The headquarters of the Association of Southeast Asian Nations in Jakarta. (Photo courtesy of Wikipedia)

Asean Set to Gain $1t from Digital Economy Over Next Decade, Report Finds


FEBRUARY 25, 2016

Jakarta. Indonesia and its Southeast Asian peers need to revamp their information technology infrastructure, update regulations and encourage an entrepreneurship ecosystem to generate an additional $1 trillion in its gross domestic product in the next decade, according to a report published by a consulting firm on Tuesday (23/02).

The report, titled "Asean Digital Revolution," suggested that members of the Association of Southeast Asian Nations can benefit from the use of digital technology in businesses and day-to-day human life by aligning strategies across the nations to create a single, borderless digital market and harmonized digital regulations.

"Transforming Asean into a global digital economy powerhouse could potentially generate an additional $1 trillion in GDP over the next 10 years. Realizing this goal will require a joint effort and a shared vision across Asean," said Naveen Menon, one of the contributors to the report.

Today, the region's GDP is $2.5 trillion, with digital economy accounting for just $150 billion of the output. The economy would generate $4.3 billion in 2025 if the governments do business as usual, the report said. Or, if they implement the reforms, the bloc would have a GDP of up to $5.6 billion as it gains additional output from new businesses and increased productivity enabled by broadband connectivity.

The report – which was released by A.T. Kearney, a global management consulting firm, and Axiata Group, one of the largest Asian telecommunication companies – offers input for governments in the bloc, including a five-year integrated roadmap to overcome the challenges.

The region should develop a comprehensive digital strategy that will include increasing broadband access by improving private sector's chance to invest in digital infrastructure in rural areas, promoting digital literacy and the benefits of the use of digital technology.

The report also mentioned the importance of allowing more innovation in mobile financial services, e-commerce and improving privacy laws and data protection across the region as they will, in turn, increase financial inclusion.

"If Asean can implement these policies effectively, the region will be propelled into the vanguard of the digital revolution, making Asean's national economies more competitive and enriching the lives of citizens," the report said.

Indonesia has implemented some of the suggestions, including encouraging digital payments and introducing the use of electronic identification cards.

Still, there are other suggestions that still need to be implemented in both Indonesia and the Asean, including building 35 connected smart cities across Asean, offering tax incentives to propel digital-led urbanization, and harmonizing cybersecurity, data protection and privacy laws across Asean.

"Just as businesses around the world have to innovate to adapt to a digital economy, governments need to ensure that existing and new regulations are fit for purpose in an increasingly online world," the report said.