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October 20, 2023
Towards a future proof asean economy

Towards a Future- Proof ASEAN Economy: Leveraging Digitalization and Sustainability

Authored by
October 20, 2023
Towards a Future- Proof ASEAN Economy: Leveraging Digitalization and Sustainability
5.32 MB

ASEAN Member States (AMS) have shown resilience in the face of the current “polycrisis”, which includes the ongoing impacts of COVID-19, Russia’s War in Ukraine, and climate change. However, external vulnerabilities – such as the synchronized monetary contraction – remain significant. In fact, the focus by central banks on price stability is now coming in to tension with the need for financial stability, following recent developments in the US and Europe. Any deviation from tighter monetary policy to address these new threats could exacerbate inflation concerns. In addition, longer-term trends related to discontent with globalization and resulting risks to trade and capital flows persist, in what the IMF has referred to as Geo-Economic Fragmentation. These challenges serve as a reminder of the interconnected nature of the global economy and the vital role of multilateral institutions like ASEAN to overcome common challenges together. 

Consistent with Indonesia’s ASEAN Chairmanship themes, this paper includes analysis and
proposals in three key areas critical to the financial sector:

Foreign Direct Investment and supply chains, where pandemic-related shocks and geopolitical tensions have presented opportunities for ASEAN. This section covers areas where the region could do more to benefit from these possibilities, as well as make progress on greening FDI and supply chains.

The digital economy, where recent developments have shone a light on not only digital opportunities, but also vulnerabilities of the crypto assets, as well as the potential for new technology. The paper covers wholesale CBDCs and stablecoins, generative artificial intelligence, government and insurance digitization and other digital finance solutions.

Sustainability, where both the urgency of scaling up the finance required to meet net zero commitments, as well as the need to ensure energy security have become more apparent in the last 12 months. This paper offers thoughts on transition finance, carbon pricing, debt for nature swaps and sustainable insurance.