Asia Pacific

Challenges loom for Asia’s digital landscape (Inquirer)

Last week, the United Nations Conference on Trade and Development (UNCTAD) released its first ever annual Digital Economy Report (2019). It came at a time when countries across Asia have been grappling with a complex digital future.

Digital technologies help cut costs, enable delivery of services without leakages, reduce opportunities for graft, promote ease of doing business, leverage an increasingly non-tactile world, grow economies, have the potential to create millions of new jobs and, it appears, even help fight fake news.

On the flip side, there are concerns of the cost of the emerging digital economy in terms of loss of traditional employment sectors, eroding the right to privacy, abetting authoritarian state-control of citizens’ lives, causing a spike in cybercrimes and, according to some, promoting a deracinated, atomised existence for human beings.

On balance, as Andrew Sheng writes for Asia News Network: “No economy today can afford to be complacent… We need a root-and-branch review of how to compete in a complex digital world.”

The UNCTAD Report is clear that the emerging global digital economy is closely associated with key frontier technologies – Blockchain, Data Analytics, Artificial Intelligence, 3D Printing, Internet of Things, Automation/Robotics and Cloud Computing – that impact all UN Sustainable Development Goals.

Global Internet Protocol (IP) traffic, a proxy for data flow, has grown at a mind-boggling rate in our lifetimes; from 100 GB of traffic per day in 1992 to 46,600 GB per second in 2017. And it’s projected to hit to 150,700 GB of traffic per second by 2022.

Yet, the world is only in the early stages of the data-driven economy.

The geography of the digital economy is highly concentrated in two countries, China and the USA, which also have 90% of the market capitalization value of the world’s 70 largest digital platforms. Half of the world remains offline and in LDCs (Least Developed Countries) only one in five people has internet access.

Demographic Dividend & Digital Potential

Sheng says he is optimistic about digital economies in Southeast Asia. “Indonesia, Vietnam and the Philippines have the scale, with populations over 100 million each. Asean’s real strength is its young population already being digitally savvy and moving into middle/higher income ranges…

“It is precisely because the Asean countries have youth, diversity of culture and access to world-class knowledge, as well as strategic geographical location, that they will become the cutting-edge digital future,” he writes.

In Vietnam News, Vo Tri Thanh and Do Le Ngọc Bich point to the ride-hailing firm Grab investing US$500 million in Vietnam over the next five years, just a month after it announced a $2 billion investment in Indonesia.

“Grab’s investment decisions are manifestations of the potential development of the digital economies of the two Asean countries which have ‘similar characteristics’,” say the authors.

But Grab isn’t just stopping there. It is accelerating its expanding business that now includes food delivery, digital payments and digital content by investing $150m in AI to build a regional super app, according to The Straits Times.

Asean member countries have already signed agreements to drive the regional grouping toward the Fourth Industrial Revolution (Industry 4.0), add Vo Tri Thanh and Do Le Ngọc Bich.

Malaysia, which established the world’s first Digital Free Trade Zone in 2017, last week approved implementation of the RM21.6 billion National Fiberisation and Connectivity Plan.

The five-year plan, which the government views as part of the nation’s preparedness for the Fourth Industrial Revolution, is a crucial infrastructure project starting this year that will provide nationwide, high-quality and affordable digital connectivity across the urban-rural divide.

Indonesia is set to become the region’s largest digital economy over the next few years while Vietnam is working on a national digital transformation project which aims to position it as a leading digital economy of Asean by 2030.

Singapore, meanwhile, has implemented its Smart City initiative and Thailand has plans to develop digital capacities in all economic sectors.

Southeast Asia’s digital economy is projected to hit $200 billion by 2025 while the e-commerce sector alone is forecast to reach $88 billion. According to a 2018 report by Bain & Company, the proportion of the digital economy in Asean’s GDP is 7 per cent, compared to 16 per cent of GDP in China. For the EU-5 it’s 27 per cent of GDP and for the US it’s a whopping 35 percent of GDP.

ATKearney research shows Asean has the potential to enter the top five digital economies in the world by 2025, however, and implemen­tation of a radical digital agenda could add $1 trillion to the region’s GDP over the next 10 years.

Uneven Skills, Infrastructure, Innovation

The real challenge in formulating digital strategies for countries in the region is, of course, that of inclusiveness. There are uneven skills sets and different strengths/weaknesses across the region which Asean as a bloc will have to address over and above its members’ national agendas.

For example, the UNCTAD report states that while South Korea and Singapore top the charts in companies receiving orders online, Thailand fares poorly in business digitalization.

But some of the most innovative ways of making the digital economy work for citizens are also being attempted in Thailand. According to The Nation, the country’s digital economy minister is empowering senior citizens by creating and giving them access to an online network to look after their health concerns as well aid the government in countering fake news.

The ministry has sought a Baht 21-billion budget for fiscal 2020 and plans among other steps to set up 10,000 free WiFi hot spots in rural areas as part of the government’s Thailand 4.0 drive. The establishment of an ‘anti-fake news’ centre is also on the cards.

In South Korea, which has a strong legacy of digital innovation, start-ups are already brainstorming on how they can solve tech savvy Seoul’s urban problems using AI and IoT.

As many as 50 homegrown start-ups honing their tech capacity in sectors ranging from ultrafine dust management to household waste treatment and fire prevention participated in the government-hosted ‘Start-Up Seoul: Tech-Rise 2019’ event on 5-6 September, where they gained access to venture investors and corporate representatives, reported The Korea Herald.

In the Philippines and Vietnam, on the other hand, the emphasis of the digital economy is on the job opportunities being created.

It may seem counter-intuitive given the emphasis on the young driving the digital economy but, as a report in the Philippine Daily Inquirer brings out, many Filipinos including those aged 50 and above are being drawn to digital career options. They are acquiring necessary skill sets as a potential fallback and to augment their incomes given the employment uncertainty in traditional sectors of the economy.

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19 September 2019

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