How Asean is building trust in its digital economy - MIDA | Malaysian Investment Development Authority
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How Asean is building trust in its digital economy

How Asean is building trust in its digital economy

14 Jan 2024

ASEAN’s outlook is of oneness – one vision, one identity and one community. But it is a vision that the turbulence caused by the Fourth Industrial Revolution, rapid digital transformation and challenging geopolitics and economics is shaking.

Engendering greater trust among Asean member states in its policy tools and vision, is paramount to its progress and aspiration of developing a community of opportunities for all. One such huge opportunity is its digital economy, which it is estimated will grow from its current size of approximately US$300bil (RM1.4 trillion) to almost US$1 trillion (RM4.6 trillion) by 2030.

Asean is one of the world’s fastest growing regions with average real GDP growth forecast to reach 4.6% in 2023 and 4.8% in 2024. By 2030, it is expected to be the fourth-largest economy in the world. This dynamism is driven by a population of 700 million, composed of young, educated, increasingly online individuals and a growing middle-class.

For many people in the region, especially its youth, the integration of digital technologies into their everyday lives has changed the way they consume information, buy goods and services, use financial services and interact with government. Positively, governments regionwide have recognised the importance of harnessing the ongoing digital transformation for good and deployed policies to foster a thriving regional digital economy. Standing as a challenge to this are the region’s socio-economic differences, levels of development and disparate regulatory regimes.

Common policy tools, regulation and legislation are key means to address these challenges. Among these is the Asean Digital Masterplan 2025 and the Bandar Seri Begawan Roadmap (BSBR). The masterplan is designed to provide a vision of what Asean’s digital society and economy will look like, while the roadmap offers a plan for the region’s digital transformation agenda to accelerate its digital economy integration through the adoption of the Asean Digital Economy Framework Agreement (Defa).

With the vision and plan in place, the Asean Defa has the potential to transform the region. It’s the world’s first region-wide digital economy agreement, and as such, could offer a blueprint for how to achieve harmonisation among nations who are at different stages of digital integration. It also allows Asean to design an agreement that works for all member states, taking into consideration the different levels of socio-economic development, rather than rely on models created in other parts of the world.

Among the topics for negotiation will be digital trade, cross-border e-commerce, cybersecurity and online safety, digital ID, digital payments, data flows, competition policy, digital skills and talent mobility as well as emerging topics such as artificial intelligence. Asean member states recognise the enormous economic potential that can be reaped from the digital economy, and that digital transformation is a foundational strategy for economic growth and prosperity.

By engaging in the Defa negotiations, the grouping’s member states are building trust for business as well as investors in an inclusive and sustainable Asean digital economy, paving the way for economic development, job creation and investment opportunities.

If planned out in an inclusive way, the Asean Defa will create an environment designed to empower and connect micro, small and medium-sized enterprises (MSMEs) to regional and global markets, facilitate digital skills development and generate quality employment (including for women, youth, and rural communities) as well as strengthen collective and individual economic competitiveness and resilience.

Early progress is heartening. Countries at the subregional level already collaborate to facilitate the use of digital technologies for cross-border payments. Thailand and Singapore have been at the forefront of this; their PromptPay and PayNow systems enable instant, low-cost mobile transfers using just a recipient’s phone number.

This shows what is possible, and as Asean embarks on negotiating the Asean Defa, it is important that an inclusive process of consultations is used to ensure everyone’s voice is heard. This will help build trust in the process of building an inclusive and sustainable Asean digital economy.

To facilitate these moves, the World Economic Forum, in cooperation with the Asean -Korea Cooperation Fund, has launched the Asean Digital Economy Agreement Leadership (Asean Deal) project. This aims to support Asean member states address preparedness, overcome challenges and reap the benefits of digital economy agreements.

This is achieved through the provision of capacity building activities, an online depository of digital economy agreements, and annual business surveys and dialogue on digital economy topics. The project also offers inputs to negotiations from stakeholders in academia, civil society, the private sector, and other regions where the implementation of digital policies has shown positive results.

Creating a strong integrated digital economy will enable Asean to compete more effectively in the global economy and provide greater opportunities for its citizens. A region-wide digital economy framework will require collaboration, but will in turn, engender greater levels of trust, and if successful, will foster the goal of a stronger, unified, one Asean. — Asia News Network

Joo-Ok Lee is World Economic Forum’s Asia-Pacific regional agenda head. This article was published as part of the World Economic Forum Annual Meeting 2024 discussions.

Source: The Star