeltypicallyevolvesfrompolicy,focusing on attracting investment in strategic sectors aligned tothenationalagenda.Inaddition,governmentincentivesand infrastructure support help build trust for companies and academicinstitutionstobecomepartoftheecosystem.Ontheotherhand,theacademicmodelcentresonrenownedinstitutionsoflearning,wheretheavailabilityofskilledtalent,aswellasresearchanddevelopmentfocus,helpdriveinnovation,bringinginparticipationfromtheprivatesectorandthegovernment.Finally,thebusiness-ledmodelinvolveswell-established companies driving investments and setting uptheirownecosystemtopromoteinnovation.

Regardlessofthepathwaychosen,stakeholderparticipationiscritical.Realisingtheneedtocometogetherwithasenseofurgency,allstakeholderswillberequiredtotakeondifferentrolesfortheecosystemtoachieveimpact.Theyneedtoworktogether,notforaltruisticreasons,butbecauseeach party can play a crucial value-adding function for the systemtodeliver.Theserolesarehighlightedbelow(seefigure14).

Figure 14 Innovation ecosystem participants and their roles

Case example

Sydney Innovation and Technology PrecinctTheNewSouthWalesgovernmentplanstoinvestUS$34milliontodeveloptheTechCentralprecinctinSydney,whichisexpectedtohoststart-upsandhelpscale-upbusinesses.ThegovernmentisworkingincollaborationwiththeUniversityofSydneyandindustry experts from start-ups and large technology corporationstoestablishtheprecinct.Theprojectsofferan example of a corporate-led innovation ecosystem withAtlassian,anAustraliansoftwarecompanysigning a memorandum of understanding with the governmenttobeafoundingpartnerforthehub.Positionedasananchortenant,thecompanyissettingup its headquarters within the precinct and targets to reachaheadcountof4,000by2025.Asalarge-scaletechnologycompany,Atlassianaimstoactasthecentreofgravityattractingotherindustryplayerstotheregion,while creating an ecosystem that attracts talent from across the country and enables easier exchange of ideastofosterinnovation.53

Source:PwCanalysis


Asia Pacific collaboration for accelerated innovation Considering the scale of change required within Asia Pacific,theseinnovationhubsneedacollectiveeffortforimpact.A “cross-stakeholder,cross-border”collaborationmodel(e.g.ChinesecompaniesworkingwithMalaysianuniversities)canenableAsiaPacifictoinnovateevenfasterandcreateacommongoalforlastingchange.Thisis,however,onlypossibleifregionalgovernmentsworktogether to facilitate cross-border cooperation across institutionsandencouragecross-fertilisationofideas.Different markets in the region need to build specialisation acrossavastrangeoftechnologiesorsectors,andintheprocess developing complementary strengths that make themmorewillingtoworktogether.Thiswillinvolveharddecisionsaboutwheretodirectinvestmentandcapability,but COVID-19 has given governments and business the opportunity to make tough decisions on building up areas thatcanstrengthencompetitiveadvantageforthefuture,inan environment that is less resistant to dramatic change than beforethepandemic.Besidesbeingmutuallybeneficialforregionalmarkets,suchamodelisalsorelevantfordifferentcorporatesegmentswithsmallerfirmsbeingabletoaccessfunds,leverageawealthofexperienceandachievescalefaster,whilelargerplayersareabletobemoreagileindriving innovation.

Moving forwardDrivenbyCOVID-19,globalnetworksarebeingrebalancedwith regionally integrated supply chains to develop stronger resiliencetodisruptions.However,theextentandpaceofchange remains dependent on the level of digital readiness withinindividualmarkets,theabilityofcompaniesandcountries to invest in transformation initiatives while managingCOVID-19,andchanginggeopoliticalconditionswithinAsiaPacific.Whilemulti-nationalsneedtotaketheleadindevelopingregionalsupplynetworks,localfirmsalsoneed to drive agile innovation to offer more value-adding propositionstobecomeapartofthese.Forthis,buildingamoreeffectiveinnovationecosystemwithinAsiaPacificthatfosterscollaborationacrossstakeholders(governments,academics,businessesandfundingbodies)andregionalmarketshasbecomemorecrucialthaneverbefore.

Case example

Cambridge Innovation Cluster (Silicon Fen)

Source:TheGuardian,FinancialTimes

Cambridge Innovation Cluster, also known as the ‘Silicon Fen’, is one of the largest innovation hubs in Europe

Key highlights of the ecosystem

Factors contributing to region’s success

‘Cambridge Phenomenon’, a term used to explain the continuing rise of globally significant companies and innovation in the small town of Cambridge, started in 1970 with the foundation of Cambridge Science Park. Today, the region has become one of the largest technology and bioscience hubs in Europe - with companies in the cluster generating a collective turnover of almost US$15 billion.

Tax breaks, low land prices, affordable housing and low crime rate attracts large corporates, start-ups and venture capitalists

Research universities provide safe environment for start-ups to test their ideas and innovate

Start-ups and corporates get access to skilled workforce from university schools

Technology spill-overs from near-by high-tech industries and start-ups further fosters innovation

corporations, venturecapitalists and start-ups are part ofthe cluster

unicorns have originated from the cluster so far

164700+people are employed in the ecosystem

~61,000


Multinationalsneedtoleadthedevelopmentofregionallyintegratedsupplychains,establishingregionalcontrolhubs,creatingnewdataexchangemechanismsandsupportingregionalpartnersintechnologyadoption.

Supplierslookingtoenterregionalnetworksneedtooffernewinnovativepropositions,implementrequiredqualitystandardsandworkwithotherecosystemparticipantstoimprovetheirtechnologyreadiness.

BusinessesneedtodriveinnovationtoaddressAsiaPacific’surgentneedforchange,withthegovernmentactingasfacilitators,academicbodiesascollaboratorsandfundingbodiesasscoutstofindfuturechampions.

Theinnovationecosystemneedsgreatercross-borderfocus.Intra-regional collaboration has become crucial to innovating faster by addressingresourcegapsandsharingbestpractices.


Key takeaways

Rebalancing global supply chains with regional networks offers new opportunities for both large and small-scale firms in Vietnam and across Asia Pacific. However, companies need to strengthen their capabilities with innovation to ensure they remain competitive."

Van Dinh Thi Quynh

CountrySeniorPartner, PwC Vietnam


Leh City, India

Expanding and future-proofing the labour force

Pillar four

PlanstorebuildAsiaPacificrequirestrongsupportfromtheregion’speople,whichnecessitatesexistingworkforceskillstobereconfiguredinalignmentwiththegrowthpillarsofthefuture.

Systemicchangesneedtobeinitiatedtodaytoidentifyandaddressgaps in skilling next-generation employees entering the region’s future workforce,targetinginterventionsfromanearlyage.

COVID-19hasdisruptedthetraditionalworkplaceenvironment,providingan early view into the future and presenting an opportune time to reinforce theneedforchangeanddrivenewinitiatives.

Why now?

01

02

03

JobsinAsiaPacificarechanging.AsdiscussedinPillars2and3,technologyandtradearetakingadifferentshape,drivingthedigitaltransformationof traditional value chains and regionalising new growthopportunities.Technologyincreasesproductivity,butitalsocreatesconcernsabouttheimplicationsofautomationonjobs—enhancingthe necessity of ensuring workers maintain the relevance of their skills as technology continues toadvance.Additionally,ashighlightedinPillar3,supplychainsareshiftingfocustowardsregionalmarkets,requiringnewskillsforAsiaPacificcompaniestoaddvaluetotheseemergingregionalnetworks.

No change can be successfully delivered without equippingpeopleforthefuture,whichmeanstwopertinentareasmustbeaddressed.Firstly,AsiaPacific’sexistingworkforceneedstoquicklyadapt to foster digitalisation and drive higher-value addition to avoid losing relevance in changing times.Secondly,takingstepstoenhancetheskillsand workforce participation of future employees is alsocritical,especiallyconsideringyoungpeopleaccountforalmosthalfofAsiaPacific'sjoblesspopulation.Governments,inparticular,needtoleadinbuildingthefutureworkforce,sharingtheirvisionandworkingwitheducationalinstitutions,businesses and families to develop an educational ecosystem that prepares the students of today for thejobsoftomorrow.54

The fundamental need for future-ready talent


Upskilling today to be relevant tomorrow

Need for role-specific and SME-focused effortsAsiaPacific’sworkforceisfacingawideningskillsgapontwo fronts — digital expertise and higher-value skills — owing to rapidly evolving technologies and the increasing regionalisationofbusinesses.Regionalstakeholdersshouldfocus on understanding how existing roles are evolving and identify the skills needed to remain relevant in the emerging economiclandscape.Whileitiscommendablethatbothlarge businesses and governments are investing in upskilling workforces,theseeffortsneedtobemorerole-specific,rather

than providing broad-based training that is often too focused ondigitalaspectsandonlyrelevanttoafew.ReskillingtheSMEsegmentinAsiaPacificneedstobecomearegionalpriorityaswell.Beingthemajorityemployersoftoday,transformationinthissegmentiscritical.Thereisalsoanurgentneedforsmallerfirms,astheyseektoparticipateinmoreregionalsupplychains,toprepareforthefuturebyadequatelyequippingtheirworkforces with the skills required to support larger companies seekingalternativesuppliersandproduction centres.

Designing a holistic reskilling program An effective reskilling strategy not only addresses the needs of companies and individuals but also considers wider critical development areas for the relevant industry and the country inwhichitisbased,todrivegreatervalueadditionandboostlong-termnationalgrowth.Toexpandtheirgrowthfocusfrom local to regional markets and to integrate into emerging regionalsupplychains,countriesshouldupskillpeopleforhigher value activities in industries where the country has a competitiveadvantageintheregion.Theirfocusthereforemust shift to new skills that can support the industry’s move upthevaluechain.

Toenableapurposefulupskillingprogram,companiesneedtoaligntheirgrowthstrategywiththeirindustry’strajectoryandtranslate it to workforce capability and capacity gaps to be addressed.Whilesomecompanieshavebeenimplementingupskillinginitiatives,theseeffortstendtofocusoncompany-wideandbroad-basedtraining,whichareinsufficienttobetransformative.Companiesmustinsteadfocusondevelopingtargetedskills:buildingacohesiveyetdynamicroadmapthatalignswiththeevolutionoftherole,articulatesthemilestonesandhighlightsresourcesrequiredtoachievethesedefinedgoals.Itisalsoimportanttonotethatupskillingisadynamic

processthatneedstobeundertakenwithsufficientlyagilitytoadapttorapidlychangingrole requirements.

Another cornerstone of upskilling is the empowerment and motivationofemployees.Companiesmustventurebeyonddevelopingtechnicalskills,addressingthesocialandemotionalaspectsrequiredtoovercomeresistancetochange,andmakingemployeesawareoftheimportanceofnewskills.COVID-19 has further required business leaders to undertake the new challenge of managing employees in a changing world.Buildingrelationshipshasbecomeacriticalaspectofaremoteworkingenvironment,andmoresoinAsiaPacific,where face-to-face interactions have traditionally played a significantrole.AworldreshapedbytheCOVID-19pandemicrequires business leaders to lead from afar and develop skills in managing ambiguity while adopting an approach of hyper-personalisation to motivate and support employees astheyengageinupskilling.Figure15highlightsthevariouscomponentsofaholisticupskilling approach.

Sub-pillar 1

The need for new skills at the workplace has been accelerated by the pandemic. Companies now need to act quickly in reskilling their employees, to develop an understanding of emerging technologies and tools required to stay relevant in the future. Further, these trainings must be designed and customized for all age groups, thereby supporting the workforce with new skills throughout their career journey."

Raizo Sakoda

President,HitachiAcademyCo.,Ltd.


