Businesses in the ASEAN region face an interesting situation this year with the implementation of near-sourcing strategies to overcome supply chain issues in China, presenting opportunitiesca for local manufacturers. On the other hand, interest rate hikes both here and in other regions will impact the liquidity of trade finance institutions.
How organizations implement their digital transformation strategies will play a huge part on whether they will turn the uncertain economic climate across the region and the world to their advantage. To guide ASEAN decision-makers navigate 2023, Samir Neji, Founder, #dltledgers shares five key trends that are expected to have a significant impact on their businesses:
1. Continued transition to “just-in-case” strategies: Many businesses have reverted to this model as a response to pandemic-related supply chain issues in previous years. We can expect more organisations to follow suit as more challenges crop up while existing ones persist this year. According to EY, ASEAN companies that opt to do so: supply chain visibility, intelligence, and traceability; supply chain resiliency and sustainability; and digital enablement. Blockchain technology is a key enabler of this, as it allows all parties to a transaction to have visibility. At the same time, each transaction’s record is immutable, eliminating fraud and assuring all parties involved of its accuracy and reliability.
2. Greater emphasis on sustainability: With global shipping alone accounting for 3 percent of all greenhouse gases, regulations and customer expectations are driving companies to reduce their carbon footprints across their supply chains. Blockchain-enabled traceability and visibility can help organisations track down their products’ and shipments’ carbon footprints from end to end, enabling decision-makers to identify where they can work to reduce greenhouse emissions and raw material consumption.
3. Renewed focus on working capital management: With central banks in the region following the US Federal Reserve in raising rates, there will be a renewed focus on working capital management. Decision-makers will be looking for ways to improve cash flows and make processes more efficient. Blockchain technology assures financial institutions that transactions are free from fraud, increasing confidence and allowing for more funding.
4. Blockchain implementation at scale: With blockchain viability and application becoming increasingly apparent, it will be implemented at scale for supply chains. Instead of being used between several companies across a supply chain, governments will deploy blockchain solutions for use in specific trade corridors. Companies transporting goods between two ports or airports in any of the aforementioned trade corridors will have to use a blockchain platform to record and update their transactions. There will also be more use-cases outside of shipping such as tracing counterfeit products and parts, financial transactions, and maintaining sensitive data such as patient health records.
5. Blockchain-driven transformation will further drive Web3 transformation: As more companies, industries, and sectors adopt blockchain tech, even more applications and use cases will be discovered, leading to an upward spiral in blockchain tech and hopefully a breakthrough in Web3 becoming reality. In general, Web3 will dramatically change how data is stored, secured, and consumed. From central servers of a few organisations, data will be owned and managed securely by millions of users using blockchain platforms. Using the same technology, businesses can connect with each other with a single source of truth, helping them make timely and informed decisions.
“Digitising supply chain processes and operations is the key to turning the current economic climate from a challenge into an opportunity. Blockchain, in particular, has tremendous applications ranging from automating processes, securing cross-border transactions, combatting trade finance fraud, and sustainability”.
“On a macro level, we see 2023 as the year where blockchain makes a breakthrough in terms of becoming universally accepted as something that is here to stay and will radically change the way we do things, not just in supply chains”.
