Covid-19 has stricken the world economy. Therefore, global collaborative initiatives need to be taken into consideration to address the downturn caused by the disease outbreak.
By
PETER DRYSDALE
·6 minutes read
AFP/KENZO TRIBOUILLARD
A pedestrian wears a protective facemask as he walks past a newly hung banner that reads "Coronavirus Global Response" in front of The European Union (EU) Commission building in Brussels, on May 6, 2020. - The EU forecast on May 5, 2020, that the eurozone economy would contract by a staggering 7.7 percent in 2020, warning the wreckage from the coronavirus outbreak could endanger the single currency.
Covid-19 has stricken the world economy. Therefore, global collaborative initiatives need to be taken into consideration to address the downturn caused by the disease outbreak.
International economic cooperation will be very important to manage the crisis and help economic recovery through trade channels, market stabilization, faster reopening of business supply chains and international travel. Without them, the world will face a prolonged health crisis, and the implication of that is prolonged economic stagnation on a scale not seen since the Great Depression of the 1930s.
Unfortunately, in the geopolitically fragmented world at present, international cooperation is not an easy thing. The United States, the world\'s biggest power, has lost interest in multilateral cooperation and has a strategic dispute with China, the second-largest power in the world. Under such conditions, leadership is needed from other countries.
Twin challenge
This situation has placed Asia and Indonesia at the forefront of global economic recovery. We know that Asia is one of the regions with the highest economic growth in the world. In Asia alone, there are three sources of growth: India, Southeast Asia, and East Asia with Japan, China and South Korea. It cannot be denied that ASEAN has an important role here, and if we talk about ASEAN, Indonesia has a very central role. That is why the role of Indonesia is important here.
Because of its role and potential in the world economy, the Asian economy is central to the recovery from the Covid-19 crisis. Because the Covid-19 outbreak occurred earlier in Asia, Asia is expected to experience a faster economic recovery and be a vital source of global economic recovery.
President Joko Widodo attended the ASEAN Summit specifically discussing the handling of Covid-19 from the Bogor Presidential Palace, West Java, Tuesday (4/14/2020). The summit meeting takes place virtually.
Asia, like other countries in the world, faces a twin challenge: The huge international health challenge and the economic policy challenge to get out of the crisis. Failure to navigate wisely between the two will cause social problems, leading to more deaths and economic difficulties. This is not an easy task, but it is a very urgent one.
For this reason, a group of Asian economic experts under the coordination of the Asian Bureau of Economic Research, which I led some time ago, issued a report on the Asian Covid-19 recovery strategy. We call on the ASEAN + 6 countries (ASEAN plus China, Japan, South Korea, India, Australia and New Zealand) to move quickly to coordinate financial, trade, public health and food security policies to avoid prolonged stagnation and encourage the US and Europe to work together with Asia in this initiative.
The foundation for regional policy action in Asia was laid at the ASEAN + 3 summit on 14 April, which included leaders from Southeast Asia, China, Japan and South Korea. The meeting led to a commitment to coordinate health and economic policy. Indonesia plays an important role in that initiative. With its magnitude in ASEAN, Indonesia and ASEAN now have important contributions in cooperation with major neighboring countries, such as Australia, Japan, India, South Korea and China, in facing challenges sparked by the virus.
Six regional cooperation initiatives
There are six important points in the regional policy cooperation initiative. The first is to encourage central banks and finance ministries in several countries of the world to expand bilateral currency swap schemes and agree on the new issuance of special drawing rights (SDR) to create a stronger regional financial safety net. This will create space for macroeconomic policies and financial stability to combat the outbreak and help economic recovery in developing countries in the region, including Indonesia.
The second is to support the development, production and equitable distribution of diagnostic tests, vaccines and treatments through a collective funding commitment for the WHO Access to Covid-19 Tools (ACT) Accelerator and the expansion of the Covid-19 ASEAN Response Fund to cover ASEAN + 6 countries.
The third is to keep open markets for medical devices and food in countries of the regional. It is very important to avoid restrictions on trade in medical equipment and supplies. We see a tendency of some countries to curtail exports and only focus on their domestic needs. If this happens, the impact will be very bad for other countries in need. Therefore, after domestic needs are met, access to exports from other countries must remain open.
This requires a commitment from countries in the region to reduce or eliminate tariffs and nontariff barriers to medical goods and services. Likewise, regional food security will depend on access to international markets and the removal of export barriers that have been imposed. Existing bilateral initiatives to keep trade open for food exports can be consolidated into regional agreements.
The fourth point is to develop protocols for health certification for international travel to accelerate the resumption of international trade, travel for studies, scientific exchanges, temporary labor movements, and tourism. Gathering experts to solve these problems is the first step.
The fifth is to support digital transformation in health management that has already occurred in anticipation of the Covid-19 outbreak. Asia can start a proactive agenda for collective management of digital infrastructure, which includes coherence of arrangements, privacy standards and data-sharing. This is needed for new work practices, new modes of production, supply chain management and the delivery of goods and services, including government services.
Speeding up the RCEP
Kompas
New Zealand\'s Prime Minister Jacinda Ardern, India\'s Prime Minister Narendra Modi, Chinese Premier Li Keqiang and Thai Prime Minister Prayuth Chan-Ocha shake hands at the 3rd Regional Comprehensive Economic Partnership (RCEP) summit in Bangkok, Thailand, November 4, 2019.
The sixth point is to finalize the Regional Comprehensive Economic Partnership (RCEP) agreement immediately to ensure regional trade. The initial agreement of the RCEP with 15 members will send out a global signal about the importance of keeping trade open, ensuring food security and maintaining market access in East Asia. Indonesia and the RCEP group need to continue to pave the way for India\'s membership and actively promote economic cooperation with South Asia.
We know that the current Covid-19 crisis is the center of a storm that has caused turmoil in the global economy and politics. Asia can take the initiative to implement this agenda through the ASEAN, ASEAN + 3, and ASEAN + 6 schemes, involving the countries of the East Asia Summit, including the US and APEC and G-20 forums, while arranging steps to lead the reform of the World Trade Organization (WTO) and International Monetary Fund (IMF).
AUSTRALIAN NATIONAL UNIVERSITY
Peter Drysdale
Mobilizing political energy and political commitment in Asia to manage international issues from the Covid-19 crisis will be an important step to address current global problems. It is an important step toward addressing the global big problems we face, including regional political stability, and to restore the early prospects of prosperity.
Peter Drysdale,Emeritus Professor, Head Asian Bureau of Economic Research, The Crawford School of Public Policy, Australian National University.