Figure 15 Designing a holistic reskilling strategy

Key considerations for an effective corporate upskilling strategy

Develop national upskillingstrategy that aligns to industryand regional priorities

Formulate policies to enable conducivedemand and supply conditions with theappropriate incentives and support

Commit to funding upskillinginitiatives

Target initiatives to address inequalitiesin upskilling opportunities or workforcethat might fall through the cracks

Assess future business needs and identify skill gaps

• Define corporate growth strategy in line with the industry’s trajectory and translate it to the workforce capability and capacity gap, according to market, and functional priorities that have the greatest impact on delivering business value

• Develop skill architecture, map skill and competency needs

• Validate a case for change to upskill the organisation

Strategicalignment

Build a well-supported learning strategy

• Develop a cohesive yet dynamic roadmap that aligns with the evolution of the roles to prioritise

• Ensure the learning strategy is sufficiently enabled by effective organisation and deployment of resources such as how the Learning and Development (L&D) team is structured and what technologies can be leveraged to deliver on upskilling goals

Effectiveenablement

Implement a cultural shift to support change

• Develop managerial skillsto manage ambiguityand adopt a hyper-personalisation approach to motivate employees

• Venture beyond developing technical skills to address employees’ social and emotional skills to strengthen resilience

• Align financial reward and incentives, talent and performance management to upskilling goals

• Set up a change strategy. For example publish success stories, use gamification to increase participation

Empowermentfor change

Tailor training to specific firm and employee needs

• Employ a role-specific approach. Define granular job level skills to assess employee skill profile and customise learning needs

• Develop an engaging and accessible learning experience with innovative approaches, tools and technologies to enhance effectiveness. For example encourage collaborative social learning through support groups, online platforms or informal meetings

Targetedlearning

Enable continuous review review to ensure relevance

• Integrate organisational capability needs and upskilling progress into the yearly planning cycle

• Measure Return on Learning Investment and Employee Engagement

• Link indicators to business performance data to create visibility for business impact

• Set up processes to continuously assess effectiveness and iteratethe approach

Agility forgrowth

Government enablers to support upskilling

Source:PwCNewWorldNewSkillsReport,PwCFutureofGovernmentReport,PwCdiscussionswithsubject-matterspecialists



Case example

Talent initiative by Asia Pacific Economic Cooperation (APEC)

APEC forum

Theimportanceofintegratingelementsacrossnational,enterpriseandindividuallevelsisreflectedinAPEC’stalentinitiative.Recognisingtheimportanceofdefiningskillgaps and connecting them with academic institutions and trainingproviders,APECdevelopedasetofdatascienceand analytics competencies in 2017 to serve as a resource

to equip academic institutions and training providers acrossAPECeconomies,aligningcurricula,coursesandprogramstohelpfillthegapbetweenskillsandemployerdemand.Thiswasfollowedbyanindustry-drivenimplementation roadmap that informed training institutions onthedeliveryoflearning outcomes.55

Step 1

Analyse and define the upskilling initiative

Step 2

Define the future workforce

Step 3

Assess the current competencies

Step 4

Find the best match possible

Step 5

Train the new competencies

Step 6

Monitor, evaluate and improve policy

• Collaboration across multiple ministries, trade unions and associations to align on a common national skills strategy

Important considerations for an effective upskilling strategy

• Conduct future manpower planning to drive targeted upskilling efforts

• Identify employees at risk, assessing the best option for employee on the internal or external labour market

• Ensure employees are accompanied by personal advisor and coach, supported by evaluation with AI tools

• Use job-matching and job suggestion tools taking into account vacancies and the skills gap towards new job

• Broaden trainings to cover digital, technical and soft skills

• Use digital platforms to drive labour mobility

• Conduct regular monitoring and evaluation supported by internal communications

• Provide support to ensure smooth progress of the initiative • Minimise the workforce fallout by subsidising training cost, whether it is for internal or external placement

Key steps in the Luxembourg Digital Skills Bridge programme

Role of companies

Strategicalignment

Strategicalignment

Effective digitalenablement

Empowermentfor change



Empowermentfor change Targeted learning

Agility for growth

Fundcommitment

Addressworkforce fallout

Source: European Commission, PwC Upskilling for Competitiveness and Employability Report, PwC analysis

Enabling role of government

The Luxembourg Digital Skills Bridge initiative is designed to minimise workforce that falls through the cracks , by adopting a common vision that addresses the implementation challenges at every level

Luxembourg Digital Skills Bridge Initiative

Theinitiativedemonstratestheimportanceofhavingawell-definedgovernmentvisiontodriveimpact.In2018,thegovernmentofLuxembourg(MinistriesofEducation,LabourandtheEconomy)joinedforceswithtradeunions,industryassociationsandbusinessestoformtheLuxembourgDigitalSkillsBridgeinitiative,

jointlydevelopinganationalskillsstrategythatengagedcompanies to develop manpower plans and identify employeesatriskduetodigitaltransformation.Theinitiativefocusedonfosteringlongtermemployability,evenif that meant investing in employees who might move to othercompaniesinthefuture.56


Exploring partnerships to drive SME upskillingEffectiveupskillingeffortsrequireacustomisedapproach.Thisisanuphilltaskformostcompanies,butitisparticularlychallengingforSMEs.SMEstodayformthebackboneoftheAsianeconomy,accountingformorethan98percentofbusinessesandprovidingtwooutofthreeprivatesectorjobsintheregion.Assuch,ifSMEskillscanbeenhancedmostoftheregion’sworkingpopulationwillbenefit.KeySoutheastAsianmarketssuchasMalaysia,Thailand,IndonesiaandthePhilippines show a stronger need for an intervention in this regard(seefigure16),havingsignificantSMEemploymentandlowerdigitalmaturityintheSMEsegmentatpresent.57

Figure 16 Relevance of SME digital upskilling in Asia Pacific

0 10 20 30 40

SM

B D

igita

l Mat

urity

Ran

king

(201

9)

SME share of total employment (%)(latest data available: 2016-2018)

Countries that have thegreatest opportunity toupskill people throughtheir SME’s

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

SingaporeR

egio

n m

edia

n: 6

8%

50 60 70 80 90 100

Countries that need to continue their emphasis on SMEs to ensure broad-based digital upskilling

Japan

AustraliaSouth Korea

China

Hong Kong SAR

New Zealand

MalaysiaThailand

Philippines

Indonesia

Region median: 6.5

Vietnam

Notes:SMEshareofemploymentdataforBrunei,Myanmar,Cambodia,Laosisnotavailable. Digitalmaturityassessthecompany'sdigitalcapabilitiesinstrategyandorganisation,processandgovernance,technologyandpeopleskills.CISCOdefinedSMBasbusinessesthatemploy50-499employeesacrossFinancialServices,Infrastructure,Manufacturing,Services,PublicSector,RetailandWholesale. APECcapturesdatainalignmentwitheachcountry'sdefinitionofanSME.

Source:AsiaPacificEconomicCooperation(APEC),CiscoSMBMaturityIndex


Shanghai, China

Figure 17 Partnerships between industry majors and SMEs

Value add of industry majors to SMEs Benefits industry majors can get from partnerships

Provide access to network and sphere of influence to establish credibility, mobilise stakeholders and gain commitment in initiatives

Transfer technical expertiseto align with up-to-date industry developments to ensure relevance

Share industry experience to understand which skill sets are most needed

Get embedded into the ecosystem to benefit from economic growth

Integrate brand, technical tools and products into the ecosystem

Demonstrate commitment to investing in the region to the government

Gain from potentially lower costs, better quality control, reduction in vulnerability in supply, compliance to local content requirement, better access to market and increased customer base

Support maturity of the customer market to provide greater value-adding activities and obtain economies of scale e.g. banks training SMEs on fintech

Improve commercial position by developing the supply chain

Build market for the futureby developing the customer’s sophistication


However,SMEsfacelimitedaccesstofinanceandalackofmanagementexpertise,curtailingtheirpotentialtodriveupskillingandenabletransformation.Whengovernmentsprovidesupport,itisoftenintheformoftrainingcontentthatis too generic or characterised by a lack of co-ordination from governmentagencies.GovernmentsthereforeincreasinglyneedtoenableSMEstolearnfromtherightinstitutions,ratherthandelivertheseprogrammesthemselves.58

A more fruitful approach could see smaller companies formpartnershipswiththeirindustry’smajorcompanies.ThisenablesSMEstolearnfromindustryexpertsintheecosystem,becauseindustrymajorspossessthenetwork,expertiseandexperiencetostronglysupportsmallerfirmsastheyengageinupskilling.Suchanassociationcanhelplargercompaniesinassimilatingtheirbrands,technicaltoolsandproductsintoanecosystem,whileallowingSMEstoembedthemselvesinregionalsupplychains.Effortstodevelopsupplierscanalsobenefitlargecompaniesintheformoflowercosts,betterqualitycontrol,reducedsupplychainvulnerabilityandstrongercompliancetoindustryrequirements.Similarly,onthedistributionside,byhelpingsmallerpartners,industrymajorscanbenefitfromimprovedmarketaccessandlowerdistributioncosts.(seefigure17).59

We believe helping SMEs and our business partners with digital transformation and the know-how will enable the entire supply chain to become more competitive, which in turn improves profitability for all. We have collaborated with various partners across a variety of platforms such as MY Digital SME, to provide practical modules, seminars and insights to small and medium-sized enterprises, to help them bridge the digital gap."

Albern Murty

Chief Executive Officer,DigiTelecommunications


Case example

Singapore

SkillsFutureSingaporehasidentifiedindustrymajorsas“QueenBeecompanies”todriveemployer-initiatedskillsdevelopmenteffortsandtrainthesectorbeyondtheirownneeds,especiallySMEs.AsofJuly2020,thereare17 “QueenBeecompanies”,includinglocalfirmsaswellasforeigncompanies.60

China

China’sNationalDevelopmentandReformCommissionhaslaunchedaprogrammeincooperationwithmajorenterprisesandotherstakeholderstoestablishonlineplatformsthatsupportSMEsintheirdigitalisationjourneys.TheseplatformsareaimedatprovidingtargetedassistancetoSMEsindigitalmarketing,smartpayments,onlinefinancinganddigitalmanagement–strengtheningtheircompetitiveadvantagethroughcostreduction,efficientsupplychainmanagementandincreasedonlinetraffic.Theplatformsalsofacilitatevocationaleducationtrainingsthroughonlinecourses,tohelpSMEsupskilltheirworkforcetonewdigitalcapabilitiesrequiredforanorganisationaltransformation.61

SkillsFuture Singapore has identified Bosch Rexroth as one of its “Queen Bee” companies to influence other companies, particularly SMEs to drive skill development efforts

Bosch Rexroth’s value add to the programme

How its value is captured in the programme design

Industry knowledgeNetwork and expertise Trained personnel

Drives proof-of-contents and encourages enterprise adoption in advanced manufacturing technologies

Co-develops training content with Singapore Polytechnic by:

• Validating the relevance of skills training

• Providing global insights on emerging jobs and skills required in advanced manufacturing

• Producing bite-sized modules to help manufacturers transform

Trains a pipeline of Industry 4.0 specialists who will be certified by the Singaporean-German Chamber of Industry and Commerce

To train about 1,500 workers and support 300 companies in five years

Target impact

Source: Robert Bosch (SEA) Pte Ltd, PwC analysis

Developing the SME sector through industry partnerships


Preparing the employees of tomorrow

Need for a government-led strategic vision AsiaPacificconstitutes60percentoftheworld’syouthpopulation,whichrepresentsasignificantsourceofenergyandcreativity.Thoughonly20percentoftheregion’sworkerstodayareagedbetween15and24years,youngpeopleaccountforalmosthalfofAsiaPacific'sjobless.Thisisamajorconcernandhasthepotentialtointensifyifnourgentstepsaretaken.Unlessjobsofappropriatequantityandqualitycanbecreated,thesocialandeconomicgrowthpotentialoftheregioncouldbecompromised.Tothatend,itiscriticalforgovernmentstodevelopawell-definedvisionthatallowsvariousparticipantsintheeducation“ecosystem”(includingindustryplayers,academicinstitutionsandfamilies)tocollaborateonthebasisoftheirstrengths.Governmentsneed to articulate a compelling vision of what the future looks like,highlightingstrategicsectorsandthecorrespondingmanpower capability and capacity gaps that need to be addressed.TheCOVID-19pandemichasreducedresistancetochangeamongstpeople,andhasthereforeprovidedanopportunitytotakeharddecisions.Besidesthis,developinga cohesive strategy that translates this vision across the “educationjourney”andengagesvariousstakeholders—parents,educationalinstitutions,industryplayersandinvestment promotion agencies — is also pivotal for tangible changetotakeplace.62

Connecting government’s vision to the larger ecosystem Aligning the education ecosystem to a distant vision is not an easytask.Governmentsreinforcethevisionwithpoliciesorinvestments,buttheCOVID-19pandemichasalsoprovidedthe world with a window to the future — giving everyone from children and parents to employees and employers a preview ofnotjustwhatatransformedschoolandworklifewillbelike,butalsoachancetoliveittoo.Thisrealpremonitionhasenabledtheworldtoappreciatehowjobsmaychangeandwhatskillswillbeneededtobesuccessfulinthefuture.Governmentsnowneedtoleveragethissuddenchangetoredefinecareerreadinessandempowerchildrenwiththerightskillsforanewspectrumofroles.

GovernmentsinAsiaPacificneedtoleadfromthefront,firstby identifying priorities for future growth and the associated sectorsdrivingthese,andfollowedbyarticulatingnewrolesandresponsibilitiesrequiredfromthoseineducation,businessandthebroadersociety.Thevisionmustbebroughttolifefromthepreschoolleveloftheeducationjourney.Governmentscanstartbyreshapingcareerperceptionofjobscriticaltothecountry.Theuniquevalueofcriticalprofessionscanbebroughttolifethroughstorybooks,nurserysongs,playgroupsandactivitycornersintheclassroom.Finally,beingkeyinfluencers,parentsneedtobe actively engaged through workshops or communication campaigns to support what the government and the school aretryingtoachieve.

Sub-pillar 2


Kyoto, Japan

The government of Japan is working with industry players and academic institutions to transform the education system in order to prepare for Society 5.0 - a next-generation society living with technologies such as AI, IoT and robotics. The transformation plan stresses on development of human skills such as communication, leadership and endurance, while also emphasising on building basic digital skills for all."

Raizo Sakoda

President,HitachiAcademyCo.,Ltd.

Figure 18 Industry players partnering with schools to upskill students throughout the education journey

Source: Company websites and press releases, Economic Development Board of Singapore, Press articles

Senior school(Around 14 – 18 years old)

Creating pathways to enter into aerospace industry

Boeing Defence Australia has created pathways for Queensland high school students through student projects, scholarships, awards and student outreach programmes, to enter into careers within the aerospace industry.

School-to-work transition(20 year old onwards)

Entering new partnerships to cultivate a robust talent pipeline

Saint Gobain, a French construction multinational worked with IIT-Madras to recruit 100 IIT graduates to intensify its R&D focus in India. Selected IIT-Madras researchers were sponsored for research-based doctoral programmes and short-term research grants, and later joined the company as industrial researchers.

Tertiary school(Around 19 – 23 years old)

Placing students directly intoaerospace projects

BAE Systems has partnered with Newcastle University Australia to place students directly into aerospace projects, in between their university studies.

