CONFIDENTIAL AND PROPRIETARY
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20 August 2020
Covid-19 implications and how companies could support economic recovery
McKinsey & Company 2McKinsey & Company 2
Potential corporate support for Covid-19
economic recovery
01
02Appendix: Additional 6 Thought Starters
for Company’s contributions to Thailand
Economic Recovery
Contents
McKinsey & Company 3
Key messages
Thai Economy is expected to be severely hit by the Covid -19 impact ( 2-9% GDP decline in 2020, 2-3
millions unemployment, >1 millions SMEs affected)
Thailand needs to increasingly focus economic recovery efforts on “Reimagine/Reform” to ensure
scalable and sustainable impact with following 8 priorities
— 5 Sector focus ( Tourism/Hospitality, Health Care and Food/Agri security, Global Supply Chain,
Environment & Sustainability)
— 2 Segment focus ( Worker Reskilling, SME Productivity) and 1 Enabler Focus (Digitalization/Industry 4.0)
Globally, corporates are moving from unsustainable short-term relief/subsidy to longer-term
innovation-based support for the countries. Four potential themes for Thai energy companies;
— Reskilling/Digitalization – Create/expand its capability/digital programs to support Thailand worker/farmer
reskilling and SME productivity
— Core business investment – Accelerate EE/Energy transition investment as well as support its Thai SME
vendors/customers to capture global supply chain opportunities
— New business investment - Leverage its own innovation units to join force to build end-to-end platform for
Tourism/Hospitality/Health/Agri & Food
— Integrated Theme of all above – Opportunities to revisit the ongoing “Integrated Smart/Energy Village”
approach which could create tech jobs, farm income while investing for the future EE/Energy transition
McKinsey & Company 4Source: McKinsey surveys of global executives
Shape of the COVID-19 impact: the view from global executivesThinking globally, please rank the following scenarios in order of how likely you think they are to occur over
the course of the next year; % of total global respondents1
Updated June 9, 2020
1. Monthly surveys: April 2–April 10, 2020, N=2,079; May 4–May 8, 2020, N=2,452; June 1–5, N=2,174
Virus
spread
and public
health
response
Effective response,
but (regional) virus
resurgence
Broad failure of
public health
interventions
Rapid and effective
control
of virus spread
Knock-on effects and economic policy response
Ineffective
interventions
Partially effective
interventions
Highly effective
interventions
A3
A1 A2
A4B1
B2
B3 B4 B5
World April → May → June surveys
15→13→16%
11→14→12%
3→2→2%
16→17→19%
31→36→33%
9→7→7%
6→4→5%
6→5→5%
2→1→1%
McKinsey & Company 5
Scenario A1: cross-country comparison
Updated June 9, 2020
110
105
80
90
85
95
100
Q2Q1 Q2 Q4Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q3
Real GDP, indexedLocal Currency Units, 2019 Q4=100
Thailand
World
United States
China
India
2019 2020 2021
Source: McKinsey analysis, in partnership with Oxford Economics
1. Seasonally adjusted by Oxford Economics
2021 Q4-4.4%China
2023 Q2-9.0%United States
2022 Q3-8.1%World
2020 GDP
Growth
% Change
Return to Pre-
Crisis Level
Quarter (+/- 1Q)
2022 Q4-9.7%Thailand
2022 Q3-9.2%India
-2.2% in A3 scenario
McKinsey & Company 6
Key questions to be addressed to help Thailand manage the crisis and restart the economy through the 5 stages
Resolve
Resilience
Return
Reimagination
Reform
Contain the virus and
minimize lockdown
period
• How to rapidly increase
testing and tracing
capabilities?
• How can Thailand
maximize healthcare
capacity?
• How do we better track
performance and spread?
Reactivate the
economy mindfully
• What are the criteria to
help determine when,
which parts, and how the
economy can safely
reopen?
• What are key protocol
examples from other
countries – Education,
Manufacturing, F&B?
Implement policies
to support the “next
normal”
Safeguard the
vulnerable segment
• How much economic
stimulus is enough and is
Thailand in a healthy
financial position to
support?
