ASEAN leaders could tap new trade mechanisms and electronic payments to ensure essential goods and payouts get to citizens during the pandemic, a regional business lobby suggested.
This was part of the US-Asean Business Council’s report on a financial response to Covid-19, released on Wednesday, which it plans to present to South-east Asian finance ministers and central bank governors.
Other longer-term proposals in the report include blended public-private capital structures that can be tapped to fund small businesses, hospitals and even infocomm technology infrastructure such as 5G networks. But, in the short run, trade finance and escrow accounts were also put forward as a way to enable the delivery of essential medical supplies, such as ventilators, from abroad.
“Asean governments should consider using escrow accounts and letters of credit as mechanisms to help expedite delivery of essential goods, including personal protective equipment and medical testing and machinery,” said the report. “Both escrow accounts and letters of credit can also help protect against fraud and potential scams involving the purchase of essential goods - especially important during the current crisis.”
The council also called for instant payment schemes to be rolled out across Asean member states, while adding that more tie-ups with payment services providers and financial technology firms could support disbursements and transactions such as cash handouts and relief schemes.
Given both physical lockdown measures and concerns that cash transactions could spread the deadly virus, the council suggested that digital payment will pick up amid the pandemic. That could lead to “long-term efficiencies and increased capacity to participate in online commerce, especially across borders”, as well as wider financial inclusion, the report said.
Banker Amol Gupte, who co-chairs the US-Asean Business Council’s financial services committee, said in a statement that the council is ready to offer immediate help such as digitising economies for business continuity and raising capital to support spending needs. The council is also prepared to collaborate on longer-term initiatives for resilience, he added. Pandemic bonds are one disaster risk financing strategy proposed by the council.
Said Mr Gupte: “The U.S. business community has a stake in the robust economic recovery of Asean post-Covid and we are keen to work with member states on both the financial response and initiatives targeted at future growth.”