Preparing teachers for education system ready for Industry 4.0

British University Vietnam launched the International Centre for Excellence in Learning and Teaching to help teachers adapt the education system for Industry 4.0. Educators will learn how to shift from teacher to learner-centred approaches, to provide students with critical thinking capabilities required for innovation

Junior school(Around 8 – 13 years old)

Helping children build self confidence and a passion for learning

Telstra has partnered with Code Club Australia to provide coding lessons to children 9-11 years old. These sessions emphasize fun, creativity and learning through exploration. Children are trained in programming by creating games and encouraged to think creatively.

Immersing children in computational and creative thinking

Google organises a “Code to Learn Contest” for students 10 to 18 years old every year. It gained traction in India and is adopted by the Ministry of Human Resource Development, Government of India.

Source:Companywebsitesandpressreleases,EconomicDevelopmentBoardofSingapore,Pressarticles

Asstudentsprogresstojuniorandseniorschool,governments can collaborate with industry players to better understandthetaxonomyoffuturejobs,andenabletargetedinterventionsgearedtowardsthecountry’sgrowthambitions.Withreal-worldinputsfromindustryplayers,curriculacanputmoreemphasisoncareerexploration.Activitiessuchas exploratory camps and skill competitions can help ignite studentinterestsinspecificareassuchascoding,whilebuilding their imagination and awareness — self-navigational skills that can guide them in an increasingly complex and uncertainworld.Figure18showcasesexamplesofhowcorporationsinAsiaPacificarealreadyparticipatinginshapingthefutureeducationjourney.

Higherlearningiswheremanystudentsmaketheleapfromeducationtoindustry;itisalsowheremanyareatriskoffallingthroughthecracks.AsiaPacifichasbeenheldbackbythelackofindustry-readygraduates,atrendthatisacceleratingasdigitalisationtransformsbusinessmodels.Inaddition,theeducationsystemissaddledbyanincreasinggapbetweenvocationalschoolsanduniversities,whichisfuelledbyculturalbiasesinmanyAsiaPacificnations.63

Governmentscanplayapivotalroleinbridgingtheskillsgapbyfocusingontheseissues.Animportantleveristotailor public funding to targeted interventions and learning outcomes.Thiscancomeintheformofincentivestoimproveworkplacetraining,developmentofnationalcompetency

standardsthatreflectcriticalskillsinkeyindustries,ormeasures to ensure educators are adequately equipped todeliverindustry-relevantlearningoutcomes.Bybringingforeign investments into strategic sectors and solidifying the demandforspecificskills,governmentscanpresentamorecompelling case for a student to embark on an educational pathway.Governmentsshouldalsore-examinethepossiblepathways suitable for students to meet different industrial needs.Theeducationsystemshouldalsoreflectashiftinemphasis from purely pursuing academic grades to building astudent’sresilienceinthefaceofchange,developingawillingnesstotakerisksandinnovate,andfosteringtheabilitytocharterself-directedlifelonglearning.64


Case example

Collaboration to develop tailored job competencies — Meister Network in South KoreaSouthKoreahasdevelopedaninnovative,demand-oriented approach to address skill gaps in its labour market.Tostrengthenvocationalskillsfordirectlabourmarketentry,SouthKoreahasestablishedanewpathway,theMeisterschools,eachofwhichisdedicatedtostrategicindustries.Thecurriculumandcertificationareco-developedbymajorcompaniesanddeliveredbyfacultythatincludesindustryexperts,whileofferingtuition fee waivers and guaranteed employment from

certainparticipatingcompanies.RecognisedbytheWorldEconomicForum,theOrganisationforEconomicCo-operationandDevelopment(OECD),theAsianDevelopment Bank and the Centre on International EducationBenchmarking,theMeisterschoolsystemprovides a best-practice reference to nurture industry-readygraduates.65

Source: National Centre on Education and the Economy, Asian Development Bank, World Economic Forum, Organisation for Economic Co-operation and Development, PwC analysis

Identifies strategic industries that each Meister school specialises in, jointly done by several ministries

Co-develops industry-specific curriculum (text book and graduate certificate) based on job-specific competencies

Provides equipment, facilities, scholarships,mentoring and training

Ensures guaranteed employment with established firms / conglomerates

Funds school operations

Opens recruitment of principals to established industry professionals

Provides faculty members that received long-term in-house industry training, including industry experts

Government Industry Industry Government School School

Roles of stakeholders to enable the key features of the programme

South Korea developed the Meister network of schools to strengthen industry-academia collaboration in developing job competency tailored to industrial needs

Strategy Key features in pathway designKey features in

pathway deliveryOutcome

Develops a new educational pathway, a Meister network of high schools that specialise in experiential education, each school customised to strategic industry sectors

Satisfies industrial demand for quality and quantity of graduates that are industry-ready

Encourages a higher sense of status to restore positive perception and shift society’s focus from academic degree towards performance

Industry-orientedcurriculum

Stable employment prospects

Tuition fee waiver

Industry-oriented delivery system

1 2 3 4

Moving forwardCOVID-19 has turned upskilling from being a human resource projecttoastrategicimperativeforcommercialsurvivalthathasreconfiguredthewaypeopleworkandcontributetofuturegrowth.Witharole-specificreskillingagendaalignedwiththeindustry’sgrowthplans,businessescanmoresuitablydevelopafuture-readyworkforce.TheSMEsectorinparticulariskeytoenablingvisibleimpact,andbypartneringthemwithindustrymajors,amutuallybeneficialstrategycanbecreatedtoelevateskilldevelopmentforthesegment.

Governmentsalsohaveacriticalroleinsettingoutaclearvision and pushing engagement across the ecosystem todeliverchange.Besidesmovingtothesenewroles,developingmechanismstoenablelife-longlearning,policiesto harness regional talent mobility and future-ready social safetynetshavebecomecrucialforlastingsuccess.


Initiatives to upskill the existing workforce need to be aligned with specificindustriesandrolesrequiredtosupportthenation’smoveupthevaluechain.

Businessesneedtodesignacohesiveandagiletalentdevelopmentplan,inlinewiththeindustry’sgrowthtrajectoryandevolutionofspecificroles,whileenablingaculturalshiftthroughpersonalisedinterventions.

LeadingfirmsneedtoworkwithSMEsintheirsupplychains,extendingmarketandtechnicalassistancerequiredtomakethemfutureready,inturnbenefitingfromoptimisedcostsandlowersupplychainrisks.

Governmentsneedtoleadindevelopingthefutureworkforce,articulatingtheirvisionsforgrowth,creatingincentivesforchangeanddrivingtargetedengagementwithotherparticipantsintheecosystem.


Key takeaways

Companies need to adapt flexible and creative talent plans as per the country's growth vision, to ensure industry relevance and future readiness of the workforce. Continuous engagement with the government, education and other professional institutions as well as the community will be necessary to appropriately skill the next generation."

Amy Cai

OneFirmServiceManagingPartner,PwC China


Bali, Indonesia

Building climate change resilience towards a net-zero future

Pillar five

Rising instances of climate disasters have raised questions over the viabilityofhistoricalmodels,moresowithAsiaPacificbeingregionoftheworldmostimpactedbyclimatechange.

Fast growing urbanisation and consumption are making emissions and wastemanagementamajorchallenge,requiringaconcertedefforttomovetowardsanet-zeroeconomy.

Foodsecurityconcernsarebecomingcritical,consideringhighlevelsofundernourishment,asizeableandexpandingpopulationbase,decliningresourcesandfrequentweatherdisruptions.

Why now?

01

02

03

Enabling a sustainable future by moving towards a net-zero economy has never been more urgentforAsiaPacific,withrisinginstancesofclimate-led disasters demonstrating the need to redesign historical strategies bent heavily towards commercialviabilityoverenvironmentalimpact.Managingtheclimatechallengeisparticularlyimportant for a highly populated region such as AsiaPacific,whichisalsoregardedasthemostdisaster-proneintheworld.Forallitsnegativeconsequences,theCOVID-19crisishasprovidedthe world with a shared experience that has helped build a common purpose within the region’ssocieties,creatinganunprecedentedopportunity for governments and businesses to build a more sustainable growth model for the future.66

However,shiftingtowardsanet-zerofutureforaregionasvastasAsiaPacificisnoeasytask,and will require concerted efforts from multiple stakeholders—governments,businessesandsociety—andsectors,suchasenergy,utilities,agriculture,industrialproduction,transportation.Thiswillrequiretheentireregionaleconomytochangeitscurrentwaysofworking,fromhowitgeneratesrawmaterials,tohowitconsumesresources,tohowitmanagesemissionsandwaste.Risingurbanisationandconsumerismcontinuetoincreaseemissionsandwaste,intensifying the need to establish a stronger circulareconomy.Enablingnewpartnershipmodels and adopting sustainability-driven strategies for business growth have now become criticaltomovetowardsanet-zerofuture.Theagriculturesectoralsoremainshighlyvulnerable,witnessingproductivityconcernsand resourcescarcitiesthatthreatenfoodsecurity.Technologyoffersanewwaytoaddresstheseissues.67

Reinforcing the need for sustainability


Building solutions for a net-zero circular economy

Addressing a deepening urbanisation challengeEven with COVID-19 reshaping historical urbanisation trends insomemarkets,urbangrowth,drivenbytheneedforemploymentwithintheregion,willcontinuetobestrong.WithAsiaPacificalreadyfindingitchallengingtomanageitsexistingpopulationburden,thisprojectedgrowthismakingrisingemissionsandwaste,andgrowingresourceshortagesamajorconcernforthefuture,necessitatingaconcertedpushtowardsanet-zeroeconomy.AsiaPacifictodayaccounts for the highest share in carbon dioxide emissions (53%)andmunicipalsolidwastegenerated(40%)annually,withonly19%ofgloballygeneratedwasteundergoingmaterialsrecoverythroughrecyclingorcomposting,whichhighlightsamajorgapintheefficientuseofnaturalresources.Consideringthescaleofchangeneeded,ithasbecomeessentialforbusinesses,governmentsandsocietyto collaborate and move towards enabling a net-zero future forAsiaPacific.68

A growing shift in consumer attitudes and rising interest from the corporate sector have created opportunities to build support for tougher decisions that prevent lives and livelihoods from being lost to the growing environmental threats.Ridingonchangingsocietalpreferences,governments must now aim for policy changes that can reduceemissions,improveresourceutilizationandtrimwastemanagementcosts,whilebusinessesneedtodiversifytonew sustainability-led options that can help strengthen their long-termprofitability.

Sub-pillar 1

We see a change in attitude among investors and business partners towards sustainability. As consumers become more conscious of the environment and aware of the impact of global climate change, companies are adopting more sustainable business practices and are investing in eco-friendly technologies and processes to improve their brand image and drive sales."

Thammasak Sethaudom

Vice President-Finance & Investment and Chief Financial Officer,SiamCementGroupPublicCompany(SCG)


Gaomei, Taiwan

Adopting a partnership-led approach for impact Shiftingtowardsanet-zerofuturebasedontheprinciplesofcircularity — where materials are continuously regenerated and used effectively — has become central to meeting the urbanisation-drivenchallengesinAsiaPacific.However,lookingatthescaleoftheissue,newcollaborativemodelsareneededtoachievenotableimpact.Forthecirculareconomytoworkeffectively,variousstakeholdersinurbancentresneedtoplayadifferentandmoreintegralrole,formingaholistictri-entitypartnership.Suchamodelcreatesbenefitsthatcannotbeachievedbyindividualentities,withcommunity organisations taking a lead in spreading efforts forwastecollection,thecorporatesectorfocusingonmanufacturing recycled goods and government implementing incentivesforalltoparticipate.Governmentscanalsoplayaroleininfluencingconsumerbehaviour,notonlythroughinitiatives to educate but also through actions that change hardenedhabits.Thismayinvolveofferingincentivestousesustainablealternatives,adoptingunit-pricingmodels(pay-as-you-throw) to impose costs on less favourable behaviour, orintroducingrestrictionsfortheuseofnon-biodegradablematerials.69

Case example

Unified multi-stakeholder initiative in PeruPeruvian city authorities partner with social organisationstohandlewastecollection,whichisundertaken by those working as waste-pickers in the informaleconomy.Bottlingcompanies,manufacturersand waste exporters buy these materials to produce recycledgoods.Thegovernmentthenworkswiththe private sector to develop a domestic market for theseproductsandsharespromotioncosts.Thistri-entity partnership has helped improve the reach of wastecollectioneffortsforthegovernment,benefitingproducers by reducing transport costs and a reliance onmaterialimports,whilstalsocreatingnewincomeopportunitiesforvulnerablesectionsofthesociety.70


Cape Peron, Australia

Case example

Waste management efforts in Asia Pacific

A collective effort is required to drive sustainability in Asia Pacific. Governments need to set clear targets and initiate policies that encourage and incentivise private sector participation in infrastructure development and investments. The corporate sector also needs to take a larger responsibility towards society and the environment, providing innovative solutions that are not only commercially viable but also sustainable."

Allard Nooy

ChiefExecutiveOfficer, InfraCo Asia

Japan has developed strong expertise in circular economy systems through government and community-led initiatives

Pioneering regulations such as the Japanese Home Appliance Recycling Law have been instrumental in driving a shift in consumer behaviour, and in incentivising companies develop new technologies to sort waste more effectively.

Further supported by non-profit organisations such as the Green Purchasing Network that publishes green purchasing guidelines and runs a platform with environmental information on more than 15,000 products and services, to help develop a market for sustainable products.

Additionally, other organisations such as the Zero Waste Academy have undertaken initiatives to strengthen community participation, such as in the town of Kamikatsu, where 80% of waste gets recycled today. To achieve this, multiple dialogue sessions were organised to explain the social and economic benefits of recycling to citizens – helping convert residential groups as early advocates. Waste collection centres were developed into hubs for social gatherings, with shops and crafts centres being set-up to push stronger engagement. To further improve participation, local businesses are regularly assessed for waste reduction efforts, and consumers are encouraged to purchase from these enterprises. Together, these efforts have enabled savings of around one-third of costs associated with the earlier practice of waste incineration.

