Digital lifestyles, cashless societies, app-based businesses, “smart” nations, virtual services – there is a tremendous amount of excitement in Southeast Asia now about the growth of the digital economy.
The region is a hotspot for digital development, and it already leads the world in some indicators, such as Internet and social media use.
The signs of Southeast Asia’s digital transformation are obvious from its impressive tech “unicorn” companies, such as GoJek, Grab and Lazada, Sea, Tokopedia and Traveloka, to the entrepreneurs and small firms that are innovating and using technology to grow.
All of this is driving a high level of interest from the region’s governments, all of which are implementing various strategies to grow the digital economy.
In other words, the full potential of technology as a driver of private sector growth is not being realized. This is because the region still faces significant barriers to growing the digital economy.
Six priorities stand out to strengthen the enabling environment for the digital economy.
Improve the availability of affordable, high-speed Internet
Around half the population of ASEAN still lacks Internet access, and when available it tends to be through mobile broadband (for example using smartphones) rather than the fixed broadband needed for data intensive business applications.
Public and private investment will be needed to address this, but policymakers can also help through regulatory reforms.
In many countries, the broadband market is dominated by one or two large firms, and often these are state-owned.
Reforms that promote competition could help to lower prices and increase speeds.
Strengthen the population’s digital skills
Although the region already has good literacy and numeracy foundations, education systems need to be nimbler in developing the skills needed for the digital economy.
These range from basic computer usage to advanced skills like coding and data analytics, as well as “soft skills” like collaboration and communication.
Achieving this requires a focus on lifelong learning, not necessarily acquiring specific degrees but developing skills for life.
Singapore’s Skills Future initiative, which provides resources for ongoing re-training and skills development, is one example.
Expand the use of digital payments
Digital payments are an essential part of a digital economy, and expanding their use is another priority for Southeast Asia.
The latest World Bank Global Findex data shows that only 19% of financial account holders in the region access their accounts using a mobile phone or the Internet.
This is well below the average of the world’s middle-income countries, and Sub-Saharan Africa, respectively at 27%…