NATO leans on its Asian allies

Insight: US politics has, as so often, overshadowed everything else in recent days. One event that deserved more attention was last week’s NATO summit, which took another step forward in cooperation between the Euro-Atlantic defense organization and its allies in Asia. Leaders from Japan, South Korea, Australia and New Zealand attended the summit in Washington for the third year in a row. 

Impact: When NATO first invited these partners to its meetings the aim was to affirm common ground on general principles. This year the talk was much more specific and about getting their respective defense industries to cooperate. With western weapons stockpiles being used up rapidly in Ukraine, there is an opportunity for arms exporters like Australia and Korea to resupply the US and EU countries. And longer term, it makes sense to share technology and develop common defense platforms, such as the new fighter jet being built jointly by the UK, Italy and Japan. 

40%

The jump in shuttlecock prices in China over just six months, triggering complaints from Asia’s millions of badminton players. The reason is that Chinese farmers are switching from rearing ducks and geese, whose feathers make the shuttlecocks fly, to pigs as declining pork prices have revived consumer demand. Which just goes to show how interconnected our supply chains are.

Insight: The Singapore Food Agency has approved a total of 16 insect species for import, including crickets, grasshoppers and mealworms, for use in the form of ingredients like insect protein powder, or ready-to-eat snacks. Importing 90% of its food, Singapore is vulnerable to critical supply chain disruptions from geopolitical tensions and climate change. In this context, the country is pushing to diversify its food sources and bolster food security. 

Impact: Insects are just one version of ‘alternative proteins’ as Asia takes a leading role in innovation. Singapore was the first country worldwide to approve lab-grown meat back in 2020, and Japan ranks second behind the US in alternative protein patent value, with startups creating a variety of products including plant-based dairy products, soy proteins and silkworm proteins. Yet despite insects and soy-based proteins being a traditional food source in many Asian countries, the “alternative protein” sector is lacking in consumer understanding and acceptance, and private funding in the sector dropped by 83% in 2023 in APAC. While emphasizing the health, safety and nutritional benefits of alternative proteins remains important, brands will need to dig deeper with their marketing strategies to engender widespread change in consumer attitudes. 

Insight: Rapidly digitizing Indonesia got one of its first big tastes of cybercrime when a hacker group thought to be linked to the infamous LockBit 3.0 organization held data from 282 Indonesian government agencies for ransom. LockBit is also thought to be behind similar attacks in other Southeast Asian countries like the Philippines and Malaysia.  

Impact: In 2022, Indonesia ranked lowest of 20 digitally advanced nations in MIT’s Cyber Defense Index. It would seem as Southeast Asian economies experience rapid digitization, their cyber defense infrastructure is struggling to keep up, leaving organizations in the region as juicier targets for hacker groups looking to send a message or make a quick buck. Experiencing a cyberattack can be a PR nightmare for an organization, damaging its reputation and credibility and even turning investors away. PR departments would benefit from taking Jakarta’s cautionary tale to heart and working closely with tech departments to identify risks and communicate cyberattack-readiness. 

Singapore and Vietnam managed just one IPO in the first half of the year.

Insight:  Initial public offerings are still few and far between across Southeast Asia. In the first half of this year, there was a one-fifth decrease in year-on-year listings to just 67, raising 60% less than in the same period as last year. The bright spots, once again, were Indonesia, Malaysia and Thailand while Singapore and Vietnam managed just one IPO apiece and the Philippines had two. 

Impact: High interest rates and political uncertainty (Indonesia had presidential elections in H1) must take some of the blame for this decline in activity. More importantly, investors are now looking for profitable companies rather than the all-out (e-commerce) growth stories that have been so popular in this part of the world in recent years. On the positive side – as this report highlights – national regulators are working on incentives and reforms to make public listings more attractive in the future. 

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