India-based industrial conglomerate, the O.P. Jindal, operates two waste-to-energy plants in the states of Delhi and Punjab, while eight other projects are under implementation in the states of Delhi, Punjab, Gujarat Andhra Pradesh and Rajasthan.

New tech-based ventures in India are also introducing innovative ways of solving the country’s waste management problem, such as:

• Banyan Nation, a plastic recycling firm uses its proprietary technology to convert post-consumer and post-industrial plastic waste into recycled granules – comparable in performance to virgin plastic. To improve waste collection, it uses a mobile, cloud and IoT-enabled platform connecting informal waste-pickers and recycling aggregators to its supply chain. It also provides data assistance to city authorities to improve their understanding of waste flows.

• Another start-up, Kabadiwalla Connect serves as an online platform for waste management, connecting waste pickers in the informal sector with recycling facilities.

Source: World Economic Forum, Company websites, Press articles

Businesses in Asia Pacific are also playing a key role in strengthening the circular economy infrastructure in India


Diversifying to sustainability-led business models While governments may be looking to re-prioritise some of their planned sustainability investments into more immediatepost-COVID-19considerations,consumersnowseemtobetakingcharge.ConsumersinAsiaPacificareincreasinglyshowingapreferenceforeco-friendlyproducts,supporting ethical sourcing practices and solutions that can helpmitigateenvironmentaldamage.Thesetrendsarenotlimitedonlytohigh-incomeeconomies;agrowingsectionofmarketssuchasChina,IndiaandIndonesiaarealsoshowingawillingnesstopayforsustainableproducts,atrenddrivenby theMillennialandGenerationZdemographics.ThisshiftingconsumermindsethasbeenacceleratedbytheCOVID-19pandemic.71

Thesetrendsindicateamajoropportunityforbusinessesandsignifyanopportunetimetorecalibratetheirgrowthplans.Alignedwithchangingconsumerpreferences,companiescandiversify into new sustainable products and business models intheyearsahead,helpingthembuildstrongerdifferentiationandloyaltyforthehighlycompetitiveworldoftomorrow.Manyoptionsarealreadybeingexploredbyfirst-movers,includingnewbusinesspractices(e.g.sustainablesourcingofrawmaterials,usingemissionby-productsasinputs),newproductlines(e.g.usingbiodegradableplastics,designsrequiringlesspackaging,clothingfromrecycledtextiles)andnewmarketpositioningstrategies(e.g.sharedeconomybusinesses,product-as-a-servicemodels).72

Case example

Sustainability-led growth model for a global consumer goods companyGlobalconsumergoodscompaniessuchasUnileverhave increasingly been incorporating sustainability-led practicesintheiroperationalmodels,undertakinginitiatives focused on reducing their environmental impact and improving livelihoods of community members.Byadoptingmoresustainability-focusedstrategiesoverthepast10years,Unileverhasbeenabletoreduceitscarbondioxideemissionsby65percent,loweritswastefootprintby32percent,andsustainablysource more than 60 per cent of agricultural raw materials while connecting 100 per cent of its facilities to renewablegridelectricity.73

Whiledenotinganotableinvestment,thesestepshavealsohelpeddrivenewbusinessandreducecosts.Accordingtocompanyresults,sustainability-focusedbrandsforUnilevergrew69percentfasterthantherestofthebusinessanddelivered75percentofthecompany’sgrowthin2018.UnileverhasalsobeenabletosavemorethanUS$1billionincostssince2008byimprovingwaterandenergyefficiency,usinglessmaterialandproducinglesswaste.Thecompanyconsiders its sustainability program to have further improvedemployeemotivationandattractfreshtalent.Drivenbytheseresults,Unileverhasnowsetevenboldersustainabilitytargetsfor2025withasignificantfocusoncirculareconomysolutions.74

As a company dealing with natural resources, sustainability has always been imperative for us to achieve long term growth. Moving towards becoming a more environmentally and socially conscious business, we strive to significantly reduce our greenhouse gas emissions and work collaboratively with our partners across the global supply chain to promote ethical sourcing."

Yuuko Iizuka

GeneralManager- SustainabilityDepartment,SumitomoForestry


Guilin, China

Figure 19 Farm-to-fork value chain challenges impacting Asia Pacific

Farming Food distributionand retail

End consumerFoodprocessing

• Low farm productivity in emerging markets, from:

(a) Declining input resources

(b) Inefficient farming practices

• Crop losses from plant diseases and pests

• More frequent weather disruptions

• Challenges to sustaining future farming income

Rising food losses due to:

(a) Inadequate or inefficient facilities

(b) Removal of imperfect products

• Fast changing product demand patterns

• Stricter food labelling requirements

• Environmental impact of plastic packaging

Rising food losses, due to:

(a) Poor storage conditions (humidity, temperature)

(b) Prolonged storage due to lack of transport

(c) Improper handling of products

(d) Overstocking at retail outlets

• Need for supply chain visibility to manage risks

• High undernourishment in lower income segments / markets

• Rising obesity and diet-related diseases

• Food security and safety concerns, for a growing population

• Growing food waste from impulsive buying, large packaging sizes, bulk discounts


Adopting technology to address food and agriculture concerns

Vital concerns over productivity and food securityFoodsecurityisamajorchallengeforAsiaPacific,withalmosthalfabillionpeoplesufferingfromundernourishment,asof2019.Theregionisprojectedtoadd another295milliontoitspopulationby2030,representing55percentoftheworld’spopulationbutwithonly25percentoftheworld'sagriculturalland,increasingthemagnitudeoftheproblem.Moreover,agriculturalproductivityremainslowinmanydevelopingmarketsduetodecliningnaturalresources,inefficientfarmingtechniquesandmorefrequentweatherdisruptions.

Movingfurtheralongthevaluechain,foodproductionistodayresponsibleforalmost25percentofgreenhouseemissions,whilefoodsafetyconcernsacrosssupplynetworkshavealsobeenontherise.75 Figure 19 summarises variousfarm-to-forkissuesconfrontingtheregionatpresent.

Sub-pillar 2


Otherthanimpactingfoodavailability,managingthesechallengesisalsocriticalfromasocio-economicperspective,considering many regional markets depend on agriculture as theirprimarysourceoflivelihood.Besidesitshigheconomiccontributiontolower-incomeeconomiessuchasMyanmarandCambodia(morethan20percentofGDP,byvalue-added),agriculturealsoaccountsformorethanaquarterofthelabourforceinmarketssuchasVietnam,ThailandandIndia(seefigure20).Ifleftunchecked,lowproductivityandclimateissuescouldnegativelyimpactsectoremployment,increasingthepotentialforsocialunrest.Agriculturalimprovementsarealsoimperativeforinclusivegrowth,witha1percentincreaseinagriculturalGDPperworkerexpectedtobetwiceaseffectiveinreducingextremepoverty,ascomparedtoasimilarriseinindustryorservices.76

Strong potential for agritech investments Asapriorityarea,AsiaPacificrequiresagreaterfocusontechnology infusion and knowledge capital to address the criticalissuesdescribedabove.Emergingagritechsolutionscanhelpimproveresourceutilization,enhanceaccesstoinformation,improvevisibilityacrossfoodsupplychainsandprovidealternativefoodchoices,leadingtohigherproductivity,strongerfoodsecurityandresiliencetoclimaterisks.ConsideringtheenormousscaleofAsia’sneeds,thereismajorscopeforinvestmentsintoagritech.AccordingtoPwCestimates,annualinvestmentsofUS$80billionarerequired over existing levels to meet Asia’s requirements by2030,providingamajoropportunityforinnovators,businessesandgovernmentstakeholders.Asignificant51percentofthisinvestmentisneededinChina,followedbyIndia(27%),SoutheastAsia(17%)andJapanandSouthKorea(5%).Almosttwo-thirdsofthefundsareneededforsolutionspromisingfoodoptionsthataresaferandhealthier,while the rest is required to increase production in line with growingdemand.77

Sha

re o

f ag

ricu

lture

em

plo

ymen

t (%

) o

f to

tal e

mp

loym

ent,

201

8

Agriculture labour productivity (US$ ‘00), 2018

Brunei Darussalam

Cambodia

China

India

Indonesia

Philippines

SingaporeHong Kong SAR

Thailand

Vietnam

Lao DPRMyanmar

0

5

10

15

20

25

30

35

40

45

~55

~60

0 5 10 15 20 25 30 35 40 ~140 ~240~190 ~850~400

New Zealand

South KoreaJapan

Australia

Malaysia

Low labour productivity andhigh share of employees in agriculture

Low labour productivityand low share of employees in agriculture

High labour productivity and low share of employees in agriculture

High labour productivity and high share of employees in agriculture

Wor

ld a

vera

ge 3

4.3

World average 27

Bubble size indicates agriculture value-add as % of GDP (2018)

Technology solutions such as machine vision, machine learning, robotics and automation can help improve the yield and value of the produce through improved quality attributes, while reducing labour requirements for agribusinesses. However, these solutions require patient capital and need to be adopted at a larger scale to reap maximum benefits. Fostering relevant partnerships locally and internationally, and developing the right business models that incentivize all stakeholders for adoption will be essential for agritech to flourish."

Steve Saunders

Chief Executive Officer,RoboticsPlus

Figure 20 Agriculture employment and labour productivity in Asia Pacific markets

Source:WorldBank,FoodandAgricultureOrganisation(FAO)

Note:Agriculturelabourproductivityisindicatedbyvalueaddedperunitofinputperworkerintheagriculturesector


Case example

Asshowninfigure20,developedmarketssuchasAustraliaandNewZealandstandoutintermsoftheirhighlyproductiveagriculturesectorsatpresent,highlightingthescopeforthemtoleadregionaleffortsinbuildingsectorresilience.Manyinitiatives are already underway that other countries can learn from.

Forexample,theAustralianGovernmenthasestablishedmultipleinnovationcentrestocatertoagribusiness,suchastheMonashFoodInnovation(MFI)Centre.TheMFICentreprovidesaccesstoresearchcapabilities,consumerinsights,packaging and product design expertise and implementation assistance,andalsoworkswithAustralianagribusinesseslooking to go overseas by helping them understand consumerneeds,culturalpracticesandregulatoryconsiderations.78

Similarly,theNewZealandGovernmenthasrecentlylaunchedanindustrytransformationplanspecificallyforagritech.Theplanhighlightsactionstodevelopgloballeadership through initiatives such as creating a robotics andautomationinstituteforhorticulture,andexploringnewbiologicalmethodsofimprovingsoilnutrition.Stepsarealsobeing taken to collaborate sub-regionally with government agenciesandindustrybodiesinAustralia,tojointlybuildresearchanddevelopmentskillsandoverseas presence.79

Digital pest monitoring solution developed in AustraliaBesidesgovernmentcollaboration,thereisalsoscopefor business-led innovation to be taken outside national borders.RapidAIM,anAustralianstart-upisonesuchexample;itfocusesonreducingcropdamagewhilemakinghealthierfoodavailableforconsumers.AccordingtotheUnitedNations,20to40percentofglobalcropproductionislosteveryyeartopests,withinvasiveinsectscostingaboutUS$70billiontotheglobaleconomy.Already,morethan4milliontonnesofpesticidesareusedeveryyear,though90percentofthesepesticidesdonotreachtheintendedtarget,leadingtogrowingenvironmentalandhealthconcerns.80

RapidAIMtargetsthisissueandprovidesadigitalpest monitoring system that informs farmers in real timeofexactlywherepestsareinvading,notonlyimprovingefficacyofpesticideusebutalsoreducingitsextent.Usinglow-poweredIoT-basedsensorstodetect characteristic movements of insects such as fruitflies,thesystemcollectsreal-timesurveillancedata and provides alerts and maps to farmers on a mobileapplication.Overall,thesolutionhasbeenabletoreducethecostofpestmanagementby35percentovermanualtrackingmethods.ThedamagecausedbyfruitfliesalonecostsmorethanUS$200milliontoAustralianagriculture,whichcouldbereducedthroughsolutionssuchasthese.81

Certain considerations need to be kept in mind while adopting agritech solutions. Most importantly, the success metrics for solutions need to be clearly identified – understanding which stakeholders in the value chain will benefit from adoption, and whether their incentives are aligned accordingly. Affordability for end users will also be highly important for large scale adoption."

Justin Webb

Co-Founder & ExecutiveChairman,AgriWebb


Chiang Mai, Thailand

Enabling affordability to improve adoption Manynewagritechsolutionsareincreasinglybeingdeveloped,testedandpilotedacrossAsiaPacific,rangingfrominnovationsinfarminputs(climateresistantseeds,newaquaculturefeeds),farmandsupplychainmanagementsystems(indoorverticalfarms,blockchainorIoTenabledmonitoring),informationandtransactionplatforms(mobile-basedservices,digitalmarketplaces)andalternativefoodproteins(plantandcellularbased).However,large-scale deployment also requires focus on areas beyond technologicaleffectiveness.

