What is Digital Economy? – An Asset or a Fiercer Dismissal in ASEAN?

This op-ed is part of AASYP’s Digital Dialogues 2022, 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 innovation and investment, digital economy, and regional mobility.

Emerging trends in the digital economy of ASEAN were noted, including the expansion of e-commerce and delivery services, the rise of digital payments, the expansion of data centers, and the ensuing social and sustainability issues brought on by the rapidly expanding carbon footprint of the digital economy. According to NIKKEI Asia news, theASEAN region’s digital economy is on course to reach $1 trillion by 2030 as millions ofnew internet users power industries like e-commerce and virtual finance. With a population of more than 630 million, the third largest in the world, almost half of whom are under 30 and are tech-savvy, ASEAN is the region with the fastest-growing internet market. In fact, the region witnesses 3.8 million new users sign up for the internet each month. The internet economy in ASEAN, which encompasses the travel, e-commerce, and media industries, is anticipated to reach US$200 billion by 2025. As a result, ASEAN has the ability to expand its economy beyond the traditional investment and trade sectors, advancing the region closer to completing the second phase of integration described in the ASEAN Economic Community Blueprint 2025. The emerging global megatrend of the digital era is a positive sign for ASEAN to improve regional economic performance and human development.

Nevertheless, like all countries and regions, ASEAN also has to deal with issues relating to how the digital era, often known as the Fourth Industrial Revolution, is affecting communities, businesses, and governments. The way that businesses and the economy function has been completely transformed by digital advancements. Noted with Uber, the world’s largest taxi company, owns no vehicles; Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory; orAirbnb, the world’s largest accommodation provider, owns no real estate. This has big implications for jobs as workers are finding themselves with outdated skills and struggle to match the demands of these changing business models. Low-skilled workers are being replaced by machines – often called “automization” – leading to political pressures. The digital economy raises the risk of fiercer dismissal, especially if it is not accompanied by increased digital connectivity, skilled labor, and cooperation.

First, ASEAN member states should ensure digital connectivity by removing the inconsistent physical infrastructure between rural and urban areas, promoting digital inclusion for less developed regions, and possibly reducing a digital divide between citizens. Digital connectivity is high quality access to communication networks and services that is made available at affordable prices for all people and businesses regardless of who they are or where they live. 

ASEAN needs to leverage its cooperation with other countries, including China through its China’s Digital Silk Road offerings, introduced in 2015, include infrastructure, business and regulation with an aim to develop a network of internationally interoperable digital infrastructure, including terrestrial and submarine communications cables, 5G networks, data centers, satellite navigation systems, smartphones, and smart city infrastructure; G7 economies through the initiative of “Build Back Better World Partnership”, which includes digital technology as one of the four focus areas of the initiative alongside climate, health security, and gender equality, and Australia through the ASEAN-Australia Development Cooperation Program (AADCP) to reap benefits on digital connectivity improvements for ASEAN. Even the four Quadrilateral Security Dialogue (Quad) countries, of which Australia is a member, also issued a statement saying they planned to announce a new infrastructure funding scheme late last year. Especially, Australia has just elevated the partnership with ASEAN to a comprehensive strategic level. That is one way it can further utilize this avenue and meaningfully contribute to the region’s resilient digital infrastructure. These partnerships should result in securing and protecting digital infrastructure, a sustainable, inclusive and secure digital growth, the reach and depth of digital capacity building programs and cyber literacy training, including cyber-hygiene training, reskilling and upskilling, particularly addressed to women and girls that can encourage the rise of digital entrepreneurs in ASEAN and boost innovation, an easier access of digital services and infrastructure, and the more equal affordability and accessibility of the critical infrastructure.

