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MANILA – The Asian Development Bank (ADB) has identified five critical sectors that will drive post-coronavirus illness economic growth in ASEAN+3 nations, including the Philippines, in 2019.

Tourism, agro-processing, garments, electronics, and digital trade, according to ADB Southeast Asia Department senior economist James Villafuerte in a joint webinar with ASEAN+3 Macroeconomic Research (AMRO) on Friday, will be the new drivers of growth for the ten ASEAN member states, China, Japan, and South Korea.

According to Villafuerte, ASEAN+3 countries must address difficulties in these areas that existed before the Covid-19 outbreak, as well as implement policies to address the challenges posed by the global health and economic crises.

He noted structural imbalances, infrastructure deficiencies, a big share of informal employment, and a low average spend per tourist as important issues in the tourism sector prior to Covid-19.

The ADB proposes that governments in the region undertake policies that restore and establish new demand channels, increase tourism industry resilience, and build capacities to accommodate future demand.

Governments in ASEAN+3 countries must address existing agro-processing industry challenges such as erratic raw material supply, low automation, and technological adoption, infrastructure gaps, lack of access to key financing, technologies, and skilled labor, as well as environmental sustainability and shifting consumer purchasing behaviors.

The ADB’s policy recommendations include improving supply chain efficiency and transparency, expanding industry value-add, pursuing efforts to increase production rates, and strengthening industry resilience.

The Philippines, which exports electronics, and other nations in the region are being pushed to solve existing issues in the electronics industry. The lack of diversification across the electronics supply chain, the relatively low economic value-add of each stage in the value chain, and the type of electronics produced, disruptive technologies, and quick changes in electronics technology and consumer trends are only a few of them.

The ADB, on the other hand, recommends that governments upgrade special economic zones by implementing policies that promote industrial and human capital development.

Villafuerte noted low automation, inadequate connection, low degree of digitization in small and medium enterprises (SMEs), tax base erosion, and the possibility of respective digital regulation as pre-pandemic difficulties in the region for digital trade.

Develop an industry plan, improve connectivity, encourage skills development, enables SMEs to go digital, and rethink digital policy to address this.

Finally, the ADB believes that restarting the garments sector will aid the ASEAN+3 countries’ economic progress post-Covid-19.

However, a focus on low-value-added products, a concentrated raw material supply base, weak infrastructure, rising labor costs, low labor productivity, job displacement due to automation, environmental harm, and unethical labor practices are all issues that must be addressed.

Improving competitiveness, expanding markets, increasing industry resilience, and adopting more flexible production and business models are some of the policy activities that will benefit the garments sector.

“Covid-19 is a huge disruptor as well as a driver for change,” according to AMRO director Toshinori Doi. “It is critical to continue to provide supportive measures to mitigate the pandemic’s impact and sustain recovery.”

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