• What types of economic
stimulus should be used
and who do they target?
• What can Thailand learn
from other countries?
Reform country’s
structural change to
preempt a future health
and economic crisis
Crisis management Restart the economy
Roles of private sector to support the nation to manage the crisis:
• What roles could private sector play to support in crisis management and nation building
• What can Thailand do to build national resilience and seize
future opportunity for growth?
• What are the structural changes that need to be
considered to accelerate Thailand growth, e.g., education,
digital economy and digital governance?
McKinsey & Company 7
CONFIDENTIAL AND PROPRIETARY ANY USE OF THIS MATERIAL WITHOUT SPECIFIC PERMISSION OF THE OWNER IS STRICTLY PROHIBITED DOCUMENT INTENDED TO PROVIDE INSIGHT BASED ON CURRENTLY AVAILABLE INFORMATION FOR CONSIDERATION AND NOT SPECIFIC ADVICE
Reimagine/Reform - The accelerated future creates opportunities and implications for Thailand
Potential implications for Thailand to leverage for economic recovery
3
2
1
9
8
6
7
5
4
Growth of e-commerce and
e-services
Acceleration of Industry 4.0Digitalization Industry 4.0: Reposition Thailand as an “ASEAN I4.0 hub” via targeted value chain
or sub-sector promotion and investments.
B2C & B2B marketplace: Enable farmers and SMEs to connect directly with local
and international customers online, supported by nationwide logistics + cold chain
Increased focus on health
system resilience
Increased focus on
food security
Healthcare: Enhance resilience in healthcare systems; Expand into high value-
added healthcare manufacturing and digital healthcare models (e.g., telemedicine)
Food/Agri security: Drive productivity through investments in agri-tech and
shifting production to high value products.
Growing emphasis on qualityChanging
consumer
preferences &
Resilience
Elevated role of remote
working
Need for intensified reskillingFuture of
work
Workforce Reskilling: Reskilling schemes for jobs of the future; Job matching
support; Partnerships with public and private sector
SME productivity: Build capabilities; Incentives for automation and digitization
Travel flows return slowly
Social and governmental
corporate agendas expand
Environmental sustainability
goalsESG goal
expansionEnergy transition: Drive energy transition for the economy for decarbonization and
energy efficiency; Diversify into renewables and alternative fuels
Flows of R&D, services, data
& innovation outstrip goods
Supply chains efficiency
Global trade flows growInternational
flows
Tourism: Set up national E2E digital tourism platform to capture local tourism,
expand into niches (e.g., affluent, medical, wellness) and support local operators
Global Supply Chain: Set up Thailand-Global B2B supply chain platform to help
mfg. SMEs participate in “Global to Local Supply Chain” reorientation after COVID
Global “Next Normal” trends
10
11
12
13
5 Sectors
focus
2 Segments
focus
1 Enabler
focus
McKinsey & Company 8
A combination of forces are driving corporate contributions /initiatives on covid-19 response
Description
Business views itself
as an accountable
entity with a
commitment to
society
Industry has
normalized an
action and a
business not aligning
may result in
customer backlash
Disruption in the
supply chain,
employees and/or
customers is
impacting the reliable
of business’
ecosystem
Prospect of
advancing brand
recognition and
ultimately acquire
need customers
Prospect of
innovating to
improve the
efficiency of its
operation or untap
market value
Example of
contribution
motivated
Endesa, designed a
Public Responsibility
Plan, endowed with
~$27 million, for
donation of materials
and service, special
conditions of energy
supply, and financial
donations
Masmovil, followed
Telefonica and
Vodafone, giving
more broadband data
and TV packages for
free during quarantine
KT Corp lowered rent
for small businesses
using their buildings
for the next three
months
Mattel to produce
face masks fashioned
with Fisher-Price
fabric for health care
workers
LG U+ began
applying various
digital services
(chatbots, customer
center apps) to
reduce average call
waiting time
Source: Press clippings, Capital IQ, IHS Global Insight, CDC, company’s website
Corporate
social
responsibility
Peer pressureEcosystem
concern
Branding
opportunity
Driving
force
Business
opportunity
McKinsey & Company 9Source: Press clippings, Capital IQ, IHS Global Insight, CDC, company’s website
McKinsey Study on
Corporate Contribution to
Country Covid Response
400+ company
contributions/initiatives to
Covid-19 Response were
collected and analyzed
Cover 6 major countries
affected (China, South Korea,
Singapore, Italy, Spain, U.S.)
