ASEAN-Australia’s rankings in digitalisation and trade facilitation: How do they matter for regional development?

This op-ed is part of AASYP’s Digital Dialogues 2021, which is a programme that aims to provide a platform and forum for future leaders from across the region to contribute to the policymaking and diplomacy sphere by engaging in issues relating to Gender and Diversity, Green Recovery, and Emerging Economies.

A myriad of global rankings on different disciplines is published every year to qualify the assertion of which countries performed best and worst, and in which domains. But do they matter? Undeniably, they do in general and they continue to broaden over time. Rankings can be deemed as reliable sources to help encourage the collection and publication of national data in higher education, employment, innovation, trade, and all facets. They can also prod nations to become competitive and do better at something to achieve higher social status—and perhaps even build back better from the COVID-19 crisis. 

Conditions caused by COVID-19 have accelerated digital transformation and led to the advent of a new generation of free trade agreements, devised to overcome the emerging challenges and opportunities in digitally-enabled transactions of trade in goods and services globally, which is known as digital economy or digital trade agreement. For ASEAN member states (AMS) and Australia, global rankings can be used to measure each country’s performance in the aspects of digitalisation and trade facilitation, which are seemingly important in building an enabling free digital trade environment in the region. So, how did they perform in these aspects? 

The Trade Facilitation Indicators Simulator of the Organisation for Economic Co-operation and Development (OECD) using 2019 data shows that Australia and Singapore performed comparably at the upper end of their implementation of trade facilitation measures. Those that fell a bit short, yet sit on the upper end are Vietnam, Thailand, Malaysia, Brunei, and Indonesia. The rest of the AMS dally in the middle to lower end. Moreover, both Australia and Singapore are also top scorers in implementing trade facilitation and trade-related measures in 2021, following the United Nations Global Survey on Digital and Sustainable Trade Facilitation. While Laos, Myanmar, and Vietnam lagged behind on the same report. 

Across the economies in the 2020 Global Connectivity Index of Huawei, only Australia and Singapore have qualified to its Frontrunner (high-performing) cluster while Indonesia and Philippines fell under the Starters (low-performing) cluster. Another report on digitalisation by the European Center for Digital Competitiveness ranked the development of  countries’ digital competitiveness over the last three years. Among the East Asia and the Pacific countries surveyed, Vietnam and Cambodia grew dramatically, hitting the first and second spot, respectively. On the flip side, Malaysia and Philippines slumped to the least competitive in the region. 

From these global rankings, it is clear that high performing economies are no less than expected to close a deal for a reciprocal agreement on digital economy. At present, only Australia and Singapore have pushed through with a bilateral cooperation on digital-only trade agreement, after just over a year of negotiations before the signing in mid-2020. The negotiations between these two economies even started later than the ASEAN-Australia Digital Trade Standards Initiative, which began in early 2018 and seeks to raise awareness on the role of international standards and address the key factors which enable and inhibit digital trade across ASEAN and Australia. We could assume that such a negotiation was accelerated by the regional trade impasse due to digital trade readiness gaps and country-level strategy misalignment. 

A recent study concluded that it is unrealistic to expect simultaneous advancement in regional integration of the digital economy considering the significant gaps among the AMS, with respect both to overall development and in the digital economy. It also urged more developed members to take steps to lead the way in more advanced areas, while lending a helping hand to other member states. Nonetheless, the economies shall act prudently in building on bilateral relations instead of a regional cooperation and integration—as the digital divide could only get worse for those who are left behind in the region. 

Think of how digital technologies have eased our communication with family, friends and colleagues, and how they have shaped the way we learn, work, and do business. Most, if not all, can now be done in a matter of a few clicks at the comfort of our home. However, not everyone has access to this privilege, which is all the more reason why we should bridge the digital divide for an inclusive society. Missing out on participating in the digital economy is a lost opportunity—a huge one. 

The region’s course of action in identifying and addressing the roadblocks to doing business in the digital age is critical to its economic growth and development. Failure to thrive to this extent will stimulate new forms and widening of social inequalities—economic crises, health disparities, and political instability—stemming from a global digital divide. 

What we are certain about is that achieving sustainable regional development and enabling a free digital trade environment increases productivity, accelerates access to information, and boosts security of the economies. 

This article was written Diomari Estor, edited by Lauren Twine and reviewed by the AASYP Publications Team.

Note: The views and opinions expressed in this op-ed are solely those of the writer and in no way represent nor reflect the position of AASYP and members of the AASYP Publications Team. The AASYP Horizons Blog provides a platform for the free expression of opinions and intellectual discourse.

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