Advancing ASEAN’S digital economy
AS the 2018 ASEAN chair, Singapore deserves high praise for driving forward a resilient and innovative ASEAN community as well as bringing about several agreements designed to invigorate the region’s digital economy.
One of these was the ASEAN Smart Cities Network, which is envisioned as a collaborative platform of cities across ASEAN that work together toward the goal of smart and sustainable urban development. ASEAN also inked its first e-commerce agreement in 2018, which aims to spur the use of e-commerce as a driver of regional economic growth. The agreement will help the region to realise the projected growth of ASEAN’S internet economy to US$200 billion (K313.1 trillion) by 2025.
ASEAN should adopt another ASEAN Economic Community (AEC) pillar devoted to engaging with the increasing role of digital technology in commerce and industry. Developing a harmonised approach would help to streamline the necessary policies for enhancing ASEAN’S digital competitiveness.
There are existing frameworks and regulations designed for the development of the digital economy in ASEAN. For example, the ASEAN Information and Communication Technology (ICT) Masterplan 2020 underscores ICT’S role in supporting regional connectivity and development. The AEC Blueprint 2025 similarly includes e-commerce under its main pillar of enhanced connectivity and sectoral cooperation.
The blueprint also notes the importance of accelerating technological advancements in international production, trade and investment practices, and calls for promoting the online presence of small and medium enterprises (SME).
These existing frameworks and provisions will be implemented more efficiently if they are included under a new AEC pillar, which would help to articulate an overarching vision for advancing the region’s digital economy.
Several key objectives The new pillar would aim to make ASEAN a global powerhouse in the digital economy by setting several key objectives. The first should be pursuing universal internet access across the region. ASEAN member states should each establish a Universal Service Fund – a system for subsidising rural internet infrastructure and services using levies collected from telecom operators. This would expand the list of ASEAN member states that already have a fund, such as Malaysia, which uses it to provide free broadband access to underserved communities.
Building trust among the region’s consumers is also a priority. Lack of trust and low consumer awareness hinder the growth of digital services. A survey conducted by GSMA Intelligence found that 89 percent of Malaysians and 79pc of Indonesians have concerns about sharing personal information online and through mobile devices. Developing digital literacy programmes for consumers and digital privacy compliance policies for businesses may help to alleviate this problem.
Promoting digital literacy and building ASEAN’S digital talent base must be another of the pillar’s objectives. ASEAN SMES contribute to more than 50pc of ASEAN’S combined GDP and represent 99pc of the region’s enterprises. But 45pc of these enterprises lack an understanding of digital technology. Possessing the necessary digital skills would enhance the performance of SMES and maximise the opportunities available for regional economic growth. ASEAN member states need to provide incentives that enable high-tech start-ups to thrive. One high-tech start-up success story is Vietnam’s Vietponics, which helps farmers improve agricultural yield and reduce water consumption.
Cross-border transactions ASEAN member states should also establish clear regulations for cross-border transactions, especially for digital financial services, to encourage an integrated digital economy. According to one estimate, digital integration could generate a $1 trillion increase in ASEAN GDP by 2025.
An AEC pillar on the digital economy would make ASEAN more responsive to trends in disruptive technologies, which could benefit other economic sectors. For example, the Internet of Things (IOT) is expected to provide significant opportunities for semiconductor companies, as this technology will increase demand for memory and sensors. It could also ramp up the annual revenue of the manufacturing industry by producing Iot-integrated consumer devices.
Digital technology also helps businesses in the region access a bigger market for their products and services. E-commerce platforms such as Lazada and Shopee have become popular ways for regional consumers to access a wide range of products at a single click.
It is imperative for ASEAN to include the digital economy as a new AEC pillar to make the most of the opportunities available. This effort would help to enrich the region’s digital experience and improve economic activity that contributes to inclusive growth. Phidel Vineles is a senior analyst at the S Rajaratnam School of International Studies (RSIS), Nanyang Technological University.