Alackoffinancingremainsacriticalissueforfarmerslookingtoadoptnewtechnologies.AffordabilityisalsoamajorconcernforAsiaPacific,withabout95percentoffarmsintheregionbeingsmallinsize(lessthanfivehectares).Manyofthesmallholderfarmershavelimitedincomesandfacedifficultiesinaccessingcredit,leavingthem vulnerable to depleting resources and weather conditions.Theseaffordabilitychallengesneedtobeaddressedfortechnologicaladoptiontocreateamajorimpact,necessitatinggreatercross-sectorcollaborationtobuildfinancialsolutionsforcultivators.Anewdomainof“agri-fintech”isquicklyemerging,marryingtechnologywithfinancialsupportforthefarmingsector.82

Moving forwardAsiaPacificfacesanurgentneedtoconsciouslymovetowardsanet-zeroeconomyfuture.Risingrisk-consciousness induced by the pandemic has re-ignited the needforchange,anditisnowtimetoact.NewpartnershipsareneededtobuildacirculareconomyinAsiaPacific,fosteringdeepercollaborationbetweengovernments,businessesandthesociety.However,thepaceofchangealso depends on the ability of governments and businesses tomanagesustainabilityinvestmentswiththepandemic,makingitevenmoreimportanttojoinforces.Lastingimpact also requires these alliances to design the right incentives and monitoring mechanisms to evolve as per changingneeds.Besidesthis,businessesneedtodiversifytomoresustainablebusinessmodels,whiledevelopingnewtechnologysolutionstotacklefoodsecurity.Sharingwastemanagement and agritech expertise across the region has alsobecomecrucialtochange,butrequiresadjustmentsinaccordancewithlocalpractices,digitalreadinesslevelsandsocialconditionsindifferentmarketstodeliverresults.

Case example

Southeast Asian markets adopt new agri-fintech solutionsCROWDE,anIndonesianmobilebasedcrowd-fundingplatform connects investors with farmers looking for workingcapital.Theplatformallowsuserstoinvestin farms across Indonesia while farmers are also able toselecttheplan(interestrate,repaymentcycle)thatworksbestforthem.Inaddition,thecompanyprovidesfarmerswithtraininginfarming,financeandmarketingtotransformtheminto“agropreneurs”.Ithasbeenworking with the government to expand its reach to new villages.Asof2019,CROWDEhadmorethan60,000lendersonitsplatform,disbursingloansofaroundUS$8milliontomorethan18,000farmersinthecountry.83

Anothersolution,TunYat,isaMyanmar-basedagritechplatform that allows farmers to rent agricultural equipmentfrommachinerysuppliers,therebyprovidingcheaper access to modern technology to those who cannotaffordtoownexpensiveequipment.Usingtheplatform,farmersgeton-demandaccesstomachinery,while suppliers earn additional income from spare inventory.ThecompanyhasalsodeployedIoTsolutionsto provide machine owners with status updates on their rentedmachines.AsofDecember2019,TunYathadservedaround1,400farmersinMyanmar,with80percentofthesebeingsmallholders.84


Bagan, Myanmar

Tri-entitypartnershipsneedtobedeployedtomanagerisingemissionsandwaste,fosteringgreatercollaborationbetweenstakeholders(governments,businesses,society)tomovetowardsanet-zerofuture.

Businesses need to redesign growth strategies in accordance with changingmarketpreferences,diversifyingintonewsustainableproductsand business models that can also help differentiate and strengthen consumerloyalty.

Businesses need to lead the development of agritech solutions to address farm-to-forkchallenges,collaboratingwiththefinancialservicessectortocreatesupportsolutionsthatimproveuseraffordability.

Regional governments need to create incentives for businesses and investorstoparticipateinagritech,withcertaindevelopedmarketsbecomingcentresofexpertisethatsharebestpracticeswiththeregion.


Key takeaways

Shifting towards a net-zero future must be prioritised for a secure and stable Asia Pacific. New partnership models and technologies offer strong potential for sustainability-led growth but require bolder action to accelerate the transition."

Yuki Isogai

Partner,PwCJapan


Cebu, Philippines

Chapter three


Bangkok, Thailand


Chapter three

While the previous chapter focused on describing what should be done to build a robust future for AsiaPacific,thisconcludingchapterisacall-to-arms for regional stakeholders that highlights how the growth pillars can be put into action to havealastingimpact.ExistingchallengesandCOVID-19-related disruptions (highlighted in chapter one) have reduced trust in the system to safeguard livelihoods and deliver far-reaching improvements.Reconfiguringtheeconomyandrebuilding people’s lives now requires stakeholders to implement new growth pillars (described in chaptertwo),butnotwithoutrestoringtrustasa pre-requisitetoimplementation.

Reinstating trust needs new principles to be adoptedbygovernmentinstitutions,businessesandsociety.Withtheiractionsbeinggovernedbythesenewprinciples,keystakeholders(government,businessesandsociety)alsoneedrenewed roles to enable resilient and robust growth.Finally,thereisanimmenseneedforstakeholder collaboration to extend beyond individualnations.Collectiveactionataregionallevel has become vital to deal with the health and economiccrisisinducedbyCOVID-19,andtostrengthen prospects for balanced economic and humandevelopmentinthefuture.Thefollowingsectionshighlighttheseaspectsingreaterdetail.

Figure 21 Elements of building a collective future for Asia Pacific

Intra-regional collaboration01 Which new principles will

govern Asia Pacific’s future growth – imperative to building trust among regional stakeholders?

02 How will the role of the government, businessesand society changeto enable robust growth in the future?

03 What are the new ways for regional stakeholders and individual markets to collaborate to counter disruptions?

Trust

Business Drives

Government Enables

Society Guides

Resilience

Transparency

Key P

rincip

les

Shared purpose

Note: see page 7 for more detail of how this fits into larger picture.



Principles for the future success of Asia PacificBuilding trust to successfully execute the growth pillars requiresnewprinciplestobeadopted,especiallyamidthechangingeconomicandsociallandscapeinAsiaPacific.Thefourprinciplesbelowareimperativeforfuturesuccess,shaping how stakeholders work together to develop new opportunities and achieve tangible improvements in people’s wellbeing.85

Thisprinciplefocusesonbalancingtheinterestsofallstakeholderstoachievesharedgoalsforthefuture.Itinvolves setting future growth priorities in a way that incorporatestheobjectivesofthegovernment,businessesandsociety,strengtheningnationalcompetitivenessandbusinessperformancewhiledeliveringfinancialandsocialsecurityforpeople,therebyestablishingtrustthatallconcernsarebeingaddressed.Suchasharedvisionrequiresfocustoshiftbeyondshort-termobjectivestosolvingcriticalchallenges that threaten the longer-term wellbeing of Asia Pacific.Itrequireslookingnotonlyatanimmediatepost-COVID-19 recovery but also on converting the crisis into an opportunity to establish a more equitable system by reducing economicdisparitiesandsocialinequalities.

Globaluncertaintieshaveheightenedthecallforgovernments,businessesandsocietytodevelopgreatersafeguardsagainstpossibledisruptionsinthefuture.Inviewofthis,regionalstakeholdersneedtofocusonmakingeconomic growth more resilient by building capacity to withstandfutureshocks,andtheabilitytoadjustforandrecoverfromsuddenfluctuations.Shiftingtoregionallyintegrated supply networks and building digital value chainsarepossiblewaysofimprovingresilience,requiringcompanies and governments to work on strengthening digitaltrust,enablingagreaterdegreeofconfidencethatflowsforessentialproductswillnotgetdisruptedinthefuture.Initiativessuchastheseneedtobeprioritisedasregionalstakeholdersworkonreconfiguringthesystemwhilerecoveringfromthepandemic.

EfficientinformationsharinghasbecomeamusttodevelopingmorerobustgrowthinAsiaPacificinthecomingyears,withtransparencybeingacornerstonetosecuringastrongerbondoftrustbetweenparties.Governmentsneedto be more transparent about their policy choices in a post-COVID-19world,whilebusinessleadershipneedstoupholdthe principles of ethics and integrity and be more transparent abouttheirimpactonsocietyandtheenvironment.Societywill be more accepting of new technologies or business models if it has greater trust —driven by transparency — in regulatorsandbusinesses.Futurestakeholdercollaborationrequires that information be easily accessible to all to facilitatecohesiveeffortsanddeliverlastingimpact.

Finally,growthinitiativesneedtobeco-ownedbyparticipants,witheachpartycontributingitsstrengthsto collectively achieve results that are individually not possiblewithoutinefficientlyusingtimeorresources.Fixingaccountabilitywhilekeepingsomeflexibilitytoredesigntasksandrepositionresponsibilitiesisalsoimportant.Forthis,partnershiparrangementsbetweenstakeholdersneedtoclearlyoutlineroles,decision-makingresponsibilities,expectedbehavioursandrightsofeachparticipant,whileincludingmechanismstohelpadjustandimproveuponexistingapproaches.Establishingsuchdetailedcooperation frameworks is also essential considering cultural and organisational differences that could exist in howgovernments,businessesandcommunityorganisationsoperateindividually.

Many company CEOs are now realising the importance of purpose driven profits. They are embracing stakeholder capitalism over shareholder capitalism. They believe that taking care of every stakeholder in their ecosystem including their employees, customers, suppliers and the society at large is the best way to ensure long term profitability."

Pamela Qiu

Head,BusinessDevelopment and Engagement, Alliance to End Plastic Waste

Shared purpose1


Transparency3


Co-ownership 4


Resilience2



Reimagining the roles of key stakeholdersBesides looking at the core principles governing Asia Pacific’sgrowth,itisalsocriticaltounderstandhowvariousstakeholders(government,businessesandsociety)needto evolve to enable a strong recovery from the COVID-19 crisisandachievestablegrowthintheyearsahead.Agilityhas become a necessity in order to function effectively in a disruption-prone world – focusing not only on agile decision-makingbutonagileexecutionaswell.Lookingattheregion’srapidlychangingpolitical,economicandsocialrealities,ithastherefore become necessary for all stakeholders to perform certainnewrolesinequippingAsiaPacificforitsjourneyahead.Thefivegrowthpillarsmentionedinchaptertwocanrealise their true potential only when all stakeholders perform thesecomplementaryroles,withgovernmentactingastheenabler,thebusinesssectorbeingthedriverandsocietyplaying a guiding role in building a robust future for theregion.86

Government — enabling role

GovernmentsinAsiaPacificneedstoevolvefrombeingreactive to emerging challenges to being proactive in developingaresilientsystem.Balancingeconomicgrowthwith social progress and environmental protection has become imperative to addressing ongoing and emerging disruptions.Forthistohappen,governmentsneedtoplayan enabling role in building the future growth pillars for AsiaPacific.Thisproactive-enablerroleforgovernmentinvolves working with other stakeholders to set the right policiesandinitiativesinplace,focusingonareasthatboostnational or regional competitiveness and strengthen the local business environment while safeguarding the welfare interestsofthecitizens.Buildinganenvironmentthatallowsagile and organic innovation to thrive and new skills to be developedisalsokeytotheregion’sfuture,ashighlightedbytheenterprisegrowthandlabourforcegrowthpillars,andgovernmentinitiativesthatfostertheseobjectiveshavebecomecriticalforimpact.

Goingforward,governmentsneedtothinkbeyondimmediatereturns and continue investing in platforms that foster long-term growth such as digital infrastructure or skill development.Governmentdepartmentshavehistoricallybeen restrained with bureaucratic procedures and longer decisionmakingcycles,whichneedstobereplacedwithmore agile execution to generate future growth – allowing businesses to better manage volatilities and the society toremainsafeandsecurefromemergingdisruptions.Finally,improvingtransparencyinpolicy-making,suchastaxchangesinresponsetoCOVID-19,hasbecomeaprerequisitetoboostingfutureinvestmentsandtrade.Wheretherearecompetingpointsofview,thegovernmentneedstofoster dialogue among stakeholders to clarify the trade-offs behindpolicies,consideringnotonlypresentneedsbutalsothelonger-termpublicgood.

Governments need to enable businesses to achieve sector growth. This has worked well for innovation led sectors such as agritech, wherein the government, industry players and research institutes are working collaboratively as part of a triple helix model to diagnose key issues, develop growth strategies and undertake implementation initiatives - while being supported by appropriate policies and regulations."

David Downs

GeneralManager-Projects, NewZealandTradeandEnterprise(NZTE)


Taipei, Taiwan

A fast rising debt burden on governments has accelerated the need for broad tax reform. Asia Pacific is now left with no option but to take hard decisions towards building a more agile, growth-oriented and equitable taxation system for the future"

Tom Seymour

ChiefExecutiveOfficer, PwC Australia

Case example

Reinventing taxation in Asia PacificTheCOVID-19pandemichasnotonlydisruptedbusinessoperations and individual lives but has also impacted fiscalhealthacrossmanynations–creatingtheneedtospend more on repairing and rebuilding the economy while facingadropintraditionalsourcesoftaxrevenues,asbusinessandpersonalincomeswitnessafall.Changingconsumption and saving behaviours induced by the pandemic will also have longer term implications on how governments raise funds and prioritise areas for spending intheyearsahead.ThesefactorshavecollectivelycreatedtheneedtoreinventexistingtaxstructuresinAsiaPacific,anddevelopasystemthatsupportsthe“fivegrowthpillars”ofthefuture.

Afuture-orientedtaxsystemforAsiaPacificcanbedesignedbasedonafewkeyinterventions.Firstly,thereisagrowingneedtotackleinefficienciesanddigitalisethetax function to improve transparency and prevent leakages – more so across various developing economies in Asia Pacificthatcouldbenefitfromstrongertaxcomplianceandcollections.Forexample,electronicinvoicingplatformscan provide governments with the ability to monitor and manage transactions in real-time and help mitigate black economies.Digitalisedtaxsystemscanalsobeatriggerfor regional governments to establish more resilient cyber security infrastructure in their countries – which could have implications beyond government services and help strengthentheoveralldigitaleconomyaswell.

