by Mr. Satvinder Singh, ASEAN Deputy Secretary-General for the ASEAN Economic Community
The continued growth of ASEAN’s Global Innovation Index (GII) marks a key milestone towards becoming a world innovation hub, highlighting the growing creativity, technological advancements, digitalization and entrepreneurial spirit within the region. With confident economic growth, ASEAN aspires to turn out to be the world’s fourth-largest economy by 2030, making progress towards constructing a dynamic and progressive community.
The way forward involves harnessing innovation as a fundamental force to unlock untapped potential for ASEAN’s long-term growth and sustainable prosperity. The key query is: what shall be the sport changer? The answer lies in the facility of intangible assets. As outlined within the ASEAN Economic Community (AEC) 2045, a give attention to nurturing and developing the intangible economy is vital to driving productivity, innovation and sustainable economic growth, positioning ASEAN as the long run global epicenter.
Invisible power: How can intangibles drive development?
In today’s global economy, intangible assets have turn out to be key drivers of innovation and competitiveness. These assets include elements resembling research and development (R&D), know-how, software and data, projects, brands, repute and organizational knowledge. Although often invisible, intangible assets are essential in a knowledge-based world, changing how value is generated around the globe and the way wealth and prosperity are distributed.
As the worldwide economy becomes increasingly based on knowledge and innovation, the worth and impact of intangible assets are enormous. In 2023, global intangible assets reached almost $62 trillion, up 8% from over $57 trillion in 2022. Investment in intangible assets reached $6.9 trillion in 2023, up thrice as much than the pace of tangible investment since 2008. Priority sectors for intangible assets have seen 28% higher growth in value gross value added (GVA) than others, while firms investing heavily in intangible assets perform higher and generate 2.6 times more gross value added than their peers. In fact, 90% of the worth of the world’s 500 largest firms comes from their intangible assets, proving that the most useful firms increase their competitiveness and market value based on intangible capital, not “tangible” capital.
The importance of intangible assets goes beyond individual firms and affects the prosperity of nations and regions. Countries that prioritize investment in intangible assets consistently outperform others, with such investment accounting for over 16% of GDP in economies with high use of intangible assets. Developed countries have demonstrated strong economic resilience, particularly during crises resembling the Covid-19 pandemic, when investments in intangible assets have enabled businesses to quickly turn around and remain productive.
For ASEAN, using intangible assets isn’t any longer an option but a necessity. By unlocking the region’s intangible assets, ASEAN can transform this promising moment right into a legacy of tangible growth, securing its position as a world leader in innovation, productivity and prosperity.
Was ASEAN ready?
ASEAN is in a promising position, poised to harness the transformative power of intangible assets, supported by a dynamic economic landscape, many years of investment in education and social improvements, a young population, a robust mental property-based innovation ecosystem, thriving SMEs and a growing digital economy. As the world’s fifth-largest economy, ASEAN’s combined GDP exceeded $3.8 trillion in 2022 and total trade reached $3.5 trillion in 2023. Nearly half of the region’s 680 million population is under 35 years old, providing a talented workforce able to drive innovation and drive growth in intangible assets.
Over the past decade, ASEAN has increased its efforts to advertise innovation through various initiatives in research and development (R&D), mental property rights (IPR), and support for SMEs and start-ups. Between 2012 and 2022, the region saw a 70% increase within the variety of patent applications, an 80% increase within the number of commercial design applications and a 110% increase within the variety of trademark applications. Gross R&D spending has increased fivefold from $10.6 billion in 2002 to $54.9 billion in 2023. As a result, ASEAN has turn out to be a frontrunner in high-tech exports, growing from $303 billion in 2013 to $598 billion dollars in 2022, with five Member States in the highest ten on the earth for high-tech exports. The latest GII for 2024 shows three ASEAN countries were among the many eight fastest-moving countries on the index, and 6 were among the many top 55 out of 133 economies.
SMEs and start-ups, which constitute over 97% of ASEAN enterprises, play a key role in job creation and GDP growth. In 2022, ASEAN attracted $110 billion in enterprise capital, a 60% increase from pre-pandemic levels, and the variety of unicorns increased from two in 2014 to greater than 50 today. ASEAN Member States (AMS) have made significant progress in digital adoption, creating latest opportunities for innovation and the event of intangible assets. The region’s digital economy is anticipated to succeed in $1 trillion by 2030, driven by growing Internet penetration and society’s increasing knowledge of technology. The ASEAN Digital Economy Framework Agreement (DEFA) goals to further this growing commitment to the digital economy, aiming to boost regional GDP by $2 trillion by 2030.
