A Fiscal Risk Framework for the Food Industry developed by Oxford Economics in collaboration with Food Industry Asia (FIA), finds that the industry is most at-risk in Philippines, with Indonesia and Thailand close behind.
Developed as the second paper in a three-part series that assesses the impact of Covid-19 on the food industry in the region, ‘Fiscal Risks for the Food Sector in Asia After Covid-19’
assess the damage done to government finances as a result of the COVID-19 pandemic, the urgency with which governments across the region need to repair their balance sheet, and the specific exposure of the food sector to risks arising from this effort.
Food Industry Asia worked with Oxford Economics to identify the impact post-pandemic fiscal corrections might have on the food business in the context of the food manufacturing sector across the Asian region. The study concluded that the food sector is most exposed to fiscal risk in Philippines, Indonesia, Thailand and Malaysia. Risk in Philippines and Indonesia is particularly driven by the potential cost pass-through from any cuts that could be made to relatively generous agricultural subsidies, while in Thailand the low rate of sales tax presents a potential revenue-raising option for the government during the recovery. Especially acute health problems mean Malaysia also scores towards the riskier end of our fiscal risk assessment.
It is still too early to say exactly what the lasting impacts of the COVID-19 pandemic will be on economies in Asia. But it is already clear governments will need to reassess their fiscal plans in order to ensure public finances remain sustainable in the years ahead, and resources remain available for key public spending priorities. This will pose challenges for the food industry, and the nature of these challenges will vary across the region.
In the final paper of the three-part series between FIA and Oxford Economics, we will study the impacts of COVID-19 on the Asian food sector, in a post-pandemic world. The third and final paper will assess the prospects for activity and jobs in the sector to rebound, but also examine the lasting impacts on household finances and spending power.
About Food Industry Asia
FIA was founded in July 2010 by a group of leading food and beverage companies. From our base in Singapore, we seek to enhance the industry's role as a trusted partner in the development of science-based policy in the region.
FIA provides an important hub for advocacy and debate. We bring together the food industry's most senior business leaders to champion initiatives that promote sustainable growth and support regional policies that deliver harmonised results.
Food Industry Asia