Coronavirus has accelerated growing awareness of need for fairer capitalism, as businesses step up to help

Businesses that had created bridges to their communities before the crisis were better prepared to deal with the impact of the pandemic
Companies that see themselves as stewards of the wider ecosystem have generated reserves of public goodwill and will be better placed to bounce back post-crisis

Colleen K. Howe

Published: 10:00pm, 18 Aug 2020

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Covid-19 has been a disaster for most businesses in Asia, as everywhere. But the epidemic has given some Asian companies a new-found sense of purpose. Interviews with Asia Business Council members have found the best Asian companies responding to the crisis by deepening community engagement, working intensively with government and civil society, and forgoing short-term profits.

The Ayala Group, a 185-year-old Philippine family conglomerate, owns a bank, supplies much of Metro Manila’s water, and runs the country’s second-largest telecom company as well as being a major property company.

Like other conglomerates, the government has often called on Ayala companies for help in the wake of volcanoes and deadly typhoons, prompting the Ayala Group in 2009 to join with other companies to create a natural disaster relief operations hub, the Philippines Disaster Resilience Foundation.

With that experience in mind, when the pandemic hit, the Ayala team knew it had to protect what it called the ecosystem: employees, informal workers, small businesses that make money from their dealings with Ayala Group businesses, and the urban poor.

Businesses got rent waivers while employees and informal workers all got salaries in lockdown; the company’s construction arm converted public spaces to Covid-19 testing facilities. All told, the Ayala Group’s contributions totalled about 9 billion pesos (US$181 million).

Jaime Augusto Zobel de Ayala, chairman and chief executive officer of Ayala Corporation, speaks during the Belt and Road Summit in Hong Kong in 2017. The Philippine conglomerate has taken a proactive role in providing coronavirus relief. Photo: Bloomberg

Other companies across Asia have recognised the need to keep their ecosystems going. A Chinese travel company launched a multimillion-yuan response fund to help customers and business partners, though it was also struggling financially.

In interview after interview, business leaders described to us a similar sense of shared purpose. They are working to keep employees safe, providing financial help to subcontractors, and contributing to society with personal protective gear or other physical assistance. The answers are many, but at heart is a desire to help the community at a time of national emergency.

One lesson that emerged was that businesses that had created bridges to their communities before the crisis were better prepared to deal with the aftermath of the pandemic using those same connections – whether it was a network for mentoring small and medium enterprises, or something as small as organising a community produce market.

Another lesson for businesses was that their fates were now tied up with the well-being of their communities in ways that had not been so obvious before. Indonesian agribusiness company ANJ worked with community leaders in rural communities to improve hygiene practices and reduce the risk of employees catching the virus.

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If the fear of a Covid-19 outbreak among its employees kept CEOs awake at night, the risk of social unrest has also sharpened minds.

The Philippines saw protesters defy the lockdown to demand food and relief supplies, as a shutdown in Manila exacerbated food insecurity. For the Indonesian elite, the crisis recalled memories of the protests and racial violence that followed the Asian financial crisis.

These sorts of efforts will need to grow, for the pandemic is likely to get worse. Even if an effective vaccine is found, there are unlikely to be enough doses available next year to halt the spread of the pandemic.

The Philippines is becoming a new hotspot. With its medical system overwhelmed, the country revived a partial lockdown in Metro Manila and neighbouring provinces last week. Even places that have done relatively well at suppressing the disease, like mainland China, Hong Kong, South Korea and Japan, are all experiencing fresh outbreaks.

The economic and human consequences will be dire. By one estimate, 20 million Indonesians could fall into poverty by the end of the year. China is seemingly a model for coronavirus control in Asia, but even there some analysts say real unemployment is around 20 per cent, after taking into account the many migrant workers who are out of work.

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With its relentless targeting of those worst placed to deal with its effects, the pandemic has exposed how easily groups like informal workers, migrant workers and the poor can fall through the cracks. But the response of a few companies hints at a new way forward.

In some ways, the crisis has accelerated a trend that was already under way before the crisis: the growing awareness of the need for a fairer model of capitalism, one that benefits all stakeholders, from informal workers to small businesses.

Companies that see themselves as stewards of the broader ecosystem have generated reserves of public goodwill and will be better placed to bounce back after the crisis, having thrown a lifeline to their customers and business partners. That should be a lesson for others.

All this is easier said than done. States will ultimately need to play a bigger role in citizens’ lives. While business can fill the gaps, it can’t be expected to provide public services in the longer term, nor are all companies likely to contribute voluntarily. Small and medium enterprises are struggling themselves and will need aid to make it through the crisis.

It is unclear, too, how long businesses will be able to sustain this more active role, and when “pandemic fatigue” will set in. Profits have been hit hard, and some companies may be eager to get back to business as usual when the dust settles. But others are talking of bottling up this new spirit of cooperation.

Whether they want to or not, business is being called on to take a new burden of responsibilities. In what is becoming a drawn-out siege, government and communities are going to demand that business play a new role.

Colleen Howe is a programme associate at the Asia Business Council

This article appeared in the South China Morning Post print edition as: A new face for business

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