DBS CEO Tan Su Shan sees ‘silver linings’ for Asia amid trade upheaval
She says Asia is home to 18 of the world’s 20 fastest-growing trade corridors, with 60% of its trade taking place within the region
[SINGAPORE] US President Donald Trump’s “reciprocal tariffs” may signal the end of an era of free trade and a rules-based global economy, but Asia’s business leaders can still seize new opportunities if they remain nimble and resilient, said DBS CEO Tan Su Shan at an event on Thursday (Apr 17).
But in the short term, business leaders should prepare themselves “for volatility and uncertainty”, added Tan at the event which featured Deputy Prime Minister Gan Kim Yong, who chairs the new Singapore Economic Resilience Taskforce formed in response to the US tariffs.
The event was part of the task force’s ongoing dialogue with the business community. It concluded with a closed-door session with DPM Gan, Tan and DBS clients – many of whom are key business leaders – to exchange views on the challenges ahead.
In her speech, Tan urged attendees to view the developments positively.
“Are there any silver linings? We’re in Singapore. There will be silver linings,” she said, adding that business leaders should view the new world order through a strategic lens.
“I’m glad to be in Asia, even though the region bears the brunt of tariffs.”
She noted that Asia is home to 18 of the world’s 20 fastest-growing trade corridors, with 60 per cent of its trade taking place within the region.
“Despite some slowdowns in our neighbourhood, we’re still surrounded by large economies such as China, India and Indonesia.”
Nevertheless, she acknowledged there are challenges ahead and outlined four points for business leaders to think about.
SEE ALSO
The first point was about supply chains. She said that there is a need to determine the feasibility and sustainability of sourcing different suppliers, bearing in mind cost and proximity to the market.
“That means agile pricing, agile adjustments and planning for the long term.”
She added that businesses should also take advantage of technological advancements such as robotics and artificial intelligence to aid their processes.
The second point that she raised was related to logistics and industry management, as she foresees a scenario where stockpiling of critical components, food and electronics takes place.
“We may have to plan for longer voyages and potential route diversions, so... make sure your ships and freight can get your goods to where it needs to go. This is crucial.”
The third point was about new financial and payment systems.
Tan noted that the US dollar’s dominance in global trade may be waning, underscoring the need for alternative financial and payment systems, and the importance of businesses planning strategically for this change.
This includes a possible move away from Swift to platforms such as China’s Cross-border Interbank Payment System, along with the rising significance of digital payments, digital currencies and blockchain.
Tan’s final point highlighted the need to prepare for a potential bifurcation of Eastern and Western tech ecosystems.
She noted that if systems are not interoperable, firms may need to invest in both, increasing costs. Therefore, companies should review their tech stack and long-term strategy to avoid being locked into incompatible platforms.
Four probabilities
DBS chief economist Taimur Baig also spoke at the event, presenting on the “US Trade War and Asia’s Playbook”.
He outlined four possible scenarios arising from the US tariffs, with the most likely – assigned a 45 per cent probability – being a move towards a dual-track model of global trade. In this scenario, companies would manufacture in the US for the American market, while operating under separate rules and agreements elsewhere.
The second scenario, with a 30 per cent probability, involves an escalation of tariff and non-tariff measures, including secondary tariffs targeting countries seen as aligned with China.
A third possibility, given a 20 per cent chance, is that the tariffs are part of Trump’s attempt to strike a “grand bargain” with China, culminating in a symbolic deal that allows both leaders to claim diplomatic victory.
The least likely but most severe scenario, at 5 per cent, envisions US pressure pushing China to view the situation as an existential threat – risking a shift from economic to actual conflict.
Still, Baig noted that “the world is not that small outside the US”, which accounts for just 11 per cent of global trade. “There’s enough financial assets, real assets and trade capability... to go about our own way and still make a meaningful existence.”
He added that the current environment is not permanent, as the US has historically swung between free trade and protectionism.
“They’re flirting with protectionism now. But maybe two, three years from now, they won’t. We’ve got to bide our time.”
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Copyright SPH Media. All rights reserved.