However, challenges remain that hinder the total unlocking of intangible assets, and ASEAN is actively addressing these obstacles. The region is making progress towards reducing its dependence on imported technologies while increasing investment in research and development. Significant progress has been made in improving mental property rules and ongoing efforts are underway to strengthen enforcement of mental property rights and shut the digital divide. While the pace of digital technology adoption varies, with some AMS progressing rapidly and others progressively improving their digital infrastructure, web access and technology literacy, ASEAN seeks to reduce these disparities by ensuring that each one member states have the chance to totally take part in and profit from the digital transformation , thereby optimizing the benefits of intangible assets across the region.
In addition, many SMEs within the region are increasingly in a position to move from importers to exporters of indigenous technology solutions, thereby increasing their competitiveness. This change will involve the inclusion of innovation through latest business processes and product designs, supported by higher access to financing for research and development and digitalization. ASEAN’s strategic position in supply chains and economic mobility provides a solid basis for enhanced intra-ASEAN cooperation, enabling Member States to totally exploit these inherent advantages.
Charting ASEAN’s strategic path
As ASEAN stands getting ready to transformation, unlocking its intangible assets is critical to achieving its ambitious economic goals and realizing AEC Vision 2045. There are several key strategic pathways to achieving this vision:
Firstit’s crucial to take a position in a regional innovation ecosystem that empowers SMEs and start-ups. To fully leverage intangibles, ASEAN must foster a strong innovation ecosystem that supports small and medium-sized enterprises (SMEs) and start-ups. Investments in incubators, accelerators and financing mechanisms can provide the support essential for the event of those enterprises. Facilitating access to mentoring programs, grants and enterprise capital will enable SMEs and start-ups to innovate, develop mental property and reach their full potential. This proactive approach will cultivate a vibrant entrepreneurial landscape that drives the region’s economic growth.
SecondStrengthening mental property protection and valuation is crucial to support innovation and protect intangible assets. A stronger mental property framework and consistent enforcement across Member States can boost investment in research and development and attract higher levels of foreign direct investment, resulting in greater innovation. ASEAN should advocate for stronger mental property laws and consistent enforcement across all member states. Improved mental property valuation practices will enable regional firms to acknowledge and effectively leverage their intangible assets, supporting a culture of respect for mental property and attracting more sustainable domestic and foreign investment.
Thirdsupporting digitalization and developing talent while reducing the digital divide is crucial. Investing in digital infrastructure and prioritizing STEM (science, technology, engineering and arithmetic) education and digital skills training will ensure employees thrive within the knowledge economy. Moreover, as digital transformation progresses, addressing the widening digital divide will enable all ASEAN countries to totally take part in and profit from the digital economy. By fostering a tech-savvy society and ensuring equitable access to digital resources, ASEAN can unlock latest opportunities for innovation and economic participation.
Fourthit’s essential to deepen regional cooperation and integration. ASEAN should give attention to sharing best practices, harmonizing policies and establishing regional innovation hubs to facilitate knowledge sharing and collaboration. Under the post-2025 vision, the main focus shall be on mental property commercialization strategies and the establishment of a single mental property register to enhance mental property management across the region. This collaborative effort will enhance ASEAN’s collective competitiveness in the worldwide marketplace and support a unified innovation ecosystem, enabling member countries to leverage their unique strengths and drive innovation.
At this watershed moment, there may be a possibility to unlock the big potential of ASEAN’s intangible assets for growth, innovation and prosperity. By investing in our innovation ecosystems, improving mental property frameworks, supporting digitalization and deepening regional cooperation, we will transform intangible assets into tangible growth.
“Our decision and commitment to strategically unlock intangible assets is key to ASEAN’s future. Through our collective efforts to ignite this strength, ASEAN will not only achieve economic prosperity but also become a global leader in innovation. Let us seize this moment to define the lasting legacy of a resilient, innovative, dynamic and people-centric ASEAN for future generations,” Dr. Kao Kim Hourn, Secretary-General of ASEAN.
