Southeast Asia’s agri-food sector has remained resilient amid the COVID-19 pandemic, with a gross domestic product (GDP) contribution of US$717 billion in 2019, according to a report released by Oxford Economics on Thursday (25 Mar).
Commissioned by Food Industry Asia (FIA), the Oxford Economics’ report examined the sector’s economic impact across four Southeast Asian countries – namely Indonesia, Thailand, the Philippines, and Vietnam.
It found that the agri-food sector is responsible for 48 per cent — almost half — of the entire workforce with 127 million jobs.
The sector also contributed a total of US$95.6 billion in tax revenues across the region, the report revealed.
Based on the report’s Economic Recovery Matrix, Indonesia faces the greatest risk in its recovery, while the Philippines and Thailand also showed important vulnerabilities due to their dependence on tourism to revive their food industries.
Of the four markets, Vietnam was ranked the lowest in terms of recovery risk, it said.
The report’s Fiscal Risk Assessment Framework also found that all four countries assessed are amongst the most at risk in Asia from post-COVID-19 fiscal adjustments.
Their scores are higher than China, India, and other higher-income Asia economies.
Oxford Economics observed that “poorly crafted” fiscal responses would potentially harm the agri-food sector’s recovery, impacting food security, income and employment, and economic opportunities as a whole.
To tackle this, it said that Governments would need to develop successful fiscal responses that do not inhibit the recovery of the agri-food industry by using education to influence behaviour, favouring regulatory standards over taxes, and maintaining a constant conversation with the industry.
“As the region looks to emerge from the pandemic stronger, it is important that policymakers provide the most conducive conditions for the agri-food industry to successfully rebuild itself, and that fiscal policy is carefully planned, designed, and communicated,” said Oxford Economics’ director of economic consulting Asia, James Lambert.
“That will allow the industry to continue to provide the economic benefits it has delivered over recent decades,” he added.
Household food spending will see an annual reduction of 0.8 per cent this year, Oxford Economics projected, while Asia will not see a return to 2019 levels of inbound tourism until 2024.