Besidesthis,governmentsalsoneedtodiversifytheirsources of tax revenues while shifting incentives to new strategicsectorsthatsupporttheirfuturegrowthvisions.Goingforward,governmentswillincreasinglyneedtoconsider more consumption-driven tax policies and lower the burden on income taxes to help businesses and communitiesrecoverfromthecrisis.Aspending-basedtaxsystem will also be a growing requirement in economies where the proportion of income-earners continues to shrink duetochangingdemographicsoremploymentpatterns.WithfastrisingdigitalisationinAsiaPacific,newsourcessuch as digital taxes can also be considered – though governments must ensure these policies continue to supportsectorgrowthanddonotrestraininvestments.Data is fast becoming a highly-valued commodity in Asia Pacificandthiscouldbeanewfocusareafortaxofficesintheregion.

Finally,governmentsinAsiaPacificwillneedtofocusonbalancing inequities in the system and design their taxation policies to create a greater sense of fairness amongst stakeholders.Supportingtheregionalcollaborationagenda,thereisalsosignificantscopeforgovernmentsinAsiaPacifictoworktogethertocreatetaxpoliciesthatincentivisecross-bordertrade,focusingnotonlyontraditional merchandise exports but also on upcoming segmentssuchasdigitalisedservicestoboostgrowth.


Morphett Vale, Australia

Businesses — driving role

ThebusinesssectormustdrivetheestablishmentofAsiaPacific’sfuturegrowthpillars.Thisinvolvesofferingnewsolutions that can help overcome existing and emerging challengesintheregion,andusingitsabilitytodevelopnewbusinessmodels,targetuntappedconsumersegmentsanddiffuseinnovationandbestpracticesacrosstheregion.Todoso,businessesneedtoevolvefrombeingfocusedonprofitabilityandoperationalmetricsalone,tobecomingmorerisk-consciousinthefuture,adjustingtheircurrentwaysofworkingtobecomeresilienttopossibledisruptions.Thisrole of being a risk-conscious driver is of utmost importance indeliveringprosperitytoAsiaPacific’scitizens,butalsorequires various actions to be implemented within companies tomakeorganisationsmoreresilientandagile.Thisincludesadoptingstrongerriskmanagementframeworks,establishingwell-defineddatagovernancepracticesandimplementingmore robust cybersecurity measures to improve resilience (as highlighted by the digital economy and supply chain and innovationgrowthpillars).Atthesametime,strengtheningcorporate agility requires both an agile mindset from theleadershipforfasterstrategicdecisionmaking,andestablishing more agile organisational models (internal processes and external collaboration) for faster execution andcontinuouslearningandimprovement.

Finally,convergingprofitandpurposeisnowimperativetoensuringsustainabledevelopment.Actingwithintegrityand showcasing greater responsibility towards social and environmental needs has become essential to remain thepreferredbrandforconsumers,favouredpartnersfor businesses and employers of choice for key talent (ashighlightedbythenet-zeroeconomygrowthpillar).Regulators are also more likely to ease restrictive barriers if they are assured of companies acting with integrity and arebeingtransparentabouttheirperformance.Toimproveinclusivity,bigcompanieswithgreaterfinancialcapacityneedto look beyond short-term gains and invest in solutions that targetmarketsegmentswithlowerspendingcapacity.Theselargebusinessesincreasinglyfindthemselvesinthecentralnexusofchangeinapost-COVID-19world,requiringthemtotakealeadinupskillingsupplychainpartners,collaboratingwith the government to develop a future-ready workforce and working with start-ups to develop new solutions with greater agilityforafastevolvingregion.

Society — guiding role

Governmentandbusinessstrategiescanonlybeimpactfuland sustainable if they build on an opportunity to meet a humanorsocietalneed,andthereforerethinkingsystemsoroperatingmodelsmuststartfromthepeople.Socialandenvironmental implications of policy changes and business decisions need to become as important as understanding their commercial viability – with strengthening human capital and improving the people’s wellbeing becoming foundationalelementsforfuture-orientedchange.Forthis,society needs to be at the core of all implementation plans –requiringregularpulsechecks,oftenutilisingsocialmediachannels,toidentifyareasofsupportandfrictionwithintargetcommunities,andmakingadjustmentsonanongoingbasistomaximisepotentialforsuccess.Forinstance,initiatives to develop a circular economy need to consider ways of transforming existing consumer habits and engage with community organisations to enable visible impact (as highlightedbythenet-zeroeconomygrowthpillar).

Finally,society,includingcitizensandcommunityorganisations,needstoevolvefrombeingpassiveconsumerstobecoming“activecollaborators”byplayingaguidingrolein providing direction to government policies and corporate initiatives.Toenablefar-reachingimpactsandtoclosedivides,societymustpushforchangebybeingactivelyvocalaboutitsneedsandpriorities.Theessenceofsocietyliesinitspeople,whoarealsothesourceofrisingconsumerdemandandthelabourmarket,anditisthesepeoplewhoneed to become the starting point to addressing existing andemergingchallenges.Securingastrongbuy-infromallstakeholdersisamustforlastingchange,inparticularfromsociety,actingnotonlyasbeneficiariesbutasownerswhoco-develop aspects of planning and governance and co-manageexecution.

Singapore

Sustainable growth can only be achieved by focusing on lives and livelihoods. Enterprises and governments need to move beyond short term gains and work responsibly and collaboratively towards the wellbeing of the society. For this, building trust among the stakeholders is paramount."

KV Rao

ResidentDirector,TataSons–ASEAN&Chair/BoardMemberofTataRegionalSubsidiaries


Case example

Sustainable infrastructure development through cross-stakeholder collaborationAn example of multiple stakeholders working in alignment to drive sustainable growth can be seen through the operationsmodelofInfraCoAsia.FundedbythegovernmentsoftheUK,theNetherlands,SwitzerlandandAustralia,InfraCoAsiaprovidesdevelopmentcapitaland leadership expertise for early-stage infrastructure projectsinSouthandSoutheastAsia–focusingonsectorsimpactingsocietalwellbeingsuchaspowerandenergy,telecommunication,logisticsandtransportinfrastructure,waterandwastewater,wastemanagement,agricultureandurbanandsocialinfrastructure.

TheseprojectsarealignedwithSustainableDevelopmentGoals(SDGs)andthedevelopmentinterestsofthehostgovernments,theneedsofthelocalcommunitiesandincentives for domestic and international private sector investors – enabling different stakeholders to play an active roleinsustainableinfrastructuredevelopment.

Byfundinghigher-riskprojectsintheirearlystages,InfraCoAsia helps catalyse private sector investment in the later stagesofinfrastructuredevelopment.Projectsundertakenfocus on providing the disadvantaged sections of the society with better access to key infrastructure – helping reducepovertyandcreatenewand/orbetterjobs.Inaddition,InfraCoAsiaassistslocalagencieswithcapacitybuildingandthedevelopmentoflocalcapitalmarkets,while working with governments to facilitate a suitable regulatory environment – such as by improving adherence to environmental best practices or by advocating for policiesthatimprovevisibilityintofuturerevenueflows,withtheaimoffacilitatingcorporateparticipation.

Akeyprojectexampleisthedevelopmentofthe168megawatt-peak(MWp)solarpowerfacilityinNinhThuanprovinceinVietnam.TheprojectwasjointlydevelopedbyInfraCoAsiaandSunseapInternational,aSingapore-basedclean energy provider – with InfraCo Asia funding the initialdevelopmentphase,tode-riskthedeal.Theprojectaligns with the Vietnamese government’s target of making

solaramajorrenewableenergysourceforthefuture,andhas therefore encouraged active participation from the governmentintheformofclearerguidelinesonexecution,approvalprocessesandtariffstructures.Intermsofitsimpactonsociety,theprojectisexpectedtoextendelectricityaccesstoaround200,000peopleinthecountrywhilecreatingjobsformorethan2,000localworkers.87

Source: InfraCo Asia, Company website and documents, 2020

Government focus

Business focus

Society focus

Owner governments

Partnership support

Private sector participantsProject developers and operatorsCommercial banksPension funds, Sovereign wealth funds, Infrastructure funds, Private equity

InfraCo’s role (stages 2,3,4) : 1. Participate as co-investor, taking minority stake

2. Continue working with other partners (private sector, government, community organisations) to improve project execution

InfraCo’s role (stage 1): 1. Provide project expertise and funds

2. De-risk projects to attract private sector capital

Stage 1Early stage Development

Stage 2Project Development

Stage 3Construction

Stage 4Operations

Funding

Power and Energy

Telecommunication Logistics andTransport Infrastructure

Water andWaste Water

WasteManagement

Urban and SocialInfrastructure

Agriculture Oil and GasDistribution

Manufacturing

Host governments (South Asia and Southeast Asia)

Sector coverage of projects

UK, Netherlands, Australia, SwitzerlandBangladesh, Bhutan, India, Nepal, Pakistan, Sri Lanka

Cambodia, Indonesia, Lao PDR, Myanmar, Philippines, Vietnam

InfraCo Asia


Greater need for regional cooperationGlobaluncertaintiesnecessitatecross-stakeholdercollaborationacrossAsiaPacifictoextendbeyondnationalboundaries,whichrequiresdifferentmarketstoworktogether.Thisisnolongeranopportunitybutamustforstabilityandprosperity.Changingmarkettrendsandemergingdisruptionshavesignificantlyreducedtherelevanceofhistoricalmodels,andregionalisationhasstrongpotentialto become a new growth lever in the years ahead by offering a balanced path between reduced growth opportunities in alocallycentredapproach,andhigherrisksmarkedwithagloballywidespreadpresence.

According to the Asian Economic Integration Report 2019-2020,thereissignificantneedforregionalcooperationinvarioussectorsandsub-regions.Lookingatsectors,whileprimary and low-tech industries have registered higher regionalvaluechain-globalvaluechain(RVC-GVC)intensityscores (indicating greater focus on regional networks over globalvaluechains),hightechindustriesandservicescategoriescontinuetoseemuchlowerfigures,indicatingsignificantscopeforstrengtheningregionallinksintheseareas.Outsidetrade,areassuchasinfrastructureandconnectivity,andinstitutionalandsocialintegrationalsoshow strongneedforaregionalfocus.Lookingatsub-regions,locationssuchasCentralAsiaandSouthAsiaremainmuchlessintegratedwiththelargerAsiaPacificregion,requiringmoretargetedintegrationeffortsinthesemarketsinthefuture.88

Establishing an effective regionalised growth model requires differentcountrygroupstoleadinparticularaspects.Morematureeconomies,suchasSingapore,China,Australia,NewZealand,JapanandSouthKorea,canleadinitiativesonenhancingresearchanddevelopmentefforts,developingfuture-readytalent,addressinginfrastructuregapsandfosteringinstitutionaldevelopmentfortherestoftheregion.

AgritechexpertiseinAustraliaandNewZealandisonekeyexample.Expandingthereachofcentresofexpertisesuch as the Australian Centre for International Agricultural Research(ACIAR)andMonashFoodInnovation(MFI),tonewregionalmarketsisgoingtobeimportantinthisregard.Similarly,Japaniswellpositionedtoshareitsexpertiseinwastemanagement,whileChinaandSingaporecanassistregionalmarketsintheareaofinfrastructuredevelopment.Japan’senvironmentministryisalreadyprovidingfinancialsupport to develop a public-private consortium to bid for wastemanagementcontractsinSoutheastAsia.Participationin certain large-scale government programmes such as China’s Belt and Road initiative can also be an important channeltoimprovecooperationontheinfrastructurefront.Finally,expandingthescaleofgovernmentagenciessuchasInfrastructureAsiainSingaporecouldalsobehelpful.TheagencycurrentlyfocusesonconnectingindividualSoutheastAsian governments with domain experts for different infrastructureprojects,whileofferingadvisoryservicesin projectdevelopment,financingandimplementation, effortsthatcanbescaledtoalargerAsiaPacificlevel.89


Motutapu Island. New Zealand

DevelopingmarketsinAsiaPacificwillnotbemererecipientsof assistance but can also play a pivotal role in shaping the region’s future by serving as providers of an aspirational workforce,driversofeconomicactivityandtestinggroundsforconsumer-focusedinnovation.ManydevelopingmarketsinSouthAsiaandSoutheastAsiawillcontinuetowitnessgrowthintheirworkingagepopulationintheyearsahead,and these markets can help build the people foundation for theregion,providingnotonlyaccesstotheirgrowinglabourforcetobolsterAsia’sproductioncompetitiveness,butalsooffering growing consumer markets for regional businesses toprosper.Developingmarketsalsoneedtoplayamoreregionalrole,ratherthanremaindomesticallyfocused.Specificareasofstrengthwithinthesemarketscanenablethewiderregiontoachievemoreinclusivegrowth.

Forexample,someeconomiesarebecomingcentresforentrepreneurshipandlower-costinnovation,thebenefitsofwhichcanbespreadacrosstheregion.Affordablehealthcareservice models and lower-cost biopharma and med-tech solutionsfromIndiaorThailandcouldhelpmanageconcernsaroundrisinghealthcarecostsinotherAsianmarkets.90

While there is a strong opportunity to push regional collaborationinAsiaPacific,on-groundimplementationof growth initiatives also requires collaboration at a more tacticallevelacrossstakeholders.Governmentsneedtoworktogethertosharebestpracticesinfinancialriskmanagementandlearningsfromsector-specificpolicies,whilepushingfor initiatives to enhance cross-border connectivity and trade.Thebusinesssectoracrossdifferentregionalmarketsneeds to enter into new risk-sharing partnerships to share developmentcostsandcapabilities,enablingcompaniesto expand geographic reach while maintaining affordability andcompetitiveness.Onsimilarlines,socialsectororganisations in different markets need to work together on newcommunity-buildinginitiatives,coveringareassuchasempowering of vulnerable populations and strengthening socialsafetynetsinapost-COVID-19world.91

Certaininitiativescanbeprioritisedtodrivechange.Considering the social disruption and personal impact causedbythepandemic,enablingcooperationinpeople-focused sectors such as education and healthcare can be a good starting point to help secure buy-in from multiple regionalauthorities.Importantamongthesearestepstofacilitate cross-border mobility of students and medical tourists,standardisingeducationalqualificationsinupcomingtechnology-drivenareas,andestablishingregionalincubatorsor agencies to support fast growing companies that could be scaled up to become strong regional or global brands in the yearsahead.Areassuchasthesecouldhelpachievetangiblechangewithlesserresourcecommitments,thusincentivisingcooperationonotherfrontsaswell.92

Moving forward, nowAsiaPacificurgentlyneedstoacttoreconfigureoldwaysofworking and chart a new sustainable and resilient path for futuregrowth.Thesharedexperienceoffacingandmanagingthe COVID-19 pandemic has shown that with common focusandresolve,increasedtransparencyandeffectiveusageoftechnology,AsiaPacificcanachievelarge-scale,meaningfulchangeinarelativelyshortperiodoftime.Astheregionemergesfromthiscrisis,governments,businessesand society need to collaborate to re-establish trust across society and form agile ecosystems where the roles of drivers andenablersevolveasthesituationrequires.Moreconcertedintra-regionalcollaborationacrossAsiaPacificiscriticaltoensuringthestrengthofthismightyregionbenefitsall withinit.It’s Asia Pacific’s Time.

