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Dr. Razeen Sally of the University of Singapore outlines three megatrends in the Asia-Pacific region

Dr. Razeen Sally of the University of Singapore addressed members of the Asia-Pacific Corporate Development Leaders Network in Singapore on 5 February 2015. He discussed three megatrends in the Asia-Pacific region:

  • Globalisation of supply chains
  • Shift from energy scarcity to energy abundance as a result of the shale revolution in the US
  • Urbanisation – the rise of both established and new cities in the region

Globalisation of supply chains

Fundamental changes in supply chains are revolutionising international trade. According to the World Trade Organization, there is a shift from the traditional model based on start-to-finish production in individual countries to a more dynamic and complex environment where production is fragmented across borders and in which services and logistics are much more important – all to serve global markets.

North America, Europe and East Asia are the three main hubs supporting these supply chains, which are concentrated in the information and communications technology (ICT) and manufacturing sectors.

The globalisation of supply chains will likely have the following outcomes:

  1. Tighter integration between imports and exports
  2. Altered trade balances around the world
  3. Increased services content; today services is around 50% of global trade measured in value-added terms

Recentralisation and decentralisation of supply chains will become key issues. Decentralisation will likely prevail – for two reasons.

First, there is potential for geographic expansion to Southeast and South Asia, especially as low-cost production migrates out of China’s coastal regions. With policy changes such as labour market deregulation, India could grab much of the labour-intensive part of manufacturing supply chains. And second, supply chain fragmentation will likely spread from ICT manufacturing to other parts of manufacturing, services and even parts of agriculture.

Currently, there is a disconnect between supply chain realities and trade negotiations with respect to all sorts of non-tariff and regulatory barriers. The WTO and most free trade agreements have weak disciplines on regulatory barriers to trade and investment. There are three initiatives in the Asia-Pacific region – the Trans-Pacific Partnership, led by the US (with 10 other countries involved); the RCEP, led by China (consisting of ASEAN members and six other countries); and the ASEAN Economic Community. If all three were much more ambitious than other trade agreements, the potential to facilitate supply chains would be considerable, but the reality is different. RCEP and AEC in particular will likely be quite shallow agreements once implemented.

Shift from energy scarcity to energy abundance

The rapid growth of US shale oil and gas production has prompted a radically new era of energy abundance and will likely impact commodity prices in the short and long term. Over the next 20 years, more than 50% of all energy consumption will be in Asia, fuelling its industrial development and bringing electricity to rural areas. Asia’s reliance on fossil fuel imports will increase, especially from the Middle East.

One consequence of this will be the need to build new infrastructure to match demand. Developing Asia needs USD$20-30 trillion of new energy infrastructure by 2030. By 2020 the US could overtake Saudi Arabia as the biggest producer of crude – it is already surpassing Russia in natural gas production, is close to energy self-sufficiency and could become a major exporter. The US is a key balancing power in Asia, but there are increasing tensions between a rising China and a relatively weaker US. The worst-case scenario is a US disengagement with Asia, leaving the field clear for more geopolitical competition among China, Japan and India. But the US’s prospects as Asia’s vital balancing power would be much better were it to export oil and gas to the region.

Urbanisation – the rise of cities

Urbanisation is one of the world’s key megatrends, and it is happening above all in Asia. The McKinsey list of top 600 cities notes that by 2025, China will have 250 top cities and India 60, with seven megacities (with a population of over 10 million) in China. About one billion new emerging middle class consumers will be added by 2025, concentrated in mid-tier cities (with populations of between 250,000  and 10 million) in emerging markets.

We should look to cities more than countries for policy innovation. The most effective mayors act as CEOs, establishing the best policies for doing business, to attract trade, foreign investment and foreign talent, and to roll out hard and soft infrastructure. Currently, Hong Kong, Singapore, New York and Dubai are the only truly global cities, but other cities can be categorised in terms of what they do best and be plugged into global supply chains in other ways.

For financial services, the implications of urbanisation are the following (these are reflections from Vishrut Jain):

  1. Should banking firms consider the top-tier, obvious cities or invest in the next tier? Urbanisation will mean USD30-50 trillion of infrastructure investment that will lead to massive opportunities.
  2. Will there be an international banking model or will it be restricted to the top few banks by country? An international trade finance model that hooks into trade flows and that leverages connectivity is becoming a reality. This could signal a move away from domestic banking.
  3. What will be the impact of energy flows? The new energy patterns will have a major impact on currencies and the balance of power in Asia (for example, Japan will be able to access gas for USD4), and there will be more money available to buy assets in the region.

