Why Asia Will Supercharge Our Global Economy - Dr. Taimur Baig, Chief Economist of DBS

Taimur Baig, PhD, heads global economics as well as macro strategy for interest rate, credit, and currency at DBS Group Research. He also advises the bank on risk management and investment strategy.

Dr. Baig has published extensively for both specialists and a general audience, on areas including monetary policy, digital currency, financial technology, climate change, demographics, frontier markets, fiscal policy efficacy, and financial market contagion.

He is the host of “Kopi Time,” a widely followed podcast series on markets and economies.

In this episode, he makes the case for economic optimism in a world of uncertainty.

TIMESTAMPS:
00:00 Trailer
01:07 The Role of a Chief Economist
02:55 Transforming Data into Insights
06:51 The Smoot-Hawley Tariffs And Trade Wars Today
10:06 The US Debt Challenge
12:13 Reindustrialization of USA
14:27 Can America Remain Innovative?
16:08 China's Economic Paradox
19:05 China's Competitive Advantages
23:39 India's Growth Potential
28:01 The Warming In India-China Relations
30:07 Southeast Asia's Golden Age
32:35 Future Growth Areas in Southeast Asia
36:06 Advice for the Youth

Keith 00:37

Today I am joined by the chief economist of DBS, Taimur Baig. Taimur heads global economics as well as macro strategy for interest rate, credit and currency at the DBS Group Research. He advises the bank on risk management and investment strategy. Taimur is also the host of Kopi Time, a widely followed podcast series on markets and economies. In this episode, he advocates for a case of economic optimism even in a time of global uncertainty.

I hope you will enjoy this conversation as much as I did.

As the chief economist of DBS, what do you actually do?

Taimur Baig 01:19

The chief economist at DBS does not do the same thing that chief economists at other banks do. It really differs from institution to institution. In my previous life, I worked at Deutsche Bank as a chief economist. There the work was markets facing. We were part of global markets. The chief economist job was to interact with institutional investors who had an interest in fixed income trading, currency trading. That was my entire world as a chief economist of Asia for Deutsche Bank.

When I came to DBS, I realized there's a much bigger world of banking in a bank like DBS. It has a huge retail franchise, big private bank, big institutional bank, but also huge internal mechanisms, including the treasury and risk. I at DBS work with all parts of that bank. There's a much broader mandate. I would work with our risk management team in terms of looking at DBS's country exposure and sectoral exposure. I would work with my corporate treasury team to ensure that our portfolio is in the right place. I would meet private clients who are wealthy high net worth individuals, talk to them about their particular aspirations and goals and their portfolios. And on top of that, I would deal with institutional clients, which is a subset of what I used to do back in the days when I was at Deutsche.

Keith 02:40

We know the standard sets of data that people look at, the CPIs, the PMIs that many economists are familiar with. But I'd like to ask you, what is the thing that you actually look at when you prepare those inside reports for your clients?

Taimur Baig 02:55

Data is democratized. I, sitting at DBS, showing to my clients a bunch of raw data would add very little value. So the key is to transform the data into insights that are useful as a leading indicator of how things are going. Do I expect a recession in the US in the next six to nine months? Looking at today's PMI is not going to do it for me. I would have to run a bunch of analytics to see which are the useful leading indicators of that.

Is it the slope of the yield curve? Or is there something going on with respect to inventories? Or is there something going on with respect to trade? Similarly with currencies, if I want to look at where the currency is today, I would have to figure out what are the buying and selling balances in the market. Is there a net long position on that currency? Is there a net interest rate differential that I need to worry about? So the forward-looking signals would not necessarily come from the raw data. It would come from transformation and analytics.

So I'll give you an example. If I want to take a long-term view on the US dollar, I would have to get a sense of what is the medium-term trend for the US current account. What is the purchasing power parity based exchange rate of the US? And is it hugely different from where it is now? And if the deviation is substantial, and by looking at past data, if I feel that differential is a good indicator of how things turn out, then I would use it as a leading indicator.

