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

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A man focuses on his mobile phone in Jakarta, Indonesia. Last year, Southeast Asia’s internet economy surpassed US$100 billion. Photo: AFP

Published: 3:30pm, 26 Jan 2020Updated: 9:49pm, 26 Jan 2020

Asean’s major success last year was the completion of negotiations to join the Regional Comprehensive Economic Partnership, potentially the world’s biggest trade deal. The agreement, which signals the deeper integration of the Association of Southeast Asian Nations into the global economy, is also a safeguard against US-China trade tensions, which remain far from resolved.

Last October, the International Monetary Fund slashed its gross domestic product growth forecast for Asia, predicting 5.1 per cent growth in 2020, the slowest since the 2008 global financial crisis. Yet Asia remains the world’s fastest-growing region, accounting for over two-thirds of global growth last year. Asean, as the world’s fifth-largest economy, contributed 10 per cent of that growth in 2018, with a combined GDP of US$3 trillion.

A top priority for Asean in these uncertain times must be to support digital integration to drive and safeguard long-term growth in GDP, jobs and investment. Digital integration across Asean, according to a Bain & Company report, will accelerate intraregional trade and growth, enable small and medium-sized enterprises to become regional and global players, and potentially lift GDP by US$1 trillion by 2025.

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.