In Southeast Asia, Thailand and Vietnam have faced increased infection rates after successfully curbing the virus in 2020. Singapore and Malaysia are also facing similar challenges, and now, these countries have imposed movement restrictions to prevent further contagion.

While mobility restrictions are necessary during the pandemic, the challenge with these measures, such as lockdowns, is that it hurts the economy and businesses badly. In 2020, Indonesia – the largest economy in ASEAN – fell into a recession even after going through several models of movement restrictions to keep the economy running. Other countries have dealt with a significant decline in growth. Many businesses have suffered, especially those in the travel and tourism industries.

There are lessons that we can gather from how businesses have struggled to survive in the first year of the pandemic in Southeast Asia.

First, a few studies have indicated that the digitalization of business operations serves as a major factor in helping businesses to survive during the pandemic. For example, moving from brick-and-mortar shops to e-commerce helps businesses sustain themselves despite movement restrictions. Small businesses in Indonesia have shown resilience by tapping into various e-commerce platforms such as Tokopedia and even social media sites like Instagram, etc., to keep their shops running.

Second, those who have attempted to pivot and offer new digital value propositions during the pandemic have tended to accelerate the learning process and move ahead of their competitors in acquiring new digital capabilities. Digital transformation is an investment in the future. Even if businesses fail to implement digital transformations during this difficult period, they will slowly build digital capabilities that are useful for the future. This is important because the digitalization of SMEs helps to boost the economy. A 2020 study found that the digitalization of SMEs could add between US$35 billion and $41 billion to Thailand’s economy by 2024.

The third lesson is that retrenchment strategies – that is, continuing to operate and reducing costs as much as possible – work because they signal that businesses are resilient and maintain consumer trust. But this type of strategy can only be done by medium or big businesses backed by strong capital. Thus, it is a luxury that many small businesses cannot afford. This is unfortunate because small business make up the largest proportion –89 to 99 percent – of all businesses in Southeast Asia.

Popular

New islands appear after Anak Krakatau volcano erupts

A ministry restored

Prabowo resurrects advisory board