How ARCC can improve food security in ASEAN during the Covid-19 crisis
The economic consequences of Covid-19 will negatively impact hundreds of millions of people across the world and none more so than the estimated 650m urban poor in Southeast Asia.
The ten countries comprising ASEAN are particularly vulnerable to the shocks reverberating around the global economy. The collapse in the price of oil from $60 to $25 (Brent crude) this past month has placed an immediate shock on Indonesia where hydrocarbons represent 12% of GDP and where proven reserves are second only to China in Asia Pacific. A flight to safety in financial markets in the past week has seen the US dollar appreciate against a basket of Southeast Asian currencies including the Philippine peso, the Thai bhat and Malaysian ringgit. According to the Institute of International Finance, non-resident investors have taken $78 billion out of emerging market stocks and bonds since 21 January, representing more than three times the amount of cross-border outflows in the three months after the financial crisis of 2008. Emerging market policy makers have been quick to react with interest rate cuts to facilitate liquidity and ease debt repayments. The reaction by central banks has been somewhat predictable, albeit tinged with an element of inevitability: lower the cost of money and increase the amount of fiat money in circulation. While the trigger for this central bank intervention may be different to 2008, the objective remains the same: keep credit flowing through the economy and maintain liquidity.
However, it is important not to lose focus on the impact this virus is having on a daily basis for millions of the urban working poor in Southeast Asia. It’s all well and good to analyze monetary policy action by central governments, but ultimately the immediate concern for millions of people is whether they will have any money to buy food for their evening meal tonight. Short term currency pressures may in ordinary times be of significance but if the EU and US contracts by 15–25% in Q2, local currency movements will be a secondary story. The real concern for emerging markets over the coming weeks and months is the impending acute pressure that Covid-19 will have on food supply chains and the price of staple goods. Global outbreaks such as Ebola, Sars and Mers all had negative impacts on food and nutrition security. Squeezed supply lines and rising prices will disproportionately impact the most vulnerable and disadvantaged communities. For example, the 2014 Ebola outbreak caused domestic rice prices in Guinea, Liberia and Sierra Leone to rise by 30%. The price of cassava, a major staple in Liberia, soared by over 150%. In 2003, the SARS outbreak triggered food market panics in Guangdong and Zhejiang. The urban working poor are often engaged in the least secure forms of employment. Severance pay or ‘notice’ are non-existent and with most urban poor workers having next to no savings, a rise in food prices will lead to an immediate devastating impact. The poor cannot wait for hand-outs from the government that may never arrive. Families reliant on remittance funds from relatives working overseas are likely to be under even more pressure as relatives try to protect the value of their earnings by keeping their wages in USD.
It is in times of crises when the discrepancies and inequalities between the poor and economic elites are cruelly exposed. It is in times of emergency when creaking infrastructures are laid bare and when instances of corruption become harder to stomach. First world governments are already under unprecedented strain as they work towards limiting the health and economic consequences of Covid-19. One has to assume that governments in the developing world, that arguably are under strain even during ‘normal’ times, are going to be pushed to the brink in providing their citizens with basic essentials. Governments and societal systems were not designed to operate under the extremes currently being observed by the global pandemic.
What is needed across Southeast Asia, as a matter of urgency, is a radically new approach to generate wealth by adopting a bottom-up decentralized approach that provides radical social transparency and fair inclusive access to assets that can be used for long-term entrepreneurial activity by the urban working poor. By engaging in Social Proof of Work, any user is able to earn ARCC. The limits, restrictions and barriers to entry that exist in the current centralised system that is skewed against the interests of the urban working poor are removed. As a crypto reserve currency, ARCC is positioned as an accessible ‘store of value’ and transactional currency. Users who earn ARCC are protected from the value dilution of local fiat currency and are immune from any restrictive measures that the government may impose under the guise of emergency measures.
Thanks to the technological advancement of decentralised finance and the application of blockchain technology, ARCC is in the position of ensuring that the urban working poor are not completely reliant on the whims of a government that historically has catered to the interests of the economic elites. ARCC is designed to thrive in periods of radical uncertainty. The arrival of a new decentralised paradigm has arrived. Join us.
March 20th, 2020
Research of IBMR.io & ARCC
Editors: Eric Tao, Head of Media IBMR.io & Sinjin Jung, Managing Director IBMR.io.