The bottom line is you would have to differentiate yourself to your clients by showing them that you're capable of taking raw data, which anybody can take, and transform them and come up with leading indicators that would help them trade, help them take position, help them protect their risks, whether they're a CFO of a corporation or a high net worth individual.

Keith 04:43

Maybe there are other banks equally competing for your clients, right? They also have their chief economists. What are the things that you look at and you feel that the others aren't looking at but are really quite valuable? What's your alpha?

Taimur Baig 04:55

Our alpha is our ability to communicate and our relationships. Because in terms of analytics, it is democratized and the level is pretty flat. But I'll give you an example. A few years ago, we came to the conclusion that when we sent out our publications, we can track the readership. People don't really read that much. They read the first page, or they probably read the first couple of bullets. But they sometimes respond to interesting visualizations.

So then the question was, can we differentiate our research from everybody else's by providing useful visualizations, web-based visualization that can be interacted with? People like to play with data, play with pictures. And if that gives them insight that they recall with far greater degree than just reading a long report, maybe we should be going in that direction.

Now, saying that is one thing, but doing it is a very different thing. Because if I say people should be able to interact with a chart online, I'm basically talking about graphics on an HTML platform. Most economists and finance people don't have background in HTML. They may be able to code in Python and create certain visualizations. They may be able to use Excel very well. But then jumping from that to use JavaScript, to use HTML, to create a web-based visualization that a client can interact with is not the easiest thing to do, which is why perhaps most banks or most institutions don't have a lot of web-based interactive visualization.

But then my call to action to my team was, this is not that hard. I think we can pick it up. So we basically relied on one of our team members, Chang-Wei Yang, his capabilities, and everybody else figured out the coding. And now we have what we call a macro insights portal, which I believe is pretty unique in the industry, where our clients can go and interact with exchange rate-related visualization, interest rate-related visualization, credit risk, GDP nowcast. So that gives them a wide suite of interactive ways of looking at data. And that is very much a DBS brand, not necessarily that easy to replicate for others.

Keith 06:51

So now we have to try to get you to help us understand where the world is heading towards from where you're sitting. One of the things that you talked about previously was the US is now heading into a very uncertain direction. It's still the world's biggest economy now, but now we see there's a trade war that Trump is unleashing on multiple fronts. The Smoot-Hawley Act raised tariffs on over 900 items. This ranged from eggs to sugar to oil drums and I thought the lesson we learned from that, or the lesson the US should learn from that, is that trade wars are pretty much ineffective because after that the US spiraled into depression. It seems to me that this trade war could portend similar economic fortunes for the US in the next 10 years. Is that reference point useful?

Taimur Baig 07:51

1930s is a useful reference point for two reasons. One is that once the US went ahead and imposed tariffs, they got a lot of retaliation. In fact, just like today, when we see the US allies befuddled by the fact that the US is imposing tariffs on them. Even at that time, the Canadians were shocked that the Americans were putting very large tariffs on them. And what did the Canadians do? They retaliated by putting tariffs on the US and they moved closer to the UK.

That's exactly what we're seeing today, that the US, by antagonizing its allies - the Europeans, the Canadians, the Mexicans - are probably going to start pushing them toward finding other alliances. That's a very important lesson and a marker for things to come.

Second, in both the 1930s and the 1890s, which was the other big period around McKinley when tariffs were substantially hiked up in the US, there's a parallel. Once you create that much disruption in the global markets with large-scale tariffs and huge disruption to trade and perhaps demand destruction - because at the end of the day, Keith, everybody loses in a trade war. There are no winners. I'm going to put up tariff on you. You're going to put up tariff on me. Maybe we'll cause both of each other's demand to be disrupted. Then sometimes you have financial crisis.

US had a huge banking crisis in 1890s. And of course, we know that just a couple of years after the 1930s Smoot-Hawley tariff, the US fell into a very big depression. We are coming into 2025 with the US stock market that is hugely overvalued by historical measures. In fact, the price earnings ratio of S&P 500 or what we call a yield gap, meaning the dividend yield of the stock market of the US minus the return on safe assets, those things indicate the market is as richly valued as it was in 2007-2008.