The original article was written by Ernst & Young Global Limited, and was subsequently edited by Dr. Razeen Sally.

For more information, or to book Razeen Sally as a keynote speaker for your conference or event, please contact Raleigh Addington at raleigh@chartwellspeakers.com or call +852 5512 9714.

Keynote by Parag Khanna: “Future Trends in the Century of Cities”

Dr. Parag Khanna, a leading next-generation voice on the nexus between international affairs, economics and technology, gave an insightful opening keynote on “Future Trends in the Century of Cities” and moderated a discussion, titled “Reimagining Cities: Transforming the 21st Century Metropolis”, at the 2014 New Cities Summit in Dallas.

In this talk, Dr Khanna lays out some of the context and challenges that cities around the world are facing today, and argues that the city has to reinvent itself. He begins by looking at Big Data – currently 50% of people live in urban environments, and that number is increasing by 10% per year. By 2025, 100 of the 600 richest cities will be based in China, representing the majority of the world’s GDP. When combining these figures with India, the pace of urbanisation becomes staggering – the two largest countries demographically will become collections of cities.

Future Trend in the Century of Cities

Reimagining Cities: Transforming the 21st Century Metropolis

But how will cities reinvent, adapt and transform themselves to fit the capacity of these growing populations, integrate new technologies, and become more dynamic both economically and culturally? Watch discussions from the summit below for more insight!

Speakers:
Hiroo Ichikiwa, Executive Director, the Mori Memorial Foundation
Jaime Lerner, Celebrated Urbanist, Former Mayor, Curitiba, Brazil
Arturo Sarukhan, Former Ambassador to the US, Mexico
Richard Sennett, Centenial Professor, London School of Economics
Mpho Franklyn Parks Tau, Executive Mayor, Johannesburg

Moderator:
Dr. Parag Khanna, Managing Partner, Hybrid Reality

For more information on how to book Parag Khanna as a speaker, please contact Alex Hickman at alex@chartwellspeakers.com or call +44 (0) 20 7792 8004.

Razeen Sally, an expert speaker on the rise of Asia, explains how cities can benefit from urbanisation

Countries around the world need to devolve power to cities and be more open to foreigners if they are to benefit from new patterns of urbanisation, says Razeen Sally, Associate Professor at the National University of Singapore in this World Economic Forum (WEF) video.

Citing the recent WEF report on “The Competitiveness of Cities”, of which Razeen was the lead author, he explains that the coming decades will see the next wave of mass migration to cities, especially in Asia and Africa. Megacities are sprouting while entirely new cities are being created. Cities, with their economies of scale, scope and connectedness, bring people and markets together in a single, dense space. They will be one of the driving engines of growth, poverty reduction and prosperity over the course of this century.

Razeen goes on to argue that whilst cities can benefit from urbanisation, some are struggling to cope with challenges such as large-scale influx of people, or the inability to provide basic services, houses or jobs.

Click here to read the full report, which also identifies six global “megatrends” especially relevant to cities (1) urbanisation, demographics and the emerging middle class; (2) rising inequality; (3) sustainability; (4) technological change; (5) industrial clusters and global value chains; and (6) governance.

For more information on how to book Razeen Sally for an event, please call Alex Hickman on +44 (0) 20 7792 8004.

Gabe Klein: game-changing pioneer in urban design and transportation

Gabe KleinGreat chatting to Gabe Klein, who ran the city of Chicago’s Department of Transportation (CDOT) from 2011-2013.  While at CDOT, Gabe and his management team transformed the agency into a national model for innovation in transportation and tech.  From publishing six groundbreaking plans for Chicago, to not just talking about Complete Streets, but putting it into practice, baking sustainability and livability into every project that CDOT undertakes.  The soon to be largest bikeshare program in the United States, Divvy, has already revolutionized how Chicagoans navigate their neighborhoods.

Gabe has a well-deserved reputation for getting stuff done, and he is much in demand for his insights on how cities need to innovate, and develop their services for the 21st century.

Read what the Chicago press made of Gabe’s time at CDOT here: http://www.suntimes.com/opinions/23600025-474/new-cdot-chief-will-have-a-big-job-ahead.html

Visit Gabe’s website here: www.gabeklein.com

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