AJC points out industries vulnerable to external risks

EACH ASEAN country and company engaged in international production networks should examine vulnerability of value chains to external risks, proposed the ASEAN-Japan Centre (AJC).

According to AJC’s recent publication, entitled Resilient Global Value Chains (GVCs) for ASEAN and its Relationship with Partner Countries, the degree of risks of value chains to external shocks and identified which industries tend to be more vulnerable to risks.

There are two types of risks — risks that affect the upstream part of GVCs (supplier market concentration) and those affecting the downstream part of GVCs (buyer market concentration) — which are considered.

According to a statement, AJC has further proposed a set of five strategies to build resilient GVCs in ASEAN.

It includes utilisation of pandemic-related policy measures and actions implemented by ASEAN Member States; improvement in risk management by the private sector; and, strong push for digital transformation by the public and private sectors.

Fourth and fifth strategies are promoting new and crisis-resistant industries as well as reconsidering company strategies for international production: offshoring or reshoring, respectively.

For effectively dealing with the COVID-19 crisis and its economic aftermath, it is important for policymakers to resist the temptation of quick-fix solutions or protectionism, and maintain an overall favourable business climate. – Oct 17, 2020

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