So do we really want to play with that fire when markets are already stretched overvalued and do we really want to give investors reason to sell at a time when we should be worried about valuations being too high anyway, and at a time when we have this mountain of debt hanging over our head, whether it's the United States or in Europe. So those are the two important things to keep in mind. What does a world of trade action and retaliation lead to? And second, what would happen if financial stability were to be threatened?

Keith 10:06

You spoke about this unsustainable debt challenge that the US faces, that there is a reckoning to come. I guess the question would then be, is there a way out for them?

Taimur Baig 10:15

The clearest way out would be to raise taxes, not cut taxes. But I think that's what Mr. Trump wants to do, not necessarily raise taxes. The US has had very large tax cuts in the last three, four decades. Reagan came in the 80s and cut taxes heavily. Bush came in the 2000s and cut taxes heavily. And Trump also in his first term cut taxes heavily. And he wants to make some of his tax cuts permanent. He wants to cut taxes in other areas as well.

As a result today, US government's tax-to-GDP ratio is below 30%, less than 30% of GDP, which is substantially lower than any European country or even the G20 average. US also spends about 36-37% of GDP and the difference, which is about 6-7% of GDP, is the fiscal deficit right now. Again, the expenditure envelope is not that large compared to European countries where expenditure to GDP ratio is in the high 40s. So I don't think there is a lot of scope for significant expenditure cuts.

All the stuff that is happening right now with the Doge-related noise that we see, in my view at least, scratches the surface. The US through the first 10 weeks of 2025, despite all these noise of cutting expenditure, is actually spending more money than it did in 2024, 2023. Huge amount of money being spent on interest payments, huge amount of money being spent on defense, social security. Those things are largely untouchable, even with Elon Musk being empowered to do just about everything.

So I think the way to address debt primarily would be by raising revenues, maybe closing some tax loopholes, maybe making the system a little more progressive, make the billionaires pay a little more, things like that. And perhaps also the way the debt-to-GDP ratio comes down over time is if GDP grows pretty fast. So pro-growth policy, which I was hoping that Trump would institute - deregulation or supply-side measures. So if you have strong growth and some degree of progressive taxation, this debt-to-GDP is not going to be a problem for the US.

Keith 12:13

Donald Trump is going on this huge push for trying to re-industrialize America. He's trying to force a lot of the global MNCs to bring back manufacturing onshore and if you hear his speeches, his different interviews, he's always talking about how he's talking to the big boys, the big tech players, the magnificent 7 in the US to kind of bring their production onshore even with TSMC, a Taiwanese chip manufacturer, kind of forcing their hand trying to bring them to manufacture more in the US. Do you think this effort at reindustrializing would actually succeed?

Taimur Baig 12:52

The US is a very powerful nation. It has lots of leverage. It's a very big market. So if the US tells global multinationals who don't produce in the US that if you don't produce in our own country, we'll cut you off, I think many multinationals would move some of their production to the US. Would it be the most efficient outcome? Absolutely not. It would be much better if the world was an open system of trade and commerce and countries that have comparative advantage on one thing produce that and sold it to the other country which did not.

If the US wants to bring all of its essential manufacturing onshore, it can choose to do so. It would be costly. It would be inefficient. And it may not necessarily create a huge amount of prosperity for the US. Because what you would have by creating what they're calling a tariff moat, a moat around the US with high tariffs, would be loss of competitiveness. Because the American companies don't have to compete that hard because they're protected by tariff. It would also probably lead to a sapping of innovation.

Because if you don't have a lot of competition, you don't want to innovate that much. So that's what I worry about. The US has chosen to go on a path. That's their prerogative. And I wish them luck. But history of economics and history of finance tells you that that is not the best option for an economy to pursue. So I hope that the US is not going into a wrong direction, which would lead to actually sapping of growth momentum and growth potential for the medium term.

Keith 14:12

Talking about that, even with these amber lights or red lights around the US now, some of the challenges that you've spelled out earlier, is there hope that the American economy will still remain as dynamic and as innovative as they were in the 20th century?

