Digital Revolution Expected to Add Additional $1t to Asean GDP by 2026

Jamaludin Ibrahim, managing director, president and group chief executive of the Axiata Group, participates in a panel discussion during a World Economic Forum event in Phnom Penh, Cambodia, on Thursday (11/05). (Photo courtesy of the WEF/Sikarin Thanachaiary)

By : Tabita Diela & Iwan Subarkah | on 11:06 AM May 12, 2017
Category : Business, Economy, Featured

Jakarta. The digital revolution can help countries in Southeast Asia to increase their combined gross domestic product by an additional $1 trillion by 2026, a global telecommunications company executive said during a World Economic Forum event in Phnom Penh, Cambodia, on Thursday (11/05).

Jamaludin Ibrahim, managing director, president and group chief executive of the Axiata Group, said he has been advocating the concept of the digital revolution in the region for the past year.

"We think Asean is at the right spot to kind of leapfrog many countries in the world, or many regions in the world, to be at the forefront of this digital revolution," Ibrahim said.

According to data from the secretariat of the Association of Southeast Asian Nations (Asean), the region had a combined GDP of $2.4 trillion in 2015 and it is expected to have reached $2.5 trillion in 2016.

Ibrahim said broadband connectivity is still lagging in Southeast Asia and he called on the public and private sectors in the region to work together to make the digital revolution a reality.

"There's a lot to learn from each other," he said, noting that one of the first things to solve is data roaming between countries because it is no longer relevant.

The digital revolution will affect economic transactions, improving the efficiency and the cost of doing business, Asian Infrastructure Investment Bank (AIIB) president Jin Liqun said during the panel discussion.

Liqun said the China-backed AIIB and other similar banks will help Asean member states reap the benefits of the digital economy by providing funding for infrastructure.

"So, when we build power plants, power generation and transmission, it certainly helps but when we build roads, railways, ports, airports, seaports and all these kinds of infrastructure, the digital economy permeates all these sectors," he said.

One example of an undertaking that has benefitted from digitization is Grab, an online-based ride-hailing service, founded in Malaysia in 2012.

Grab co-founder Tan Hooi Ling said the company uses technology to provide a more efficient way of transportation. She said Grab has been directly connecting technology to the economy by providing jobs for hundreds of thousands of people in the region.

Grab has more than 850,000 driver partners in Southeast Asia.

"I believe technology is not for a particular generation [...] When we are thinking of building the next form of economy, we need to take everyone along with us," she said.

The "Digital in 2017 Global Overview" report compiled by global marketing agency We Are Social and social-media management platform Hootsuite, shows that more than 315 million people in Asean, or nearly half of the region's population, are connected to the internet.

This number increases aby about 124,000 every day, with the growth pace expected to persist over the next five years.

With more than half of its population under the age of 30, the Asean region is well placed to tap into and benefit from the digital economy, said Tony Fernandes, chief executive of AirAsia, Southeast Asia's largest budget airline.

"The whole digital revolution is very exciting for Asean and there are a lot of budding entrepreneurs here. I think Asean must be driven by entrepreneurs," Fernandes said.

Tokopedia co-founder William Tanuwijaya said the internet connects everyone in the region and gives rise to multi-billion-dollar companies that enable millions of entrepreneurs to create jobs.

"Our business in Indonesia enables around 1.5 million small business owners to expand their markets," William said.

The digital economy in Asean is expected to grow to $200 billion by 2025 from $31 billion in 2015, according to a study by Google and investment firm Temasek.

Indonesia will become the largest player in the digital economy in Southeast Asia with a market of $130 billion.

Kao Kim Hourn, a senior minister in Cambodian, said digital progress should be able to reduce poverty and create economic equality in Asean countries.

"The Asean dream is about prosperity for all. It's a daunting [...] but not impossible task," Kao said. "We have to make technology accessible to a lot more of people and make it cheaper."

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