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ASEAN cooperation could see digital economy reach $200bn by 2028

Article - November 14, 2018

Singapore, the nation with Asia’s most competitive digital economy, and the second most competitive globally behind the United States, is spearheading ASEAN’s digital revolution.


With a population of 650 million and a nominal GDP of $6.5 trillion, the effective economic integration of Southeast Asia has long been an ambition of leaders in the region – an ambition that would turn it into one of the world’s largest and most dynamic emerging markets.

It is a vision that has been espoused and progressed by the cooperation of the ten-nation Association of Southeast Asian Nations (ASEAN) for more than thirty years. However, it is not until the fairly recent but very rapid adoption of digital technologies by the region’s governments, businesses and increasingly wealthy consumers, that the grand idea of a common market has seemed entirely possible.

Today, through smartphones, wireless internet, and digital innovation, invisible data highways are bridging the market gap previously presented by vast island archipelagos and populations separated by several different languages.

Paving the way for the region’s digital revolution is Singapore – the nation with Asia’s most competitive digital economy, and the second most competitive globally behind the United States, according to the IMD World Digital Competitiveness Ranking 2018.

During its chairmanship of ASEAN this year, Singapore has made the development of the digital economy a priority. Addressing the Digitize ASEAN Conference in Singapore earlier this year, the city-state’s Senior Minister of State of Trade and Industry Koh Poh Koon stated that, with cooperation, the digital economy in ASEAN could grow to $200 billion over the next 10 years, with e-commerce accounting for $88 billion.

A recent major study conducted by Microsoft – a significant investor in the region’s digital transformation – strongly supports these estimations. According to Microsoft’s research, in 2017 about 6 percent of Asia’s GDP was derived from digital products and services created directly through the use of digital technologies, such as mobility, cloud, Internet of Things (IoT), and Artificial Intelligence (AI). This is expected to surge to around 60 percent of Asia GDP by 2021.

Within ASEAN, the Singapore Government has pledged to lead by example in the digital sphere, implementing a number of strategic national projects such as the national digital identity system and universal cashless payments, whilst also encouraging more private sector players to adopt digital solutions. Working along these lines, in June 2018 Singapore launched its Digital Government Blueprint, outlining how Government will re-organize and transform itself to deliver public services better through technology. This involves improving the user-experience interface where citizens interact with a greater range of government e-services; but also important back-end, ‘whole-of-nation’ enabling systems. The blueprint has been put in place to provide a supporting framework for the state’s wider Smart Nation vision; an initiative to fully exploit new technologies to create new businesses and jobs, and to provide citizens better access to public and private sector services.

“In the smart nation, there are three important components, firstly, being a vibrant digital economy,” explains Tan Kiat How, Chief Executive of Singapore’s Info-Comm Media Development Authority (IMDA). “The second component of that is an inclusive and cohesive digital ready society, and thirdly, a digital government that is responsive to the needs of our citizens and our businesses.

“These three components form the legs of the stool for smart nation. IMDA is spearheading the digital economy drive and supporting the ministry of communication to establish this digital ready society. We believe that every business needs to be a digital business and every worker should be empowered by technology.”

To realize this vision, Singapore is working closely with the private sector – Microsoft being one the government’s most notable innovation partners.

“On the digital government side – how we support the whole of Singapore by enabling society with technology to make the country a better place to work and live, we are quite actively involved in this topic,” explains Kevin Wo, Managing Director of Microsoft Singapore.

“The other aspect is the IMDA, whom we are partnering with in the SME co-digital program. SME is a big focus for Singapore as 99 percent of the companies here are SMEs and 70 percent of the employment comes from them. They are contributing to the GDP and yet this is a sector where Singapore as a whole has lot of room to grow.”

This is not only true of Singapore, but the region a whole. With SMEs comprising 98 percent of enterprises across Asia-Pacific, digitalization is imperative to connecting millions of these businesses their local economy, but also presenting SMEs with greater opportunities for cross-border expansion. 

Though communications infrastructure in many ASEAN countries has previously been very basic, new investments in fiber infrastructure is now improving connectivity immeasurably. “This is where telcos like us play an important role,” explains Chua Sock Koong, CEO of Singapore Telecommunications (Singtel).

“Together with our regional associates and our Australian subsidiary Optus, we are Asia’s leading communications group with an ecosystem that spans 21 countries. We provide links not only within ASEAN but between ASEAN and the rest of the world,” says Ms. Chua.

“Within ASEAN, we are focused on connecting small and medium-sized enterprises (SMEs) which play a vital role in driving and developing local economies. We have an initiative called ‘99%SME’ to spur the adoption of digital technologies among home-grown SMEs in Singapore.  It helps them establish their online presence on an e-commerce platform which opens up new growth opportunities outside the Singapore market. This digitalization push supports ASEAN’s vision for a more connected community.”

Like Microsoft, Singtel is a key partner for the government’s Smart Nation vision, providing digital solutions and connectivity, both on the consumer and enterprise front. “With our extensive network capabilities in communications, cyber security and data analytics, we are in a unique position to support Singapore’s Smart Nation vision,” adds. Ms. Chua.


Investment opportunities

Digitalization not only has the potential to transform the economies of the ASEAN bloc, but also global perceptions of the region, in turn creating a greater number of opportunities for international investment.

“A lot of companies aren’t aware that this region has really accelerated,” says Sean Murphy, the American chairman and CEO of Procurri, a leading global independent provider of IT and data services that has chosen Singapore as its international base.

“I live in the United States and you wouldn’t find the same [digital] infrastructure there. There are great opportunities in Asia and the Americans need to know about it. Especially American small businesses, they need to get here because the customers are here. With technology, you can come here and find customers tomorrow.”