Cover 4 major sectors (
Consumer, IT&Telco,
Manufacturing, Financials)
Company contributions are moving from donation/subsidy in early outbreaks to product/service innovation in the recovery stage
Co
mp
lex
ity o
f im
ple
me
nta
tio
n
Resilience/Return Reimagine/Reform
Financial donation
Employment/
Partner
benefits/training
Free access to
own products/
services,
Donation of
general &
medical supplies
New product or
service, core
business
New product or
service, non-core
business
More
Less
Horizon of actionImmediate Longer-term
Analysis matrix of all contributions, all countries
# of contributions/initiatives, sample size: 410
98 14
39
61
75 43
49
2
1
5
22 1
A Most of corporate focus during early
outbreak stage but proven to be
unsustainable
B Current shift of
corporate support
focus toward
innovation C Emerging trends
Resolve
McKinsey & Company 10
Selected example of energy companies contribution to Covid-19 response
Co
mp
lex
ity o
f im
ple
me
nta
tio
n
Resilience/ReturnResolve Reimagine/Reform
Financial donation
Employment/Partner
benefits/training
Free access to own
products/services,
Donation of general &
medical supplies
New product or service,
core business
New product or service,
non-core business
More
Less
Horizon of actionImmediate Longer-term
Produced hand sanitizer
for and helped provide
food for lower-income in
Africa
Increase production and
subsidize plastic toward
medical equipment
sector.
Puma Energy
Holdings
Partnership with Uber Eats
to expand food delivery
capacity
Seed funding for All On, an off-
grid start-up to provide solar to
remote health centers in Nigeria
Provide experts/training to
help Global Medical Global
Provided its industrial supercomputer infrastructure and its
molecular modelling skills to run molecular modeling
simulations of the virus in for a drug-project with a
biopharmaceutical company, non-profit research centers,
universities, and the Italian Ministry of Education
Donated its supercomputing capabilities to the US
government, leading universities, and tech companies like
Amazon, Google and Microsoft to help accelerate research
into COVID-19 drugs. set up a new long-term supply chain
for all Covid-19 medical equipment
across U.S.
A Most of corporate focus during
early outbreak stage but
proven to be unsustainable
Current shift of corporate
support focus toward
innovation
B Emerging trendsC
McKinsey & Company 11
Reimagine/ReformResilience/Return
Thailand Economic Recovery Needs ( 5 sectors, 2 segments, 1 Enabler)
How can energy companies in Thailand contribute to country economic recovery ?
Illustrative – Thought Starters for Discussion
Reskilling
Workers
SMEs
Maintain core local
energy investment
Vendor/Customer
credit/cash flow support
TBDFinancial donation
Free access to own
products/services,
Donation of general &
medical supplies
Core Business
investment
Non-core business
investment
Employment
benefits/training
Maintain headcount/
recruiting
Short-term subsidy on
tariff/fuels
TBD
Digitalization
Industry 4.0
B2C/C2C
Health/Safety
Health care
Food/Agri Security
Environment &
sustainability
Tourism &
HospitalityGlobal
supply chain
Short-term relief
Workers
Business
Co
rpo
rate
Co
ntr
ibu
tio
n l
eve
rs
Digital/I4.0 transformation
to share saving with
public ?
Accelerate
EE/Energy
transition
investment ?
Leverage own Innovation units to
support Tourism/Health/Agri
platform ?
Proven to be unsustainable in
other countries under study
Reskilling programs for
internal/external talents as well as
SME vendors/customers ?
Support vendors/
customers to set up
Thailand Global
B2B market place ?
