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Collaboration as a mission, to create value, innovation and new opportunities for growth through free and open digitally enabled cross border Trade in APAC

5The Pacific Basin Economic Council Vision outlined for 2024-2027 ahead of its AGM 2024 – by Michael Walsh CEO PBEC – June 2024

Collaboration as a mission, to create value, innovation and new opportunities for growth through free and open digitally enabled cross border Trade in APAC

Hello PBEC members, colleagues and followers. It’s a pleasure to share the latest mission and vision of the Pacific Basin Economic Council (PBEC) for the next three years- an organization that has been at the forefront of connecting leaders, promoting collaboration between them, providing value creation, and sharing innovations in Asia-Pacific international trade & investment relations for over 57 years.

The PBEC is much more than just an advocate for free trade and sustainable economic development across the Asia-Pacific region. We are a think tank these days that continues to bring together business leaders, stakeholders, government representatives, and other associations to share market intelligence, innovative initiatives, and facilitate cross-border collaboration.

PBEC enjoys within its ranks some of the most prominent public executives, owners, and entrepreneurs in the region. PBEC is a true asset in connecting, supporting, and matchmaking business leaders, while providing inclusive policy recommendations from diverse opinions across Asia-Pacific.

Our goal is simple – we share regional insights within our peer group and agree on what governments and policymakers need to hear directly from the companies that are experiencing the realities on the ground and the urgent assistance they need. We aim to drive efficiencies, speed up response times, and support the adoption of global best practices and mutually beneficial standards that safeguard the free flow of goods, services, and people, without undermining national identity, sovereignty, safety, or security.

The companies that were once the protagonists of the epochal change brought about by the formation of the PBEC, APEC and PECC institutions, Asia-Pacific free trade agreements and enjoyed capital flows to places like Hong Kong, Tokyo, Seoul, Singapore, Manila, Bangkok, Kuala Lumpur, Jakarta, and Canberra/Auckland are the same ones that today, more than ever, want to trigger a new phase of change which now includes Chinese and Latin American businesses playing a more dominate and crucial role.

They seek to eliminate inefficiencies, support green and sustainable investments, and ensure that the WTO system and global supply chains do not break down into factions, where trade and commerce become completely weaponized as national security. PBEC has only ever wanted to help its members’ businesses progress and grow.

However, we continue to observe supply chain disruptions, excess supply, significant fragmentation of companies, and logistics costs that are structurally higher than the European, LATAM and ASEAN average. We certainly live in complex times, characterized by geopolitical instability, volatility in the costs of raw materials and energy, current weakness in demand, and the rapidly evolving digital era, including the adoption of AI.

These challenges cannot be used as excuses or distractions for policymakers. Instead, they must give us a greater sense of urgency regarding the need to take action rather than further postpone certain changes to the overall system.

Faced with this scenario, there is a growing consensus around a couple of principles:

The innovation of the processes that represent the infrastructure of the current global supply chains and GHG/ESG reporting system can no longer be postponed and mandates are the order of the day.

Business leaders and stakeholders must seek and analyze market factors and supplier responses more regularly, utilizing organizations like the PBEC, to find the key to being truly effective in closer collaboration across the global supply chain with brands and ultimate beneficiaries.

To that end, PBEC has identified three key areas of work for the next three years:

Digitalization: New ways of working across borders, sharing data, digital currencies and assets, and adopting technologies like AI.

Supply chain resiliency: Free trade agreements, trade pluralism, development finance initiatives, and infrastructure.

Sustainability: Intellectual property rights, youth engagement, pathways to carbon neutrality, and carbon trading.

In the realm of digitalization, we have identified several necessary paths:

Alignment of product master data to ensure quality trades, automation, and the elimination of errors and misalignments.

Paperless, electronic exchange of commercial documents, such as orders, shipping notices, delivery notes, and invoices, leveraging EDI standards and protocols to automate this exchange and include third parties like logistics operators.

Enhancing sustainability reporting by making it easier to acquire information fundamental for disclosing the environmental impact of companies and their supply chains, including Scope 1, 2, and 3 emissions.

Many of our member corporations have already faced the digital transition and carried out a review and digitalization of their processes to increase efficiency. However, we still see that many firms within Asia-Pacific are far behind in their own digitalization path, and the communication chain between companies within their supply chains on this issue is something PBEC wishes to close the gap on.

One line of intervention concerns the promotion of knowledge about standards and frameworks, such as those provided by GS1, ICC, IFRS and ADB, and the benefits they can deliver. These are often little known among the contact people of our members, who are also not heavily involved in promoting them. Innovating requires the diffusion of innovation throughout the organization.

What we need is a change of pace. To describe supply chain relationships, we cannot simply talk about the exchange of goods. The level of involvement of different functions, from marketing to the supply chain, from sales to information technology, in the context of one’s relationships must be truly continuous and have a certain type of breadth.

To win the game of innovation and efficiency, we must be able to share information in a modern way, with a continuous flow and an exchange of data that allows us to manage complex and onerous processes by making them simpler and more efficient. Digitalization is truly the key to achieving this type of result.

PBEC is calling for the materialization of the collaborative spirit that characterizes our member community and the use of standard data sharing platforms. In this way, the benefits of reducing costs and errors are obtained not only at the individual company level but as network externalities that multiply as the number of participating actors and users of the standard increases.

Technology alone is not enough. There is a need to change attitudes and mindset. Only by working together within the APAC community can this clear priority be transformative, moving from a more conventional and generally transactional model to a more virtuous and efficient one that can generate greater prosperity, well-being, and progress for the overall system.

To truly scale the benefits of these standards, we must avoid imagining that they only concern some large companies. When we talk about processes and standards, we must keep in mind that numbers are key, and the involvement must be of all companies, big or small.

This is why it was crucial for PBEC to publish an annual report, which has the ability to follow the implementation by companies and provide guidance and recommendations to those that follow.

Without the digitalization of the supply chain, we also risk losing the opportunities that lie within technological progress. Artificial intelligence and predictive models are very promising, but they are fundamentally based on large quantities of high-quality data. Without data, they do not work or work poorly.

The industry subject matter experts and distribution companies represented on the PBEC board, at their highest levels, including those representing respective trade and policy recommendation associations, are committed to the objectives of this strategic plan, convinced of the need to accelerate efficiency.

It’s time to move towards a more advanced relational model. Only together can we actually succeed in building consensus and actions for a more efficient, more transparent, and more customer-centric future.

Thank you all for taking the time to read this document. I look forward to your support in it being adopted at the upcoming AGM 2024. I look forward to your continued collaboration and the progress we will make in driving Asia-Pacific’s international trade development and international cross border business relations to new heights.

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