Author: Administrator

Area of Work: COVID 19 Pandemic

 

  • The pandemic has accelerated Southeast Asia’s adoption of e-commerce, which holds great economic potential
  • But, for the region to become a major digital economy, gaps in infrastructure, access, inclusion, skills and policy must be addressed

The coronavirus pandemic has accelerated Asean’s digital transformation at an unprecedented scale and speed. With bricks-and-mortar businesses in Southeast Asia disrupted by lockdowns, e-commerce surged to US$62 billion in 2020, 63 per cent up from 2019. Online shopping is expected to grow by another US$100 billion by 2025, research shows.

In Thailand alone, downloads of shopping apps increased by 60 per cent early in the pandemic. In Indonesia, where almost all businesses are micro, small and medium-sized enterprises (MSMEs), the government has been compelled to help entrepreneurs adopt digital tools and skills. Across the region, the shift to online work and schooling has seen the number of internet users hit 400 million.

Southeast Asia’s adoption of digital solutions has played an important role in addressing a wide range of socio-economic challenges. Singapore was the first country in the world to introduce a Bluetooth-based mobile app, TraceTogether, for contract tracing, with others in the region following suit.

The use of technology to compliment conventional health care has benefited members of the Association of Southeast Asian Nations. Deployment of information apps providing transparent and accessible data on the pandemic has kept the “infodemic” under control, for example.

Technology has also been used to roll out social programmes: the adoption of digital identity systems has been accelerated to ensure cash transfers reach the poor. Additionally, the plethora of online marketplaces that have sprung up during the pandemic has helped small businesses survive and, in many cases, thrive.

Digital integration has enabled Asean to harness its power as a collective, enabling member states to compete effectively in the global economy and also allowing them to foster domestic growth.

However, a divergence in technological readiness, governance and the like has led to differing levels of adoption. Internet penetration varies widely: only 22 per cent of Laos’ population has internet access versus 81 per cent in Singapore, for instance.

While Singapore, Thailand, Brunei and Malaysia were quick to support health and other sectors with digital tools, the Philippines and Indonesia were held back by a lack of government coordination. For less-developed countries like Cambodia, Laos and Myanmar, low digital penetration and lack of digital literacy has left them reliant on traditional approaches.

For Asean to become a key regional digital economy, gaps in infrastructure, access, inclusion, skills and policy have to be addressed. Up to US$1 trillion could be added to the region’s GDP by 2025 with greater digital integration, according to Bain and Company research.

With the pandemic-induced shift in consumer behaviour, e-commerce integration for MSMEs could help Asean revive struggling economies. This would open up opportunities for enterprises of all sizes, increasing local businesses’ participation in the global value chain and enhancing their international competitiveness.

MSMEs are the backbone of Asean’s growing economy, employing 80 per cent of the workforce. Despite this, less than 20 per cent of such enterprises are equipped to benefit from digital integration. To foster their growth, they need support to navigate the e-business ecosystem, whether it is starting an online enterprise or understanding digital norms.

Southeast Asia can generate major investment opportunities via cross-border integration and economic digitalisation. This has to be accompanied by the provision of seamless, secure and low-cost digital financial services.

Such services could provide support to the “unbanked” and “underbanked” populations, and foster entrepreneurship by providing financial assistance to small businesses. It is estimated that digital financial services could generate US$60 billion in revenue by 2025.

Digital technology can also help garner exponential gains in manufacturing. The region could become the next factory of the world by seizing the potential of Industry 4.0 technologies like robotics, 3D printing and predictive algorithms. For Asean, this could translate into productivity gains of up to US$627 billion by 2025, according to a McKinsey report.

Asean’s path to a successful digital transformation depends on coordinated policy responses – that is, whether the region’s leaders have a common vision for digital integration.

First, providing inclusive and affordable access to quality digital infrastructure across the region would involve lowering prices, increasing internet speeds and introducing stable broadband services in neglected areas. Second, no one in the workforce should be left behind. The yawning gap in digital skills makes it imperative to prioritise investment in human capital.

Third, growth driven by cross-border data flows will have to be balanced by stringent cybersecurity standards and regulations as customer trust is key to the long-term success of online trade. Vulnerability to cyberattacks could cost top Asean companies up to US$750 billion, and the region would need to spend up to US$171 billion on cybersecurity by 2025, according to research by consulting firm Kearney.

Finally, around US$18 billion in investments is needed to roll out 5G networks to 200 million people by 2025 and deliver internet that is 50 times faster than 4G. Given the enormity of the task, public-private partnerships will be vital to Asean’s digital transformation.


Professor Syed Munir Khasru is chairman of the international think tank, The Institute for Policy, Advocacy, and Governance (IPAG)

Weblink:https://www.scmp.com/comment/opinion/article/3135868/key-aseans-post-pandemic-recovery-digital-transformation

 

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