Detailed integrated examples
next pages
McKinsey & Company 12
India Example: Andhra Pradesh “Smart Village”Open innovation ecosystem to address farmers’ pain points
Farmer’s pain pointsSmart village support approach
16,000 farmers trained in 647
villages in Andhra Pradesh
40 India's corporates
solutions, expertise, services, funding
46 program staff
train
570 villages interns
coach
Benefits of the ecosystem
Cost elimination
Time efficiency
Speed to market
• Risk sharing
• Yield improvement
• Data richness
Time Crop cycle
Happiness index /
profitability
Open innovation agricultural platform
Ecosystem of corporate
pain reliever
Education
Access
Costly
Time consuming
Quality
Pre-Harvest
Timely information
Access to resources
Financing
Planning assistance
Growth Management
Lack of labor
Yield prediction
Disease prevention
Irrigation
Post-Harvest
Market transparency
Middle man issues
No storage facility
Inaccessible market
1 2 3 4
1 2
3
4
Source: Smart farming in Andhra – white paper, Haas School of Business, University of California Berkeley
McKinsey & Company 13
India Example: Corporate solutions/expertise contribution, including energy players for Smart VillagesSelected example
Education
Pre-harvest
Growth &
management
Post-harvest
IT Staffing IT / Hardware Artificial
Intelligence
Design
Thinking
Automotive Electronics Employment
& Skill
Development
Healthcare Construction Agriculture Agriculture &
IOT Systems
Loan
Farm analysis and advisory
(Drone/Satellite, Sensor, Imagery, Analytics) Agri input and equipment
Monitoring & management (Drone, Sensor, Imagery, Analytics) Energy provider
Harvest
R-Tech
Market access Supply chain excellence
ShotPut ripe.lo
1
2
3
4
Solar solution Biogas IOT / microgrid
Source: Smart farming in Andhra – white paper, Haas School of Business, University of California Berkeley
McKinsey & Company 14
Germany Example: Energy village/region
Generation
decentralized
and renewable
Electricity is primarily generated decentrally from renewable
sources
Promotion of innovative technologies
Energy efficiency Energy efficiency actions are promoted and implemented on site
Balancing at
local level
Generation and demand balanced out at the local level
Electricity imported only at peak load times
Economics
Energy regions finance themselves over the medium term
with no subsidies
Use of innovative business models
Local
participation
Inclusion of local players (residents, businesses, etc.), e.g., by
participating in the planning process and in profits
Ecological
sustainability
Resource utilization in harmony with sustainable regeneration
capabilities of the ecosystem
What characterizes an energy village/region? > 146 100% renewable energy village/
regions
> 25 million
inhabitants
100%-renewable energy regions
100%-renewable energy starter regions
Source: BMU, 2013; Netzwerk der 100ee-Regionen, 2016
McKinsey & Company 15
Feldheim is the first 100%-renewable village energy in Germany
The village shows
stellar economic
success
SOURCE: New Energy Forum of Feldheim, Kommunal Erneuerbar
Renewables-based
generation
43 wind power stations (74.1 MW)
Biogas installations (4,000 MWh/year)
Solar park with around 9,000 modules (2,748 MWh/year)
Economics
Power production for > 600 households
Investment of EUR 2.2 million for separate power and district
heating network (amortization time: 5 to 10 years)
> 25 jobs created
Inclusion of local
players
Alliance of households/businesses in operator company
Founded a development association
Reduced consumption Joint development of energy efficiency initiatives
Facts145 residents, 37 households
Objective: generate regenerative electricity and heat
Balancing generation
with demand
Currently building a new battery storage facility
Wood chip heating plant for additional heating requirements
Ecological
sustainabilityBuilt up an environmental education center in the village
Strong support can be generated based on direct participation of residents in profits
Germany Example: Energy village/region
McKinsey & Company 16McKinsey & Company 16
Potential corporate support for Covid-19
economic recovery
01
02Appendix: Additional 6 Thought Starters
for Company’s contributions to Thailand