Regional stakeholders need to work collaboratively to handle complex challenges facing Asia Pacific. Collective action by governments, business and society is a must to enable a prosperous and inclusive future."

Christopher Kelkar

PwCAsiaPacificViceChairman,Operations GlobalAlignmentLeader


Varanasi, India

Thanks and acknowledgements

Albern Murty,ChiefExecutiveOfficer,DigiTelecommunications

Alex Ng,ChiefExecutiveOfficer,KerryExpressThailand

Allard Nooy, ChiefExecutiveOfficer,InfraCoAsia

Allen Huang, ChiefExecutiveOfficer,MerryElectronics

Chantel Lord, GeneralManager-PeopleTransformation&Technology,AustraliaPost

David Downs,GeneralManager-Projects,NewZealandTradeandEnterprise

James Wei, ChiefExecutiveOfficer,MasterKong

Jochen Schmittmann, DeputyHeadIMFOfficeforAsiaandthePacific

Jonathan Sudharta, ChiefExecutiveOfficer,Halodoc

Justin Webb, Co-Founder&ExecutiveChairman,AgriWebb

KV Rao, ResidentDirector,TataSons–ASEAN&Chair/BoardMemberofTataRegionalSubsidiaries

Melody Hong, SeniorVicePresident,StrategicPlanning,SingaporeEconomicDevelopmentBoard

Le Hong Minh, ChairmanandChiefExecutiveOfficer,VNGCorporation

Pamela Qiu,Head,BusinessDevelopmentandEngagement,AlliancetoEndPlasticWaste

Dr. Parag Khanna,Founder&ManagingPartner,FutureMapandAuthor,'ConnectographyandTheFutureisAsia'

Png Cheong Boon,ChiefExecutiveOfficer,EnterpriseSingapore

Raizo Sakoda,President,HitachiAcademyCo.,Ltd.

Snehal Patel,ChiefExecutiveOfficer,MyDoc

Steve Saunders,ChiefExecutiveOfficer,RoboticsPlus

Surina Shukri,ChiefExecutiveOfficer,MalaysiaDigitalEconomyCorporation

Thammasak Sethaudom, VicePresident-Finance&InvestmentandChiefFinancialOfficer, SiamCementGroupPublicCompany

Tom Rafferty,RegionalDirector,Asia,TheEconomistIntelligenceUnit

Will Zhang, PresidentofCorporateStrategyDepartment,Huawei

Yuuko Iizuka,GeneralManager-SustainabilityDepartment,SumitomoForestry


1 UnitedNations,StatisticsDivision-DepartmentofEconomicandSocialAffairs,December2019;UnitedNationsDevelopmentProgramme,2019HumanDevelopmentReport,December2019;InternationalTelecommunicationUnion,WorldTelecommunication/ICTIndicatorsDatabase,October2019;AsiaPowerWatch,‘ThefutureofAsianFTAsandtradeblocsafterCovid-19’,May2020

2 WorldEconomicForum,‘Thesearethetop10manufacturingcountriesintheworld’,February2020;WorldBank,Statisticsonmanufacturingvalueadded(currentUS$),2020;ITCTradeMap,TradeStatistics,2020

3 AsianDevelopmentBank,Asia’sJourneytoProsperity,January2020;UnitedNations,StatisticsDivision-DepartmentofEconomicandSocialAffairs,December2019

4 AsianDevelopmentBank,Asia’sJourneytoProsperity,January2020;UnitedNationsDevelopmentProgramme,HumanDevelopmentReport,December2019;UnitedNations,StatisticsDivision,2020

5 AsianDevelopmentBank,Asia’sJourneytoProsperity,January2020;UNCTAD,InvestmentTrendsMonitor,January2020;InternationalMonetaryFund,‘CaughtbyaCrestingDebtWave’,June2020;UNCTAD,WorldInvestmentReport2020,June2020

6 WorldTradeOrganization,‘EvolutionoftradeundertheWTO’,2019;WorldEconomicForum,‘Abriefhistoryofglobalization’,January2019;AsiaPowerWatch,‘ThefutureofAsianFTAsandtradeblocsafterCovid-19’,May2020

7 WorldIntellectualPropertyOrganization,GlobalInnovationIndex,September2020;InternationalTelecommunicationUnion,WorldTelecommunication/ICTIndicatorsDatabase,October2019

8 InternationalMonetaryFund,WorldEconomicOutlookUpdate,October2020;InternationalMonetaryFund,SpeechontheGlobalandAsiaEconomicOutlook–TaoZhang,IMFDeputyManagingDirector,July2020

9 InternationalMonetaryFund,SpeechontheGlobalandAsiaEconomicOutlook–TaoZhang,IMFDeputyManagingDirector,July2020;AsianDevelopmentBank,AnUpdatedAssessmentoftheEconomicImpactofCOVID-19,May2020;Strategy+Business,‘Adaptingtoanewworld’,May2020

10 WorldTradeOrganization,‘ReportshowstraderestrictionsbyWTOmembersathistoricallyhighlevels’,December2019;WorldEconomicForum,‘Tradeuncertaintycouldhurteconomicdevelopmentworldwide’,July2019;IMF&StanfordUniversity,WorldTradeUncertaintyIndex,June2020;WorldTradeOrganization,‘TradesettoplungeasCOVID-19pandemicupendsglobaleconomy’,April2020;ITCTradeMap,TradeStatistics,2020

11 WorldTradeOrganization,‘TradesettoplungeasCOVID-19pandemicupendsglobaleconomy’,April2020;WorldEconomicForum,‘Coronaviruscouldreduceworldtradebyuptoathird’,April2020;ITCTradeMap,TradeStatistics,2020

12 Estimates,2020;PwC,FutureofASEAN–TimetoAct,May2018

13 InternationalLabourOrganization,ILOModelledEstimates,2020;PwC,FutureofASEAN–TimetoAct,May2018;KornFerry,GlobalTalentCrunchReport,May2018

14 ChinaDaily,‘Boaoreport:HugeinfrastructuregapremainsinAsia’,March2019;StandardChartered,‘ASEANneedstore-thinkapproachtoUS$2.8trillioninfrastructuregap’,February2019;AsianDevelopmentBank,MeetingAsia'sInfrastructureNeeds,February2017

15 AsianInfrastructureInvestmentBank,AIIB’sRoleintheGrowthoftheDigitalEconomyofthe21stCentury,January2020;AsianInfrastructureInvestmentBank,DigitalInfrastructureSectorAnalysis,January2020

16 WorldBank,DoingBusiness2020,October2019;WorldBank,WorldwideGovernanceIndicators,2019;U.S.ChamberofCommerce,2020InternationalIPIndex,February2020

17 UnitedNations,WorldSocialReport2020InequalityinaRapidlyChangingWorld,January2020;WorldInequalityLab,WorldInequalityDatabase,2020

18 UnitedNations,AsiaPacificDisasterReport2019,August2019;UnitedNationsDevelopmentProgramme‘ClimatechangeinAsiaandthePacific.What’satstake?’,November2019;UNESCAP,Populationdynamics,vulnerablegroupsandresiliencetoclimatechangeanddisasters,September2018

19 FranklinTempleton,‘TheRacetoHarnessAITechnologyinAsia’,October2018;Forbes,‘WhereAsiaIsTakingtheWorldWithAI’,May2020

20 PwCdiscussionswithsubject-matterspecialists

21 RedshiftbyAutodesk,‘Japan’sDaiwaHouseIndustryIsUsingGenerativeDesigntoRetoolUrbanHousing’,July2019

22 EU-JapanCentreforIndustrialCooperation,‘BlockchaininJapan’,January2019

23 Hitachi,‘HowaJapanesecompanyisdrivingtowardafutureoffactoriesthatcombineSkilledtechniquesand automation to deliver the best manufacturing services’,October2017

24 Robotics&AutomationNews,‘GeekPlusRoboticstopartner with leading Chinese automaker and supply itsdriverlessforklift’,March2019

25 EqualOcean,‘HuitongdaFocusesontheRuralMarkettoRealizeDigitalTransformation’,October2020

26 Marsh,‘CyberRiskinAsiaPacific:TheCaseforGreaterTransparency’,2020;PwC,‘AcceleratetheDigitalAgendaforrestartpostCOVID-19’,2020

27 Ibid

28 NikkeiAsia,‘CoronaviruspandemicfuelsAsiae-commerceboom’,May2020

29 PwC,‘Conditionsforcross-borderbusinessinAsiaPacific2019-2020’,2020


31 CSA,‘11CIISectorsTestedonMoreComplexCyberAttackScenarios’,September2019

Endnotes


32 HarvardBusinessReview,‘TheStateofGlobalizationin2019,andWhatItMeansforStrategists’,February2019;PankajGhemawat,DifferencesandtheCAGEDistanceFramework

33 PwC,‘WinninginMaturingMarkets’,2017


35 Forbes,‘ScalingInSoutheastAsia:LessonsFromTheRegion'sBiggestStartups’,June2019


37 Ibid

38 TheBrookingsInstitution,‘Couldservicesdriveglobalizationinthepost-COVID-19world’,June2020;PwC,GlobalEconomyWatch-Will“slowbalisation”snowballintotheglobalservicestrade,March2020;WorldTradeOrganization,WorldTradeReport2019:Thefutureofservicestrade,October2019

39 ITCTradeMap,TradeStatistics,2020;WorldBank,StatisticsonServicesValueAdded(%ofGDP),2020;UNCTAD,HandbookofStatistics-TotalTradeinServices,December2019;WorldTradeOrganization,WorldTradeReport2019-Thefutureofservicestrade,October2019;ITCTradeMap,TradeStatistics,2020

40 WorldTradeOrganization,WorldTradeReport2019-Thefutureofservicestrade,October2019;EconomicResearchInstituteforASEANandEastAsia,ServicificationinGlobalValueChains:TheCaseofAsianCountries,November2017

41 WorldTradeOrganization,WorldTradeReport2019-Thefutureofservicestrade,October2019;PwCdiscussionswithsubject-matter specialists

42 PwC,GlobalEconomyWatch-Will“slowbalisation”snowballintotheglobalservicestrade,March2020;CentreforEconomicPolicyResearch,‘ServicestradeandCOVID-19’,April2020;WorldTradeOrganization,WorldTradeReport2019-Thefutureofservicestrade,October2019;AsianDevelopmentBankInstitute,ProductivityandTradeGrowthinServices:HowServicesHelpedPowerFactoryAsia,January2019

43 OECD,OECDServicesTradeRestrictivenessIndex:Policytrendsupto2020,January2020;WorldTradeOrganization,WorldTradeReport2019-Thefutureofservicestrade,October2019;UNESCAP,AsiaPacificTradeandInvestmentReport,October2019

44 PwCdiscussionswithsubject-matterspecialists;ITCTradeMap

45 BertelsmannStiftung,GEDFocusPaper-TheComprehensiveandProgressiveTrans-PacificPartnership,2019;CongressionalResearchService,USTradeinServices:TrendsandPolicyIssues,January2020;PwCdiscussionswithsubject-matterspecialists

46 PwC&OrangeBusinessServices,Buildingconnectedsupplychains,September2018;PwCdiscussionswithsubject-matterspecialists

47 StandardChartered,ASEAN–Aregionfacingdisruption,April2019;ASEAN-JapanCentre,GlobalValueChainsinASEAN:ARegionalPerspective,January2019;PwC&OrangeBusinessServices,Buildingconnectedsupplychains,September2018

48 HarvardBusinessReview,‘TheStateofGlobalizationin2019,andWhatItMeansforStrategists’,February2019;StandardChartered,ASEAN–Aregionfacingdisruption,April2019;PwC&OrangeBusinessServices,Buildingconnectedsupplychains,September2018;PwCdiscussionswithsubject-matterspecialists

49 Ibid

50 HarvardBusinessReview,GlobalSupplyChainsinaPost-PandemicWorld,September2020;PwC,Connectedandautonomoussupplychainecosystems2025,April2020;PwC&OrangeBusinessServices,Buildingconnectedsupplychains,September2018

51 TheDigitalShip,‘Koreangovernmentlaunches$132mautonomousshipproject’,June2020;ChinaDaily,‘HK’slogisticshubstatusputtothetestinCOVID-19crisis’,June2020;PortTechnology,‘MajorAsianPortLaunchesBlockchainSystem’,August2019;SingaporeEconomicDevelopmentBoard,‘Singaporetotransformlogisticssectorwithnewroadmap’,January2017

