PETALING JAYA: Economists say strengthening regional ties, as agreed to by Asia-Pacific Economic Cooperation (Apec) finance ministers recently, will build the foundation for a strong and sustainable post Covid-19 economy.
In a joint statement earlier this week, Apec finance ministers stressed the need for coordinated multilateral cooperation to help the region bounce back from the pandemic – which has seen several economies hit by double-digit drops in quarterly GDP between Q1 and Q2.
Centre for Market Education Malaysia CEO Carmelo Ferlito called the ministers’ message “positive”, stating it was clear that Covid-19 and the consequences of the various lockdowns on movement required a coordinated strategy in order to start economic recoveries – which he said would be longer than expected.
Yeah Kim Leng, a professor of economics at Sunway University, said that as most Asia-Pacific countries were highly open and trade-dependent economies, a synchronised regional or global recovery would lift all countries through higher combined domestic and external demand that would provide multiplier effects.
“In an increasingly integrated and connected world economy driven by global supply chains, digital technology and international trade, finance and capital flows, a multilateral approach to tackling common problems and challenges is almost always superior to a single country or go-it-alone approach,” said Yeah.
“Likewise, in facing common issues ranging from the current pandemic to tax avoidance, climate change to sustainable development, the sharing of ideas and experiences and coordinated policies such as facilitating cross-border flow of goods, services and essential personnel will help to sustain economic recovery and lead to higher regional growth,” he added.
In the Apec Virtual Finance Ministerial Statement on Mitigation and Recovery of Covid-19 Pandemic, the ministers said member economies needed to continuously exchange experiences and good practices.
The ministers also reaffirmed their commitment to promoting tax certainty and tackling tax avoidance and evasion in the Apec region in light of the severe regional economic downturn and the challenge that Covid-19 is posing to fiscal sustainability.
While noting that fiscal stress was a pressing issue which needed immediate attention by the regional finance ministers, Ferlito stressed this should be tackled not by introducing new taxes but with better taxes, or a better enforcement of the existing ones.
“How such fiscal coordination will be implemented remains a bit obscure. Last spring, we saw EU countries struggle to achieve the common goal of a EU recovery fund,” Ferlito pointed out.
“Therefore, it is important that coordination does not become uniform, in the sense that different countries have peculiar fiscal systems.
“On the other side it is good to share experiences and to share successful stories, because taxation is also a competitive instrument.”