Taimur Baig 14:27

The US has certain major advantages. Number one, its education institutions are the best in the world. Its research labs have some of the best scientists in the world, largely because it has always had a very open immigration policy for the best and brightest of the world. So the top Chinese scholars sitting in labs in the US and producing cutting-edge research, and you have seen whether it is Elon Musk or Peter Thiel, these are first-generation immigrants who came to the US to study and then stayed on and did amazing things that even Satya Nadella at Microsoft or Sundar Pichai at Google have done.

So the US has that mojo. Stay open to the best and the brightest of the world, put them in the best labs in the world, and create the technologies of tomorrow. And that becomes commercialized and creates a lot of wealth. I don't think that is going to be undermined or unraveled in the near term. But if the US does indeed become a more inward nation, becomes less open toward immigration, then of course, some of these advantages would erode over time.

But in the near term, I think we can safely say that the dynamism that the Silicon Valley has, or the dynamism that some of the big high-end manufacturing that the US has, say chip design, for example, I think those advantages would be maintained for the near term.

But if you move away from the US momentarily and look at what China is doing, which is doubling, tripling up on investments in research and development, and when we look at the top-tiered journals in the world, where Chinese labs, Chinese scientists are publishing in a prolific manner, then you would think that the US probably is picking the wrong time to turn inward. This is the time which should actually become even more open because competition from China is going to be absolutely fierce in the coming 5, 10, 15 years.

Keith 16:08

You pointed out an interesting fact, that China seems to be ramping up in terms of its contribution towards innovation. But at same time, there is this rather dreary outlook in the near term. What do you think explains this paradox?

Taimur Baig 16:26

We see economies go through booms and busts all the time. The US has done that. They had a big financial crisis in 2007, 2008. Took them a decade to fully recover from that. Japan had a big crisis in the 90s. Took them two decades to recover from that. China probably grew a bit too fast in the previous decade, in the 2000s. Then in the 2010s, some of that excess started to unravel. And now we're really seeing the pain associated with the unraveling. The property market boom, the excessive lending, maybe some degree of connected lending between property developers and banks and local governments.

These distortions are not unique. Many other economies have faced this. The fact that China is seeing some degree of sapping of growth momentum because of the overhang of the debt and the default associated with the property sector is problematic, but it's not unique to China. It doesn't necessarily indict China as a system. Most economies in the world go through this boom and bust.

Now, dealing with this, while keeping the rest of the economy buoyant is a challenge. And I think China went through several bouts of volatility over the last five years. Very strong, heavy-handed response to the pandemic. A major pivot toward cracking down on the tech sector, whether it is education tech or gaming or e-commerce. I think in addition to the property market problem, they decided to take on a bunch of other things that also affect the economy's vitality. And those multiple punches have really hurt China in recent years.

Now, this is not a point of no return. As we can see over the last year or so, China has pivoted. It is addressing the property market with a great deal of monetary injection, fiscal support, some degree of what we call forbearance, where they tell the banks to work with companies to not necessarily call the loans, but work with them to refinance.

Similarly, in terms of the huge crackdown that we saw in the tech sector, it's being unwound. Now we see Jack Ma taking a picture with Xi Jinping. We see some of the Chinese tech companies being celebrated for their innovation. So all of that is being reflected in China's stock market, which is outperforming the US stock market in 2025 as we speak.

So I would say that looking at an economy struggle and having some worries about the near-term, all of that is absolutely legitimate. I also worry about China's near-term outlook, but that should not detract us from looking at its foundation of research and development innovation, which will pay tremendous dividends in the medium term. And I think that's where we should focus on, not just wallow in the worry about the near-term stress that the Chinese economy is facing.

Keith 19:05

Where are the other sectors that you think the Chinese have really gained a strong competitive advantage?

