Collectively, the 10 member nations of the Association of Southeast Nations (ASEAN) have a number of advantages when it comes to reaping the benefits of digitalization.
The region has a young population, most of whom are digitally engaged, with the majority connected to broadband via mobile phones. Some 94% of its adult population is literate – of which 40% are under 30 years old. Of this youthful portion, 90% have access to the internet.
All of these facts could combine to make South-East Asia a leader in the digital economy, a development that could transform the region by 2025. The benefits to regional GDP could be as much as $1 trillion.
But on South-East Asia’s road to a unified digital market, challenges and roadblocks still exist, resulting in the 10 nations of ASEAN struggling to keep pace despite their potential.
The arrival of the ASEAN Economic Community (AEC), however, brings with it the promise of a more integrated regional economy with its attendant rewards.
To overcome these roadblocks and jump-start change, there are five policy imperatives for ASEAN countries to act upon:
1. Universal mobile broadband access
The pursuit of universal mobile broadband access should be a top priority, if the 67% of the ASEAN population who live without access to basic internet services are to be included in the region’s digital revolution. Crucial to advancing mobile broadband access is the release of a substantially larger number of lower-frequency bands, specifically the 700MHz digital dividend, to mobile operators. The freeing up and allocation of additional technology-neutral spectrum will catalyse economic growth, as a cost-effective means for telcos to bring high-speed internet access to the masses, especially those in rural areas. In addition, policy-makers need to ensure not more than four operators per country for long-term sustainable, healthy economics for telecom operators.
ASEAN people should be encouraged to be digitally literate, focusing on the core groups of students, the workforce and senior citizens. Students are the next generation to participate in the digital economy, while blue-collar and white-collar workers can leverage ICT to increase productivity and drive innovation. Senior citizens will also be able to make use of technology to service their needs, such as elderly care and remote health monitoring.
2. Accelerate innovation in mobile
Outside ASEAN, a new breed of banks are emerging as seen in countries like China and Kenya. When non-banking institutions provide financial services – internet-only banks where all transactions are conducted online – experience has shown that they are more agile and nimble, and are not lumbered with legacy issues of traditional bricks and mortar banks and financial institutions.
While safeguards are paramount, ASEAN policy-makers should be brave to shift from the traditional bank model to an online bank model and regulatory policies have to change to allow for these to proliferate. Ultimately, this will bring about innovation in financial services, as well as being inclusive of traditionally marginalized segments of society by providing them access to financial services.
As urbanization increases throughout the region, smart cities are the solution to providing cost-effective public services. By 2025, ASEAN is primed to have at least 35 smart cities. Policy-makers should work through common strategy frameworks to encourage the creation of interoperable smart cities across the region to achieve a borderless market and integrated smart-city planning and operations.
3. Enhance trust and security
Cybersecurity and digital safety goes beyond compliance. For ASEAN, it should promote cross-jurisdiction harmonization through a resilient cybersecurity regime. A good way to achieve this is by allocating e-identities to everyone living in ASEAN countries, recognized throughout the region. This will make it easier to act on instances of fraud, where the buyer is resident in one ASEAN country, and the seller in another, providing much easier recourse in cases of dispute.
4. Strengthen the local digital economy
Value creation will eventually shift from national to international markets, while the underlying infrastructure remains local. With this shift, local entrepreneurs will be in competition with global over-the-top (OTT) players. To enable a level playing field, we need to have more or less the same rules for similar people operating in the ecosystem – i.e. “same service, same rules”. This means relaxing on regulations to enable local innovators to compete with international OTTs.
5. Foster digital innovation within ASEAN
ASEAN needs to ensure that its rising generations have the right skill sets to participate in the digital economy. National education systems should be radically transformed, with a technology-enabled curriculum to teach students new skills such as critical thinking, problem solving, creativity and digital literacy; and bring about a more holistic development of social and emotional skills.
There need to be strict regulations on intellectual property, protecting those who develop innovative products and services. Specifically, throughout ASEAN, there should be a common standard of protection.
ASEAN governments should use financial inducements, preferential taxes and other incentives to encourage highly skilled overseas workers to return either to their home country or another country within ASEAN.
To promote and cultivate the spirit of innovation, ASEAN should make use of research-and-development tax incentives and concessions for new start-ups, and help innovative enterprises get off the ground.
These five policy imperatives to accelerate digital progress in South-East Asia should be strategically planned and implemented through collaborations between ASEAN nations. A seminal step towards this would be the setting up of an ASEAN Digital Economy Promotion Board, comprising of country representatives, industry experts and opinion leaders to provide strategic direction, guidance and advice to the AEC and its member governments.
The World Economic Forum on ASEAN is taking place in Kuala Lumpur, Malaysia, from 1-2 June.