Economic Recovery
Contents
McKinsey & Company 17
1. Arcstone – MES system, Garuda Robotics – Drones with Advanced analytics, Evercomm – energy consumption analytics
SOURCE: McKinsey Digital Capability Center Singapore
17McKinsey & Company
Thought Starter 1: SME Industry 4.0 Capability Upgrade
Singapore
Industry 4.0
Digital
Capability
Center
Research &
Academic
Public
Sector
SMEs
Large
Corporate
Startups1 and
Tech
Providers
Supply requisite skills for
Industry 4.0 and initiate
R&D for new technologies
Provide industrial problems
and use case requirement
Singapore
Industry 4.0
DCC: Creating
the new
Ecosystem for
Technology
Testbeds
Capability
Building
Physical
Showcase
Provide inorganic
innovation, flexible, agile
and typically cheaper
solutions
Participate in industry 4.0
capability upgrades
Provide funding and regulatory
incentives to create conditions
for initial investmentsin I4.0
McKinsey & Company 18
Thought Starter 2 – Workforce reskilling
What is GenerationExample of program in Singapore and success so far
Diversion of Generation to help on Covid recovery
A non-profit organization focuses
on preparing, placing, and
supporting underemployed
people into life-changing careers
that would otherwise be
inaccessible
13 locations across America,
Asia and Europe,
38K graduates
>80%secured a job in 6
months
>84% of graduates
outperformed peers
2-6x increase in student
income post program
Established in mid 2018, a
partnership between Generation
and SkillsFuture (a unit under
Ministry of Education) has
delivered 20 cohorts of gradates
for new career e.g. Digital
Marketing, Engineering 4.0 and
placed graduates into >180
private sector employers
As part of Covid response,
Generation is collaborating with
public and private sectors
focusing on in-demand tech jobs
End-to-end project
management
Catalytic funding, tech
assistant, aggregation of
employers
Running cost funding
Tech curriculum
assistance , potential job
openings
Implementation and
delivery of training
McKinsey & Company 19
CONFIDENTIAL AND PROPRIETARY ANY USE OF THIS MATERIAL WITHOUT SPECIFIC PERMISSION OF THE OWNER IS STRICTLY PROHIBITED DOCUMENT INTENDED TO PROVIDE INSIGHT BASED ON CURRENTLY AVAILABLE INFORMATION FOR CONSIDERATION AND NOT SPECIFIC ADVICE
Many countries have allocated COVID-19 stimulus
packages to support sustainability efforts
Source: Reuters, Garrett-Peltier, Green versus brown; Comparing the employment impacts of energy efficiency,
renewable energy, and fossil fuels using an input-output model (2017)
Such investments support job creation in addition
to sustainability
Thought starter 3: Accelerating EE/Energy Transition
1. Total stimulus package equals to €750bn
35
30
80
91
Renewable energy
Industry
Buildings
Transport
236Breakdown of
sustainability
focused
elements in
EU’s stimulus
package1,
Billion Euros
Job creation, directly and indirectly, per US$1 million in
spending
7.77
7.49
6.76
2.65
Energy efficiency retofits
Renewable technologies
(wind, solar, hydro and others)
Fossil fuels (oil, gas and coal)
Smart grid
CONFIDENTIAL AND PROPRIETARY ANY USE OF THIS MATERIAL WITHOUT SPECIFIC PERMISSION OF THE OWNER IS STRICTLY PROHIBITED DOCUMENT INTENDED TO PROVIDE INSIGHT BASED ON CURRENTLY AVAILABLE INFORMATION FOR CONSIDERATION AND NOT SPECIFIC ADVICE
McKinsey & Company 20
Thought Starter 4: Support companies/SMEs to participate in Global to Local supply chain re-orientation after COVID
1. Duty Free Trade Zone
Malaysia (March, 2017)
Alibaba and DFTZ1 alliance
has empowered Malaysian
SMEs and facilitated sale
of agricultural produce to
global market through
ecommerce channels
China (Oct, 2017 | June, 2019)
Hangzhou customs and Alibaba’s,
eWTP pilot zone to promotes
trade between Hangzhou and the
world through innovative steps in
tax refunds, exchange settlements
and more efficient trade practices
Rwanda (Oct, 2018)
Rwandan coffee producers
are now able to sell directly
through e-commerce to
more customers while
bypassing costly
intermediaries
Belgium (Dec, 2018)
Alibaba-owned Cainiao Smart
Logistics Network signed a deal
with Belgium’s Liege Airport to
build 220k m2 logistics hub at the
airport to support cross-border
trade for SMEs.