52 Cornell,INSEADandWorldIntellectualPropertyOrganisation-GlobalInnovationIndex,WorldBank,2020

53 ZDNet,‘AtlassianannouncesHQsiteatnewSydneytechhub’,June2020

54 InternationalLabourOrganization,‘YouthemploymentinAsiaPacific’,September2020;PwCdiscussionswithsubject-matterspecialists

55 APECHumanResourcesDevelopmentWorkingGroup,‘ClosetheDigitalSkillsGapBy2025’,July2019

56 EuropeanCommission,‘PromisingPESPractice:LuxembourgDigitalSkillsBridge,September2019;PwCLuxembourg,‘UpskillingforCompetitivenessandEmployability’,February2019

57 AsianDevelopmentBank,‘MajorChallengesFacingSmallandMedium-sizedEnterprisesinAsiaandSolutionsforMitigatingThem’,April2016


59 Ibid

60 SkillsFutureSingapore,‘TheNextBoundofSkillsFuture’,September2020;TheStraitsTimes,‘BoschLaunchesNewTrainingProgrammetoHelpManufacturingIndustryPrepareforFuture’,July2020;RobertBosch(SEA)PteLtd,‘SkillsfortheFuture-ReadyWorkforce’,July2020

61 People’sDailyOnline,‘ChineseSMEsSeeksOpportunitiesThroughDigitalTransformation’,June2020;ChinaDaily,‘Smallenterprisessteppingupdigitaltransformationefforts’,September2020

62 InternationalLabourOrganization,‘YouthemploymentinAsiaPacific’,September2020


64 Ibid

65 NationalCentreonEducationandtheEconomy,‘SouthKorea:CareerandTechnicalEducation’,September2020;WorldEconomicForum,‘TheCompetitivenessRepositorySouthKorea-MeisterSchools’,2014;AsianDevelopmentBank,‘PolicyCasesofSkillsDevelopmentinKorea:Industry-AcademiaPartnership’,December 2012

66 UNESCAP,‘GrowingDisasterRisksExceedingAsiaPacific’sCapacitytoRespond’,August2019;UNFPA,RegionalOverview-AsiaandthePacific,2018


68 UniversityofOxford,‘WhoemitsthemostCO2today?’,October2019;UnitedNations,TheWorldCitiesin2018,December2018;WorldBank,WhataWaste2.0,September2018

Endnotes


69 APEC,RegionalTrendsAnalysis-WhatGoesAroundComesAround,May2020;APEC,CircularEconomy:Don’tletWastegotoWaste,January2020

70 NextBillion,‘EnablingtheBusinessofRecycling:HowInnovativePublic-PrivatePartnershipsHelptoBuildSustainableCities’,January2019;GlobalFairnessInitiative,InclusiveWasteManagementinPeru:EnablingtheBusinessofRecycling,March2018

71 PwC,GlobalConsumerInsightsSurvey2020,July2020;UNESCAP,EconomicandSocialSurveyofAsiaandthePacific2020-Towardssustainableeconomies,April2020

72PwCdiscussionswithsubject-matterspecialists

73 Unilever,SustainableLivingReport,April2020;Unilever,‘Unilever'spurpose-ledbrandsoutperform’,June2019;Unilever,Companywebsite,2020

74 Ibid

75 FoodandAgricultureOrganization,TheStateofFoodandAgriculture,December2019;WorldBank,HarvestingProsperity–TechnologyandProductivityGrowthinAgriculture,September2019;WorldBank,StatisticsonEmploymentinagriculture,2020

76 FoodandAgricultureOrganization,TheStateofFoodandAgriculture,December2019;WorldBank,HarvestingProsperity–TechnologyandProductivityGrowthinAgriculture,September2019;WorldBank,StatisticsonEmploymentinagriculture,2020

77 PwC,TheAsiaFoodChallenge:HarvestingtheFuture,November2019

78 AustralianGovernment,Australia:ShapingTheFutureOfFoodAndAgriculture,November2019

79 PwC,RebuildNewZealand:PrimarySector,August2020;AgritechNewZealand,AotearoaAgritechUnleashed,July2020;NewZealandGovernment,GrowingInnovativeIndustriesinNewZealand:AgritechIndustryTransformationPlan,July2020

80 TechforImpact,‘It’spossibletokillpestsandminimiseenvironmentalharm.Here’show’,July2020;CommonwealthScientificandIndustrialResearchOrganisation,‘CSIROstartuptakesaimatworld’sbiggesttradepest:fruitfly’,October2018;RapidAim,Companywebsite,2020

81 Ibid

82 PwC,TheAsiaFoodChallenge:HarvestingtheFuture,November2019;FoodandAgricultureOrganization,RegionalConferencefortheAsiaPacific,May2020

83 TechinAsia,‘HowCrowdecreatesacashlessnetworkforfarmersinIndonesia’,October2019;WorldEconomicForum,‘Here'showIndonesiaishelpingIndonesia'sfarmers’,October2018;Crowde,Companywebsite,2020

84 AbsoluteMarket,‘MeetTunYat,theMyanmar-basedAgritechStartupthatAimstoUseIoTtoRevolutionizetheCountry’sFarmingSector’,February2020;TunYatLimited,Companywebsite,2020

85 Strategy+Business,‘Adaptingtoanewworld’,May2020;PwC,‘COVID-19:Asyourcompanystepsup,speakup’,May2020;PwC,AustraliaRebooted,May2020;PwC,RebuildNewZealand,June2020;PwCdiscussionswithsubject-matterspecialists

86 PwCdiscussionswithsubject-matterspecialists;PwC analysis

87 InfraCoAsia,Companywebsiteanddocuments,2020;PrivateInfrastructureDevelopmentGroup,‘NinhThuansolarpower’,2018

88 AsianDevelopmentBank,AsianEconomicIntegrationReport2019/2020,November2019

89 AustralianGovernment,PartneringwithAustraliaonInnovationScienceandResearch,March2020;AustralianGovernment,AustralianCentreforInternationalAgriculturalResearch(ACIAR),2020;EnterpriseSingaporeandtheMonetaryAuthorityofSingapore,InfrastructureAsia,2020;EnterpriseSingapore,‘Infrastructure Asia deepens partnerships with multilateral development banks and regional governments in Asia’s infrastructurespace’,October2019;Quartz,‘JapanwantstobecomeSoutheastAsia’strashmanager’,June2019

90 PwCdiscussionswithsubject-matterspecialists;PwCanalysis

91 Ibid

92 Ibid

Endnotes


ContactsAsia Pacific

Raymund ChaoPwCAsiaPacificChairman Chairman,PwCChina [email protected]

Christopher KelkarPwCAsiaPacificViceChairman,Operations GlobalAlignmentLeader [email protected]

Sridharan NairPwCAsiaPacificViceChairman,Markets [email protected]

David BrownPwCAsiaPacificDealsLeader [email protected]

Calum DavidsonPwCAsiaPacificTransformationLeader [email protected]

Matt GrahamPwCAsiaPacificAssuranceLeader MarketsLeader,PwCAustralia [email protected]

Sean GregoryPwCAsiaPacificRisk&QualityLeader [email protected]

Damon HickeyPwCAsiaPacificAlignmentLeader [email protected]

Pauline HoPwCAsiaPacificHumanCapitalLeader [email protected]

David McKeeringPwCAsiaPacificConsultingCo-Leader MarketsLeader,PwCAustralia [email protected]

Peter NgPwCAsiaPacificTaxLeader [email protected]

Bob SaadaPwCAsiaPacificConsultingCo-Leader [email protected]

David WijeratneGrowthMarketsPracticeLeader,PwCSingapore [email protected]

Australia

Tom SeymourPwCAsiaPacificViceChairman,Australia ChiefExecutiveOfficer,PwCAustralia [email protected]

Pete CallejaMarketsLeader,PwCAustralia [email protected]

Matt GrahamMarketsLeader,PwCAustralia [email protected]

David McKeeringMarketsLeader,PwCAustralia [email protected]

China

Raymund ChaoPwCAsiaPacificChairman Chairman,PwCChina [email protected]

Thomas LeungMarketsLeader,PwCChina [email protected]

India

Shyamal MukherjeeChairman&TerritorySeniorPartner,PwCIndia [email protected]

Sanjay ToliaMarketsLeader,PwCIndia [email protected]

Indonesia

Eddy RintisPwCAsiaPacificViceChairman,Indonesia TerritorySeniorPartner,PwCIndonesia [email protected]

Ay Tjhing PhanMarketsLeader,PwCIndonesia [email protected]


mailto:raymund.chao%40cn.pwc.com?subject=

mailto:christopher.s.kelkar%40pwc.com?subject=

mailto:sridharan.nair%40pwc.com%20%20%20?subject=

mailto:d.brown%40hk.pwc.com?subject=

mailto:calum.davidson%40hk.pwc.com?subject=

mailto:matt.graham%40pwc.com?subject=

mailto:sean.gregory%40pwc.com?subject=

mailto:damon.hickey%40hk.pwc.com?subject=

mailto:pauline.ho%40pwc.com?subject=

mailto:david.mckeering%40pwc.com?subject=

mailto:peter.ng%40cn.pwc.com?subject=

mailto:bob.d.saada%40pwc.com?subject=

mailto:david.wijeratne%40pwc.com?subject=

mailto:tom.seymour%40pwc.com?subject=

mailto:pete.calleja%40pwc.com?subject=

mailto:matt.graham%40pwc.com?subject=

mailto:david.mckeering%40pwc.com?subject=

mailto:raymund.chao%40cn.pwc.com?subject=

mailto:thomas.w.leung%40cn.pwc.com?subject=

mailto:shyamal.mukherjee%40pwc.com?subject=

mailto:sanjay.tolia%40pwc.com?subject=

mailto:eddy.rintis%40pwc.com?subject=

mailto:ay.tjhing.phan%40pwc.com?subject=

Japan

Koichiro KimuraPwCAsiaPacificViceChairman,Japan GroupChairman,PwCJapan [email protected]

Yukinori Morishita MarketsLeader,PwCJapan [email protected]

South Korea

Hoonsoo YoonChiefExecutiveOfficer,SamilPwC [email protected]

Hwa-Joo BaeMarketsLeader,SamilPwC [email protected]

Malaysia

Soo Hoo Khoon YeanPwCAsiaPacificViceChairman,Malaysia/Vietnam ManagingPartner,PwCMalaysia [email protected]

Nurul A'in Abdul LatifMarketsLeader,PwCMalaysia [email protected]

New Zealand

Mark AverillPwCAsiaPacificViceChairman,NewZealand ChiefExecutiveOfficer,PwCNewZealand [email protected]

Joanne RobinsonGeneralManagerMarkets,PwCNewZealand [email protected]

Philippines

Alex CabreraPwCAsiaPacificViceChairman,Philippines Chairman,PwCPhilippines [email protected]

Roderick DanaoMarketsLeader,PwCPhilippines [email protected]

Singapore

Yeoh Oon JinPwCAsiaPacificViceChairman,Singapore ExecutiveChairman,PwCSingapore [email protected]

Kok Weng SamMarketsLeader,PwCSingapore [email protected]

Taiwan

Joseph ChouPwCAsiaPacificViceChairman,Taiwan Chairman&ChiefExecutiveOfficer,PwCTaiwan [email protected]

Kevin LinMarketsLeader,PwCTaiwan [email protected]

Thailand

Chanchai ChaiprasitPwCAsiaPacificViceChairman,Thailand ChiefExecutiveOfficer,PwCThailand [email protected]

Niphan SrisukhumbowornchaiMarketsLeader,PwCThailand [email protected]

Vietnam

Van Dinh Thi QuynhCountrySeniorPartner,PwCVietnam [email protected]

David TayMarketsDirector,PwCVietnam [email protected]

Contacts


mailto:koichiro.kimura%40pwc.com?subject=

mailto:yukinori.morishita%40pwc.com?subject=

mailto:hoonsoo.yoon%40pwc.com?subject=

mailto:hwa-joo.bae%40pwc.com?subject=

mailto:khoon.yean.soo.hoo%40pwc.com?subject=

mailto:nurul.ain.abdul.latif%40pwc.com?subject=

mailto:mark.averill%40pwc.com?subject=

mailto:jo.n.robinson%40pwc.com?subject=

mailto:alex.cabrera%40pwc.com?subject=

mailto:roderick.danao%40pwc.com?subject=

mailto:oon.jin.yeoh%40pwc.com?subject=

mailto:kok.weng.sam%40pwc.com?subject=

mailto:joseph.chou%40pwc.com?subject=

mailto:kevin.lin%40pwc.com?subject=

mailto:chanchai.chaiprasit%40pwc.com?subject=

mailto:niphan.srisukhumbowornchai%40pwc.com?subject=

mailto:dinh.quynh.van%40pwc.com?subject=

mailto:david.tay%40pwc.com?subject=

©2020PwC.Allrightsreserved.

PwCreferstothePwCnetworkand/oroneormoreofitsmemberfirms,eachofwhichisaseparatelegalentity.Pleaseseewww.pwc.com/structureforfurtherdetails.Thiscontentisforgeneralinformationpurposesonly,andshouldnotbeusedasasubstituteforconsultationwithprofessionaladvisors.

AtPwCourpurposeistobuildtrustinsocietyandsolveimportantproblems.PwCisanetworkoffirmsin155countrieswithover284,000peoplewhoarecommittedtodeliveringqualityinassurance,advisoryandtaxservices.Findoutmoreandtelluswhatmatterstoyoubyvisitingusatwww.pwc.com.

127079159

www.pwc.com/asiapacific

Documents

We must act now - EDB...Note from Parag Khanna There is no more important time-zone than “Asia time.” Though it spans several hours, it encompasses fully half the world’s population