Taimur Baig 19:11

Perhaps I'm not going to spend too much time on the semiconductor and the AI side. I think that's pretty well known that China is being cut off from the best-in-class manufacturing capability with respect to chips by the US and the Europeans. And hence, they're basically doing their own Manhattan project, if you will, trying to create their own know-how and capabilities in production. It's an open question whether they will ever be able to match the West in building two, three nanometer chips. But they're doubling up. So wish them luck. We shall see.

There are many other areas of the technology vertical where China, irrespective of whether they have access to those very small chips, is doing very well, will be doing very well. Let's take drug discovery. China is a world-class manufacturer of drugs today, but they largely use intellectual property from Western labs. American, European drug companies come to China, the Chinese make it cost-effectively, and then they get sold all over the world. China also does a very good job of making the basic chemicals and molecules needed for drug discovery and manufacturing.

So for example, India, which has a tense relationship with China and has a world-class drug manufacturing industry, actually gets most of their molecules and original chemicals from China. What we're seeing when we look at patents and publications by Chinese scientists is that the Chinese are graduating from being a manufacturer of drugs to a developer of drugs. When you see what's happening with respect to protein folding, when you see what's happening to AI-driven customized therapy, I would argue that in the next 5-10 years, some of the breakthrough drugs in cancer, in issues related to aging or morbidity would come from China.

Take for example, green transition. 5-10 years ago, the Chinese were very serious about green transition, but they were basically importing technology from Europe to build wind turbines and solar panels. Today, the R&D of China has reached a point where China's green transition related work is entirely driven by locally grown technology, both hardware and software. And the kind of consequence of that is that China today is adding more green energy capacity than the whole world combined. Both in '23 and '24, China's addition of green energy, driven by homegrown technology, was more than the whole world combined. And this will just go from strength to strength.

So I think the future of green transition, for example, would be underwritten by Chinese technology to a very large extent. We can go on to aviation today. Airbus, Boeing, and Embraer are the three companies that fuel the airline fleet of the world. Five, 10 years from now, Comac will be a consequential producer of airlines using made in China, developed in China, aeronautics parts.

You can think about autonomy, not just in terms of autonomous cars, autonomous tractors for large-scale manufacturing, large-scale agriculture. Again, I can see Chinese companies being a major player in that, in a 5-10 year horizon. So there's a wide range of tech verticals where we are just on the verge of seeing China transition from a low value-added manufacturer to a high value-added IP producer and manufacturer.

Keith 22:17

If you were to tell someone that in 2015, most people would laugh you out of the room. What do you think explains this rise in the ability of China to transition into the high-end manufacturing?

Taimur Baig 22:29

So I would say three arguments. The first one is well understood - that they had always felt that maybe getting all the technology from the West is not the smartest thing to do. And over the last 10 years, that fear has borne true. So there should be know-how grown domestically. And that's something that they have been pursuing for a while.

Second would be the issue related to investments. China has been very, very aggressive in investing in research and development over the last 10, 20 years. And that has caught the attention of Western labs and Western scientists as well. In an ideal world, there'd be tremendous collaboration between these two parts of the world, and we would see even better outcome. But today, we're not going to have that. It is what it is, and the Chinese will certainly go their own way and develop their own tech.

But the one big advantage China has in that regard is the law of large numbers. 1.3 billion people. So even if you look at the 0.1% tail of the Chinese scientists, by definition, they would be some of the finest brains in the world. So having large scale, having devoted huge amount of capital and having been forced by the West to develop their own IP, I would argue are the three reasons why the Chinese are now going from strength to strength.

Keith 23:39

Talking about the law of large numbers, there is another country that's also following that law of large numbers which is India. It's around a billion plus people as well. So what do you think about the Indian growth story that you think is currently maybe under-reported or something that people are not paying attention to?

Taimur Baig 23:57

Tarun Khanna, who's a professor at Harvard, wrote a book about a decade ago, I think. It's called Billion Entrepreneurs. And he basically talks about India, a country that is replete with so many distortions and problems and market failures that each individual Indian has to develop an entrepreneurial gene to solve problems just to get through their own life. And his point is that this will be India's elixir of excellence going forward.

