Pacific Possible

APAC economic growth has been primarily powered by government support and SMEs acting quickly in using technology for efficiency and productivity. Our EVP, Rajesh Subramaniam, shares his positive perspectives on the future of the Asia-Pacific economy.

Rajesh Subramaniam, FedEx Executive Vice President, Global Strategy, Marketing and Communications, on one of the biggest economic transformations the world has ever seen.

Over the last several years, economic development has continued at a furious pace in the Asia-Pacific region. While turbulence in the Chinese economy has helped slow down that growth a bit, it can’t mask the region’s remarkable rise — something most observers predict will continue.

We sat down with Rajesh Subramaniam, Executive Vice President, Global Strategy, Marketing and Communications, FedEx Services, for his take on the developments. Subramaniam has special connections to the region. He previously led Asia-Pacific marketing for FedEx and remains a frequent traveler to that part of the globe.

 

ACCESS: Recent slowdown aside, the Asia-Pacific region has flourished in the last decade. Can you provide a sense of perspective on that growth?

RAJESH SUBRAMANIAM: Without question, the situation in China is creating uncertainty throughout the region — and the world, for that matter. But here’s a big-picture figure to consider: Last April, the World Bank noted that Asia-Pacific will account for one-third of global economic growth in 2015, which is twice the combined contribution of all other developing regions. In other words, it remains the world’s fastest-growing region. That growth hasn’t only come from China, either. For instance, Malaysia has averaged 5.7 percent GDP growth since 2010. Last year, Vietnam’s economy expanded by nearly 6 percent, a figure that was fueled in part by a rise in exports. And the Philippines is on track for a similar level of growth, thanks in part to its strong electronics and high-tech manufacturing sectors.

 

ACCESS: What are some of the factors behind that?

R.S.: Innovation is a huge reason. Each year, Bloomberg ranks the world’s most innovative countries. In 2015, Asian countries accounted for nine of the top 50.

What’s driving the innovation? Numerous elements. The costs of operating a company tend to be lower in Asia-Pacific than in Europe or North America. A recent Microsoft study found that small and medium-sized businesses in emerging Asia-Pacific economies have been quick to leverage platforms such as mobile and the cloud, which helps make them nimble and productive — often on limited budgets. And governments in the region tend to provide high levels of support to business.

Singapore offers a great example of that support. Its government has created hubs for aerospace, healthcare, biotech and more. The results have been remarkable. For example, the aerospace hub has attracted more than 100 companies, including airline engine makers such as Rolls-Royce and Pratt & Whitney. As a result, Singapore is now a global aerospace leader — it handles 25 percent of the Asia-Pacific region’s aircraft and component maintenance, repair and overhaul work.

The same goes for its healthcare hub, which the country began developing in the early part of the last decade. The IMD World Competitiveness Yearbook has noted that Singapore now has the world’s fourth-best healthcare infrastructure, and major corporations such as Medtronic have established a presence in the country within the last few years.

ACCESS: What are some results of this growth and innovation?

R.S.: The most striking is the rise of the region’s middle class. In 2009, Asia was home to 28 percent of the global middle class. Sometime in the next decade, it will be home to 66 percent of the world’s middle-class population.

In other words, we are now in the midst of one of the biggest economic transformations the world has ever seen. The result will be game changing. We will see a new wave of consumers with considerable purchasing power. The balance of geopolitical power could completely shift. And global trade patterns will no doubt look far different than they do today.

We are already beginning to see the effects of this expansion. For example, airlines expect the number of passengers to double over the next two decades. And Boeing has projected that global airlines will need more than 38,000 new planes just to meet the demand.

ACCESS: How does the presence of FedEx help the AsiaPacific region prosper?

R.S.: Well, we’ve had a presence in China and Singapore since 1984, and we have arguably the best transportation network in the region. In 2009, we opened our Asia Pacific Hub in Guangzhou, China. It operates 144 flights each week and anchors our intra-Asia business. In 2012, we opened our South Pacific Regional Hub in Singapore, which is the country’s first and only express transportation facility. It’s a regional consolidation point for trans-shipments in and out of Australia, New Zealand, and Southeast Asia countries such as Laos and Cambodia. And it houses our air, ground and clearance operations under one roof.

Those clearance operations are critical. The hub is also the only one in Singapore that allows for on-site facilitation of cargo shipment clearance by Singapore Customs and the country’s Immigration and Checkpoints Authority. The end result is faster and more convenient customs clearance for FedEx customers.

 

FedEx is committed to the Asia-Pacific region. With e-commerce and global trade increasing demand for our services, we’ve recently expanded our freight forwarding and supply chain capabilities. We’ve already been here for more than 30 years. We’re looking forward to continuing to provide customers with the services they need as the region continues to grow and evolve.

 

Source: FedEx Access, http://access.van.fedex.com/

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