Ad­vanc­ing ASEAN’S dig­i­tal econ­omy

The Myanmar Times - Weekend - - News - PHIDEL VINELES

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.

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