Covid-19 is a catalyst driving change in Asia

ASIA will never be the same. Due to the coronavirus and other related geopolitical and societal factors, Asia will not only change faster than the rest of the world, it will drive the rate of change in the rest of the world for the remainder of what some have termed the Asian Century.

Covid-19 has already had a significant impact on Asia. Much more is coming. The economic effects will be deeper and longer lasting than the Asian financial crisis of the late 1990s, and will have serious ramifications for political stability across regime types. As some countries look to re-open or ease restrictions, more fundamental dynamics are at play and likely to remain long after the coronavirus is gone.

Covid-19 is shuffling the deck in terms of economic power across the Asia-Pacific. Government decisions are being altered as officials think about how to attract foreign capital, maintain continuity of trade and compete in a post-Covid world. It is therefore no surprise that we have seen Thailand consider joining the Comprehensive and Progressive Trans-Pacific Partnership, or China looking into a revised negative investment list.

Companies, seeing this abrupt downturn and major disruptions to global supply chains, will re-examine their choices over the next few years as they assess the responsiveness of governments and the Covid-19 impacts on certain sectors such as healthcare or defence. Beyond aggregate developments such as India's self-reliance emphasis via its renewed "Made in India" campaign or large stimulus packages in countries like Japan, the most agile and successful companies will be not only reacting to, but actively shaping the post-Covid 19 environment.

Turning to the political realm, the pandemic will alter the fate of the region's governments with long-term implications. In terms of domestic politics, within South-east Asia alone, Covid-19 has affected elections coming up in Singapore and Myanmar, while Malaysia and Vietnam have had to deal with a sudden ruling coalition collapse and upcoming Communist Party congress, respectively.

The implications extend out to the geopolitical realm as well. Covid-19 has heightened perceptions about China with allegations of Beijing's use of "pandemic opportunism" in its border dispute with India or in the South China Sea. It has also exacerbated concerns in the region about America's role in Asia and the world. We can expect rising angst as we approach the US presidential elections in November.

And while we focus on the political and economic effects of Covid-19 and a new normal, we should also pay careful attention to its longer-term implications for societies and people more generally. It is already clear to the people of Asia that beyond the effects on things such as household income or employment, Covid-19 has changed the way they work as well as what people believe about subjects such as the role of government in society.

INFLECTION POINTS

Even as countries move towards recovery, our research at BowerGroupAsia clearly shows that the pandemic is continuing to affect how narratives are shaped in individual countries and across the region. As this process occurs gains momentum, it is critical for governments and companies to understand it and then adjust the way they think and adapt.

While we should not underestimate Covid-19's impact, we should not overestimate it either. Covid-19 is the latest in a series of inflection points that have impacted Asia in the first couple decades of this century. Irrespective of its effects on the region, more fundamental long-term realities, such as Asia's rising prominence on the global stage, will not be altered even if the pandemic has also proven that adaptability and innovation matter as much as size or growth.

In the next few weeks, we will see some Asian countries continuing to ease restrictions on movement and resuming travel as we have with Taiwan or Vietnam, even if others like India and Indonesia are still struggling to bring down their infection rates. But amid these headlines and a picture as complex as the region itself, we should not lose sight of the fact that Asia has become the bullseye of geopolitical and economic priority in the world.

Asia's role as the world's most dynamic driver of change means it is the place where countries and companies will define their success or failure for this century. The most engaged and well informed will adapt and change with Asia as they contribute to that evolution. Those trying to avoid the complex and even messy process will be left behind.