The problem-solving skills are almost genetic for a typical Indian because they face a lot of problems on a day-to-day basis. If the system is perfect for you, where the government provides everything, if the system is efficient, then you probably don't have to exercise your problem-solving skills that much because it's all solved for you by the system. Indians don't have that luxury and therefore they have to solve problems.

But more substantively, I think over the last 15 years, Indian authorities have chosen to push for manufacturing. There are lots of naysayers who believe that China is so good at manufacturing that it's a bit too little too late for India to embrace manufacturing and succeed in a wholesale manner. I don't know whether that's true or not, but it is certainly a consideration.

But at the same time, India is a democracy and democracies like the nations in Europe and US feel a natural affinity toward working with India than they do with China. And as the West versus China friction has intensified, India certainly is a big geopolitical beneficiary of that.

But most importantly, the large population, many of which - not as big as proportion of China - but certainly a big part of which is English speaking, well educated, and they can be a very productive part of the global workforce for the future. You also have to recognize the excellence of that entrepreneurship, which is sort of trickled up to Indians being CEOs of some of the most important companies in the world.

That again has a huge galvanizing impact that the diaspora is too successful. Why can't we be successful like that in India? And I think that demonstration effect has been another reason why Indians can sort of dream very big because they have lots of role models who have succeeded. And so therefore, even in a small city, a young smart kid can watch TV and say, I can be like that guy who heads Microsoft. I can be like that guy who heads Google.

Keith 26:12

But wouldn't the argument be that most of them would then choose to perhaps export or migrate instead of staying at home to build the companies that will maybe move the needle for India?

Taimur Baig 26:24

Very good point, Keith. Look, the US is a deep market with deep institutions, many labs, many research institutions. And therefore, a young kid who wants to pursue, say, solid state physics in India would naturally gravitate toward doing a PhD in the US or the UK and perhaps work there for a long time. The question is, can India offer them jobs in R&D, say in aerospace or in AI that they can choose to come back one day and have gainful lives?

I think that's the big shift we're seeing right now. 20, 30 years ago, if you were smart, you almost certainly went to the West to study, and many of you would probably just stay on in the West because there were not opportunities in India. Today, India, because of its thriving stock market, huge venture capital and private equity field, is showing to the diaspora that if you come back to the motherland, there is an opportunity to build companies and make a lot of money.

India creates a billionaire almost every week now. That is capturing the imagination of both the young students who are in Indian high schools and colleges or Indians who are studying overseas, in some of the best universities. They're all dreaming about coming back to India because they want to be part of that dream.

Keith 27:38

As India rises, especially with its talents, its growth in manufacturing capability, it is undoubtedly going to pose a challenge to China. Do you see the challenge between China and India to be one that is almost as acrimonious as the one that we see with US and China? Or is it something that will be completely different?

Taimur Baig 28:01

Consider the last couple of years. Two years ago at this point, India-China relationship was very frosty. And as a result, Chinese companies, which already had some investments in India, were not being able to expand. If their existing investment required some technical assistance from China, those engineers could not get visas to India. India was certainly being very tough with China, and China was probably reciprocating as well.

There's been a big thaw in that relationship over the last 12 months. The same engineers who could not get their visas are getting visas and they're flying to India. India has resumed direct flights to China. So the movement of people, businesses, engineers, company owners is back to almost normal.

But more importantly, today, if you go to India, on the roads of India, you'll see that India's EV revolution is largely being underwritten by Chinese technology. Companies like MG, which of course, most people think of as a British brand, is actually owned by a Chinese company. And now it's a 50-50 joint venture in India and it is ubiquitous. You see it everywhere. You see Indians importing BYDs. You see the Xiaomis and the Huaweis of the world again, sort of beginning to expand their operations in India.

So I think that India has in its wisdom realized that if it wants to pursue a major industrialization of its economy, it would probably be in cooperation with the Chinese, not in confrontation with the Chinese. Competition is fine. Absolutely. There should be competition, but to draw some FDI from China into India for the promise of India's large market and bring in some degree of tech transfer, I think it's a no-brainer for India. So I hope that this thaw that we're seeing is more of a permanent one as opposed to a temporary one.

