The growth potential of the digital economy in Southeast Asia is big, supported by strong fundamentals. These include a digital consumer base of over 460 million people, a population that is often tech-savvy, and increasing web penetration.
The latest e-Conomy SEA 2022 report prepared by Google, Temasek and Bain & Company shows that the digital economy in six ASEAN-6 countries (Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam) will grow by 6% annually . The report also estimates that by 2030, the worth of the digital economy market within the region may reach USD 1 trillion.
However, several barriers remain to the event of the digital economy in Southeast Asia. These include the urban-rural divide and low levels of digital skills. For the digital economy to develop easily, the region must address these challenges.
According to Anthony Toh, a research analyst on the John Paul II School of International Studies. S. Rajaratnam, digital economic development in ASEAN is progressing, but a digital divide still exists between member states. Singapore is essentially the most advanced member of ASEAN when it comes to digitalization, while countries reminiscent of Malaysia, Indonesia, Brunei, Thailand and Vietnam are inclined to lag behind in some indicators. Moreover, Myanmar, Laos and Cambodia even have lower digitalization prospects.
Regulation pending
In terms of digital inclusion, Singapore and Malaysia lead on several indicators, while other countries reminiscent of Brunei, Indonesia, Thailand, the Philippines and Vietnam lag behind on a number of indicators.
Meanwhile, Cambodia, Laos and Myanmar rating below average on all indicators and want to atone for digital inclusion efforts within the region.
Kenddrick Chan, a researcher on the Portulans Institute, said having a robust regulatory framework is very important for participating within the digital economy. However, some countries still lag behind in developing regulatory frameworks, leading to an unequal distribution of the advantages of the digital economy.
ASEAN has indeed established essential policies and frameworks governing governments’ digital cooperation. However, these goals require in-depth research, visionary policy and powerful support from regional stakeholders.
Digital divide
On the opposite hand, the digital divide between urban and rural areas can also be an issue faced by every ASEAN country. Although Indonesia is seeing rapid growth in web penetration, the digital divide between urban and rural areas stays high. This may cause rural communities to fall behind in the event of digital technology.
Digital literacy can also be a difficulty in some ASEAN countries. Many residents have smartphones and access to the Internet, but they like to make use of social media reminiscent of Facebook, Instagram and TikTok. To integrate them into the general digital economy, digital skills have to be improved.
The digital divide in Southeast Asia is a significant challenge to digital progress within the region. Currently, the gap is widening and there is no such thing as a significant improvement towards higher standards.
In the remaining of the region, except Singapore, Malaysia and Brunei, greater than 40% of the population lives in rural areas, in line with the World Bank’s 2021 forecast.
Data from the Central Statistics Agency (BPS), cited by the Asia Competitiveness Institute on the Lee Kuan Yew School of Public Policy, shows that before the pandemic, the rural-urban digital divide in Indonesia was 24.8 percentage points. However, following the Covid-19 pandemic, this percentage narrowed barely to 22.5 percentage points in 2021.
Some countries within the region even have low levels of digital skills. For example, a major proportion of Cambodia’s population still lives in rural areas, as evidenced by World Bank data showing that 75% of Cambodia’s population lives in rural areas.
According to Toh, the digital divide in Southeast Asia is a significant challenge to digital progress within the region. Currently, the digital divide appears to be widening fairly than narrowing.
Source: CNBC
