Asean’s great digital potential

  • News
  • Monday, 04 Apr 2016


The confluence of technology, a youthful population and robust economies mean the region has the potential to become one of the top digital economies of the world. But first, there must a strong leadership, reports MEK ZHIN.

ASEAN is now in a position to catapult itself into the Top Five digital economies of the world because all the fundamental conditions are already in place.

But leadership is needed — and quickly — to realise this potential, according to global management consulting firm A.T. Kearney’s report, Asean Digital Revolution.

The report, produced in collaboration with Axiata Group, says this goal could become a reality as soon as 2025.

It says the digital economy in the region currently generates about US$$150bil in annual revenue, with a large chunk of it contributed by connectiviy and online services, followed by user interface and content, as well as enabling technologies.

“If Asean were a single country, with its combined GDP of US$2.5tril, it would be among the largest economies in the world — behind only the US, China, Japan, Germany, the UK and France.

“Economists have projected its growth at about 9% from now to 2020,” the report states.

The three main factors that give the region its advantage right now is the confluence of technology innovation, a youthful population and robust economies, according to firm partner Naveen Menon.

He says this presents a unique opportunity for Asean, but realising the goal of becoming one of the world’s top digital economies requires strong leadership.

The report states that Asean has a combined population of more than 628 million people, equivalent to 10% of the world’s population, with a literacy rate of 94%.

About 40% of the citizens are also under the age of 30, digital natives and primed to champion disruptive thinking and innovate.

Smartphone penetration is about 35%, and growing.

The implementation of the Asean Economic Community (AEC) will also provide a big boost for this agenda.

According to the report, a digital revolution would bring positive changes such as allowing Asean firms to compete with Silicon Valley and become global leaders in digital manufacturing; usher in borderless digital services; enable seamless cross-border public services; bring about 100% digital literacy; and pave the way for the emergence of a cashless society.

However, there are several major issues that needs to be addressed for the vision to be achieved, including the need for policymakers to optimise broadband spectrum allocation and address hyper-competition, look at regulations that inhibit innovation in mobile financial and digital services, low consumer awareness and limited supply of local content, among other things.

There is also a mismatch of skills between what traditional education provides and what a digital entrepreneur needs.

“The 10 countries in the region are all in different stages of evolution, but what our report points to is the need for an overall strategy for the entire region. We don’t have anything like it at the moment,” Naveen stresses.

He says the report suggests establishing an independent Asean advisory board consisting of country representatives, industry experts and key opinion leaders.

“Their role would be to provide strategic direction, guidance and advice to the AEC and its member governments to push the digital agenda, which has the potential to add some US$1tril to the region’s GDP over the next 10 years,” he points out.

The report goes on to suggest solutions, including pursuing universal mobile broadband access; accelerating innovation in mobile financial services, e-commerce and connected cities; and enhancing trust and security in Asean’s digital economy and fostering digital innovation within the region.

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