July 10, 2019

Internet Economy is Driving New Growth and Market Opportunities in Southeast Asia

Over the past several years, I have observed how the internet economy is driving new growth and market opportunities, globally as well as in the ten Association of Southeast Asian Nations (ASEAN) countries. Therefore, I found value in reading Digital platforms and services: A development opportunity for ASEAN, a report from The Economist Intelligence Unit (The EIU) commissioned by the Asia Internet Coalition (AIC), an industry association based in Singapore, which examines the mutual opportunities and challenges of digital platforms and service providers, and governments in the ASEAN countries.

To provide insight into the role of digital platform providers in ASEAN, The EIU conducted desk research and six in-depth interviews. The key findings of the research are as follows:
  • ASEAN countries are deploying different strategies to capture the potential of the internet;
  • Connectivity matters: to capture the benefits of an internet economy, increasing connectivity and improving digital skills are key to further development;
  • Regulatory hurdles can stifle innovation and growth: some countries in ASEAN have introduced data localisation policies, which can limit economies of scale for global providers and domestic companies; and
  • Overcoming challenges through innovation: public- and private-sector engagement is the most frequently cited solution to challenges and potentially seizing the full benefits of the internet economy.
The report also provides six key recommendations for ASEAN governments and enterprises to consider in order to seize the full potential of the digital economy in stimulating economic growth:
  1. Educate stakeholders about the benefits of digital platforms and services: the private sector should inform governments about the latest innovations and co-operate with governments to deliver economic and societal benefits. Likewise, the public sector should educate potential users of e-business benefits;
  2. Encourage government and private sector collaboration: the public and private sectors must encourage engagement to discuss current and emerging issues and opportunities as technology advances;
  3. Increase digital adoption among all population groups: to reap the full benefits of the internet economy, all population segments should be online and have access to high-speed broadband services;
  4. Support ASEAN's SMEs to come online: as the main engine of growth across ASEAN, SMEs need greater support to expand online, and across borders. Private enterprises have a significant role to play;
  5. Support technology providers that help improve the economy: e-commerce and e-tourism providers are particularly valuable in ASEAN, given the region’s attractions and economic composition, with travel contributing a large amount to GDP in several countries; and
  6. Support digital economy programs: all stakeholders should support at the highest level the development and implementation of forward-looking digital economy strategies.
"It is estimated that the ASEAN region can see US$1trn added to its GDP by 2025 if the digital economy can thrive and avoid barriers," according to the report. "Countries around the region are increasingly implementing digital economy strategies ... to reap the full benefits of the internet economy, which is largely dependent on people being able to use digital platforms and services, such as e-commerce and cross-border data flows. The numbers are encouraging: mobile-broadband subscriptions have increased and now reach more than half of the population in most markets; similarly, online access is steadily rising, again reaching more than half of the population in most countries in the region."

I concur that "[e]nhancing digital access and usage allows countries—and their populations—to save time, money and effort while enhancing productivity. Globally, the internet contributed 3.4% of GDP to the world's 13 largest economies in 2009 and 5.3% of GDP in the G20 in 2016. The benefits of the digital economy are set to increase. In 2018 the International Telecommunication Union, a UN agency, found that more than half of the world's population is now online. The potential benefits of digital development are huge."

What are your thoughts?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

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