Beware the Post-Covid, Partial-Opening Up Of ASEAN
The partial opening of ASEAN economies can mean partially closing them too. It pays to keep eyes and ears alert, office equipment and IT evaluations undertaken, and have contingency plans still put in place when revisiting your Asia offices.
Business advisory by Chris Devonshire-Ellis
Asian media has been full of the recent good news about the opening up of various economies, with ASEAN countries such as Cambodia, Malaysia, Indonesia, the Philippines, Singapore, Thailand, and Vietnam all beginning to open up for business travel and tourism. While strict protocols are in place, it is now possible to visit long marooned staff and perhaps begin to think again about regional expansion plans.
Yet some caution should be exercised. The problem with the partial opening up of economies is that the other side of the coin means a partial re-lockdown too. It is a sad fact that Governments have not aligned a global Covid strategy to be followed by all and that different Governments have evolved different strategies. While ASEAN is relatively well-coordinated and appears to have adopted a more-or-less common Covid policy, that still means that outbreaks are to be expected.
China, meanwhile, has come in for much criticism over its ‘Zero-Covid’ policy, which doesn’t make sense in terms that its neighboring countries do not have such strategies in place and means that China’s defenses will always be breached.
Yet China’s insistence on a Zero-Covid strategy does make sense on a political level: it wanted to minimize infection risks during the Beijing Winter Olympics, Hong Kong is going through a political and economic transition (a new Chief Executive was appointed last week) and the 20th National People’s Congress, a hugely influential and important event, at which 2,300 delegates descend on Beijing, together with all their assistants and deputies and so on, is being held in November. Nothing is being permitted to interfere with this. Consequently, China will remain locked down in various stages until the year-end. We expected this would happen at the beginning of 2022 and adapted our business plans accordingly.
Here is where it pays to listen to China’s advice being given from China as opposed to the United States or Europe, who always impose additional negative political angles on China’s policies. We highlighted these exact issues in our China Briefing publication in December last year, in the article China 2022 Outlook: The Economy, Covid, Business, and Regulatory Landscape.
The intelligence and the knowledge are out there. Make sure you have your China ear to the ground connected to China-based sources as opposed to Western media opinion, even if they ‘used to be’ in China. It’s a fast-moving country and advice needs to be sourced – from the source. The same applies to ASEAN.
What ‘Partial Opening Up’ therefore refers to is just that – so take the opportunity to visit your Asian offices while you can. China will remain closed for much of 2022 as I discussed, and no real surprise there, but countries such as Singapore, and Vietnam are all opening up to foreign travelers providing the pertinent Covid protocols are met. Our offices in Singapore, Vietnam, and India have only just received partner visits for the first time in two years. It is an excellent time to see them, take stock, and listen to the office and staff needs. IT has often become outdated and will need evaluating, and capital expenditure items that have been depreciated off the books a year or two back may now need replacing. This is especially true in IT. Many governments also continue to provide support to investors during this time – do you know what tax and employee contribution exemptions you may be eligible for?
ASEAN visits of course give everyone a boost. China’s time will come, but for now, concentrate on ASEAN and India. The staff you have in these locations will be very happy to see you (and vice versa). But – prepare again for possible future disruptions. Covid is not over yet.
ASEAN Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia and maintains offices throughout ASEAN, including in Singapore, Hanoi, Ho Chi Minh City, and Da Nang in Vietnam, Munich, and Essen in Germany, Boston, and Salt Lake City in the United States, Milan, Conegliano, and Udine in Italy, in addition to Jakarta, and Batam in Indonesia. We also have partner firms in Malaysia, Bangladesh, the Philippines, and Thailand as well as our practices in China and India. Please contact us at email@example.com or visit our website at www.dezshira.com.