How Asean’s dreams of digital integration across Southeast Asia can come true
- The prize? A potential GDP boost of US$1 trillion by 2025. But first, Asean needs to nail down a progressive, inclusive policy approach, and drive collaboration in the private sector so SMEs have the skills, space and funding to grow
It will also allow members to bridge the digital divide and achieve inclusive economic and social growth. Asean’s digital growth story continues to astound and hold great promise. Last year, Southeast Asia’s internet economy surpassed US$100 billion, tripling in size over the last four years. By 2025, this is set to hit US$300 billion, US$60 billion more than previously estimated.
With its youthful demographic, fast-growing middle class, world-leading rates of digital adoption, and a highly entrepreneurial start-up sector, Asean is poised for success.
However, the grouping risks leaving substantial value on the table unless it has a progressive policy approach to the digital economy, to create opportunities for SMEs to grow, and foster economic and social inclusion.
Likewise, Indonesia’s new e-commerce regulations involve taxation, licencing and registration requirements that could deter entrepreneurs and SMEs looking to transition from the unofficial economy. Prohibitive or mistimed policies like these could easily derail the prospects of an internet economy growing at more than 40 per cent a year in Indonesia and Vietnam.
Asean’s ability to promote digital integration rests on two factors: policies to encourage investment and growth, and private-sector partnerships to facilitate technology transfers and create business opportunities.
However, laws can take years to draft and are difficult to roll back, much less keep up with quickly-evolving technology. Start-ups and SMEs tend to be hardest hit by poorly considered regulation.
Asean should support and drive collaboration in the private sector and make private-sector dialogue a part of policymaking, which builds trust and understanding, and can help create better approaches. Private-sector partnerships are also key to developing an Asean talent pipeline, and ensuring that SMEs across the region can access the latest technology and investments.
Jeff Paine is managing director of the Asia internet Coalition, an industry association comprising leading internet and technology companies