Second, there should be education systems that adapt employees’ skills to new needs and for a digital future in the long run in order to facilitate the inclusive development of a digital economy that is anchored with “the leave no one behind” principle and eliminate the possibility of dismissals. The worry about broad job losses may be overstated, but more human capital will be needed for the future economy. Since there would be a greater demand for skilled workers, earnings will rise, promoting skill development. However, the area has to take decisive action to improve everyone’s access to skills training inside ASEAN by creating cutting-edge educational and training facilities. There will need to be social protection programs since some low-skilled people would not be able to tolerate reduced growth in low-skilled jobs. One essential approach to guarantee the effects of new technology won’t increase inequality is to invest in education, upskilling, and/or retraining. Entrepreneurs with high levels of expertise are essential to the formation and consolidation of innovation hotspots. With a particular emphasis on rural and outlying areas where skills are most in short supply, ASEAN must continue to increase its investments in skill development. Higher education enrollment in the ASEAN region is, on average, far lower than in other parts of East Asia. With the exception of those in Singapore, the region’s universities and higher education institutions need to improve as they are not yet on level with those in other Asia Pacific nations. 

It is hardly unexpected that a large number of prosperous digital entrepreneurs working in ASEAN are international graduates who have returned home. To create a platform for tech entrepreneurs, the higher education sector must be further liberalized in order to deliver high-quality education through facilitating exchanges with renowned overseas universities and links to global education networks. Government spending on education must also include expenditures for training in specialized technology-related skills, in addition to supporting traditional education. As agreed by the governments of the United States, Australia, and Europe, governments should prioritize STEM subjects in formal education in order to increase the human capital’s compatibility with the digital age. Additionally, a vital component of the evolution of technology is research and development (R&D). In order to encourage research in their various fields, ASEAN governments need to start raising their R&D budgets. This is necessary since effective R&D could lead to innovation- driven growth. As they accomplish this, ASEAN nations must continuously engage in extensive knowledge exchange regarding the policies put in place to develop human resources and to carry out R&D.

Besides each member state government, the participation of associations and private organizations can reduce the risk of dismissals through closing digital gap between urban and rural areas in a country as well as between the more developed and the less developed ASEAN countries with initiatives. The ASEAN ICT has implemented several initiatives to accelerate growth. One such measure is the creation of the ASEAN Digital Economy Framework Agreement (DEFA) by 2025 wherein recovery from the pandemic, improvement of digital infrastructure, and promotion of the digital economy’s overall growth are emphasized. With measures like DEFA, it will serve as a comprehensive guide that ASEAN member-countries can refer to when developing initiatives related to the digital ecosystem. Beyond the association itself, private organizations are also taking the initiative to create programs that help the development of the ASEAN region’s digital economy with less risk of dismissals. 

For instance, in collaboration with the ASEAN Coordinating Committee on Micro, Small, and Medium Enterprises (ACCMSME), the Asia Foundation established the Go Digital ASEAN initiative to equip micro and small enterprises with the necessary skills to thrive in a digital set-up. The regional project expects to train approximately 200,000 individuals. Encouraging the participation of private sectors and their launched initiatives and programs can broaden digital participation to more than thousands of people from rural regions and underserved communities—including women-led small- and micro-businesses, underemployed youth, ethnic minorities, and people with disabilities— in the ten ASEAN Member States – to create a more inclusive ASEAN region. For example, the USD$3.3M regional initiative was spearheaded by The Asia Foundation, endorsed by the ASEAN Coordinating Committee on Micro, Small and Medium-Sized Enterprises (ACCMSME), and funded by Google’s philanthropic arm, Google.org, the initiative broadens participation in the digital economy and reaches marginalized communities with the most to gain from digital literacy by offering in-person and virtual training. Similarly, the ASEAN Digital Skills Vision 2020 programme, which is pioneering a collective pledge on training digital skills for ASEAN regulators, ASEAN SME workers, ASEAN students, as well as broader ASEAN citizens to be achieved. These the pledge programmes can attain commitments and support from various organizations in the fields to fulfill and in some cases exceed the targets, namely BigPay; Certiport, a Pearson VUE Business; Cisco; Dell Technologies Malaysia, eYOuth; Facebook; FPT Corporation; General Assembly; Golden Gate Ventures; Google; Gow; Grab; ICDL; Lazada; LinkedIn; Microsoft; Netflix; P&G; Plan International; Sea; ThyssenKrupp; Tokopedia; and VNG Corporation.

This article was written by Giao Truong, edited by the Diplomacy Team, 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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