Ethiopia (Dec, 2019)
The eWTP hub, will serve as a
gateway for Ethiopian products
to China and new markets and
offer support in smart logistics
and fulfillment, and talent
training, e-commerce.
Source: Web search - https://www.ewtp.org , https://www.alizila.com/
eWTP by Alibaba
(Global B2B
platform founded
in 2016, endorsed
by G20 China)
Reduce cost, particularly labor
arbitrage
Mitigate country risk
Capture trade benefits
Improve product design
Use standard parts, instead of specially
designed per sourcing region or supplier
Reduce specification complexity
Review supplier qualification and speed
Optimize footprintExplore back up options
Look for trusted back up supplier
Measure and manage tier 2,3 supplier risk
Order backup tooling/equipment
for production continuity
Focus expanded to help companies diversify their supply chain to stay competitive
McKinsey & Company 21
Thought Starter 5: B2B Agri/food supply platform connecting farmers directly with restaurant customers
50%
Farms
Directly
sourced
from
farms
Distributors
50%
Sourced
from
distributors
30
distribution
centers
covering
~200 cities
~8000 freelance
driver fleet deliver
to restaurant
outlets
~2.73M
small
restaurant
outlets
E-commerce
platform
Launch
and predict
orders with
big data
analyticsOrder online
MeiCai has recreated a simplified food
supply chain ecosystem, allowing farmers
to sell more directly to cities
Developer of an online fresh food aggregation
platform designed to connect farmers and
restaurants
Services offered in ~200 cities in China
No of Employees: ~30,000 (as of Jul, 2019)
Pain point Meicai solves
• For farmer = access to buyers with better prices +
logistic services
• For restaurants = fresh quality supply at doorstep
SOURCE: Company website; Web and press search
How Meicai works
McKinsey & Company 22
Thought Starter 6: Thailand end-to-end Tourism platform
3 platform architypes Supporting evidences
Potential mission for Thailand Tourism Exchange Platform
(TTX)
A number of new health standards are
required post-COVID (e.g., Touchless
traveling, sanitization, reduced sharing
accommodation — Airbnb)
38 websites are visited on average for trip
planning
Post-Covid health and hygiene standard promotion
Tailored experience to fit source market (and possibility
to extend to personalized marketing promotion)
One-stop-shop for all travelling needs to Thailand (i.e.,
visa, emergency contacts, VAT refund)
Promote
Thailand to
target travelers
52% of travelers found it is time-
consuming and not worth the effort to
book a room directly from operators (e.g.,
unattractive loyalty program, no customer
reviews)
OTAs normally charge 15-30% from sales
SMES are suffering with less than 10%
occupation rate under COVID crisis
Direct channel to end-travelers
Access for SME to list service with relevant large OTA
and potentially with better pricing
Comprehensive support tailored to local Thai SMES
regardless of digital literacy level
Support local
Thai SME
operators
$170 million is budgeted for destination
marketing and promotion to help recoup
tourism industry after COVID
>20% of Google ads revenue coming
from travel-related search
Better source of merchants to be on-boarded
Easier merchants’ management
Center to coordinate for national tourism promotion
Ease of doing
business for
global operators
Information-only platform
Only serve travelers as a channel
for basic information and
announcement such as facts
about the country, regulatory
processes, transportation, etc.
Full-fledged platform
Provide comprehensive functions
which allow travelers to complete
booking transaction for all services
end-to-end (e.g., visa, hotels,
excursions, flights, etc.)
Selected transaction platform
Recommend packaged trips that
can be booked for selected
services (e.g., hotels and local
transportation) and sometime re-
directed to suppliers’ sites
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