Keeping the Goods Moving to Beat the COVID-19 Pandemic
Mr. Steven Beck of the Asian Development Bank (ADB) wrote in a blog post that “the COVID-19 pandemic underscores the need to support trade to not only move medical supplies but also to bolster economies.” His post asked (i) how we can maintain trade flows at a time when everyone’s attention seems to be focused on tightening borders, and (ii) how we can keep goods moving when the financial systems that companies rely on are under stress.
Global trade is critical to the pandemic response. Few countries manufacture everything they need by themselves, so the flow of trade in medicines, medical equipment and other goods vital to the health of populations need to be opened wider, not shut. Moreover, Mr. Beck emphasized that governments must take action to eliminate trade barriers on goods and component parts for goods critical to fighting COVID-19. According to a recent study, only 50 of the World Trade Organization’s 164 members do not tax imported medical devices. 79 countries have also placed a tax on imported soap. The study cautions that “a tax on soap is a tax on hygiene and hastens the spread of coronavirus.”
ADB Supports the Supply Chain of Products Critical to Beating the COVID-19 Pandemic
Mr. Beck discussed the host of initiatives ADB is extending to ensure that products needed to combat the COVID-19 pandemic, such as medicines, test kits, N95 masks, and ventilators, will continue to be manufactured and distributed:
- ADB, in partnership with commercial banks, will provide companies in Asia and the Pacific with additional working capital to meet expansion and other requirements; and
- ADB will provide $200 million from the Supply Chain Finance Program to help companies critical to fighting the virus ramp up their production of items. “Given that a single pool of supply chain finance is typically used for a subsequent delivery over a period of 120–180 days, this facility could support more than $400 million of financing over the next 12 months. Fifty-fifty risk sharing from partner commercial banks could boost support under the facility to $800 million over the same period,” adds Mr. Beck.
Furthermore, to encourage more collaboration and support, ADB is working with partners on mapping the entire supply chain for goods needed to overcome COVID-19. The information will be released once some of the products have been mapped so banks and investors can support companies along the entire supply chain.
ADB’s Trade Finance Program is also working on a major increase in its financial resources to boost the banks’ ability to ensure sufficient trade finance is available to keep trade flowing.
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