Keith 29:43

Certainly we're stepping into the Asian century with China and India really being back on the rise or maybe in some cases people say re-emergence. Then the focus has to shift towards Southeast Asia and Singapore. What's the Southeast Asia story here? How can Southeast Asia as a collective block benefit from the rise of these two giants?

Taimur Baig 30:07

Keith, as we speak, we're going through a golden era of investments in Southeast Asia. Singapore in the last three years, each year has received over $100 billion of net FDI. Malaysia, which till 2019, 2020 was almost an afterthought for global tech investors, is back in the headlines. In 2023 and 2024, both years received over $20 billion worth of FDI.

So we are seeing the Americans, the Europeans, the Koreans, Chinese, Japanese, everybody flocking to Southeast Asia to tap into the region's outstanding supply chain, world-class logistics to double up their capacity of building in this part of the world.

Trade wars are going to be complex. It would not help anybody, but I don't think it would hurt Southeast Asia in a very meaningful manner because Southeast Asia's supply chain is just unparalleled. If you want to build a wide range of electronics in this world, if you want to build wafers and chips, you cannot just be in Taiwan, you cannot just be in China, you would have to recognize that Southeast Asia is the place for a lot of these productions and manufacturing.

Singapore, this tiny little island today, attracts tens of billions of dollars of FDI in AI-related work, in chip manufacturing, and beyond tech in the area of energy refining and pharmaceutical. Despite all the talk of Singapore being so expensive, manpower is expensive, clearly global CEOs see that and still want to invest in Singapore because the value proposition is substantial.

Malaysia, which has sort of lost its way in the past two decades, is back in a big way because it maintains a legacy of excellence in high-end manufacturing of electronics. It started doing that in the 1960s and it's back again.

Vietnam, we all know, has been an amazing star in the last two decades of taking some of the manufacturing mantle away from China. And both American and European companies, as well as Southeast Asian companies, find it very profitable to produce in Vietnam.

Then you have the likes of Thailand and Indonesia, which in my view should be doing much better, but they have not. Governance related issues or some degree of institutional deficiencies are there. But even there, the markets are substantial. There's some degree of excellence as well in terms of commodities with respect to Indonesia and manufacturing with respect to Thailand.

So I think the region is very well placed to take advantage of whatever geopolitical realignment we're seeing. This region will benefit. I'm quite confident about that.

Keith 32:35

So despite all this uncertainty, talks of trade wars and so much geopolitical tension today, your case is that we're actually entering a golden age. Is that what you're saying?

Taimur Baig 32:46

My view is that within distress lie the seeds of next birth and the world is realigning. No question about that. It is problematic, it's painful and I really think it is inefficient. But at the same time, just like we saw in the 1930s, after the US put up tariff wall, the Canadians looked to West as in Western Europe, the Western European countries came up with their own measures. This realignment would again be consequential. It will dictate the path of trade and commerce for decades to come. But I think Southeast Asia is very well placed to take advantage of that.

Keith 33:20

The big question on my mind is, why is it that in Southeast Asia, a lot of global investors kind of still underrate or not really see Southeast Asia as this golden age, but they kind of underplay its significance?

Taimur Baig 33:36

Good point. Maybe we have too much of a good thing going on, therefore we don't recognize it. I always tell young Singaporeans that they should travel outside of Singapore to realize how awesome Singapore is. Similarly, I think for Southeast Asia, which is sort of used to a fairly high level of economic prosperity and decent growth rate and generally speaking, stable governance, they probably don't realize how turbulent and difficult the rest of the world is.

And maybe that's why the Zeitgeist doesn't really feel what the overseas CEOs feel about this part of the world, that it is unparalleled in its supply chain and logistics and therefore we should invest here. But when you look at job creation, when you look at overall GDP growth, the region has been remarkably successful. It's left the shadows of the Asian financial crisis and the SARS crisis way back in its rear view mirror and it's really flexing its potential. It can do much