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How data-rich Asean can leverage this resource

The sharing of high-quality data across its member states will strengthen trust so the bloc can reap the benefits of a data-driven economy.

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A villager in the Indian state of Rajasthan gets her retinas scanned as part of a drive to create a Unique Identification (UID) database. For Asean to be competitive in the global economy, the individual governments in the bloc should create a safe, seamless and efficient ecosystem for data-sharing and use.

DATA is increasingly turning into a resource that can transform economies. A study by McKinsey Global Institute (MGI) indicated that cross-border flow of data has increased exponentially - 45 times higher in 2014 than 10 years before that. Higher data flows drive cross-border transfer of knowledge, greater efficiencies in operations and enhanced access to cutting-edge research. These digital forces are disrupting and reshaping the world at various levels - economies, sectors, companies, and individuals - and the Association of South-east Asian Nations (Asean) is no exception.

Asean is one of the most data-rich regions in the world. It has the third-largest number of mobile-phone users in the world and the fourth largest number of Internet and Facebook users. The rate at which these users are increasing is also among the highest in the world, suggesting that data as a resource is abundant and will only continue to grow.

MGI estimates the combined potential economic impact of mobile Internet, big data, Internet of Things, cloud technology and other disruptive technologies in Asean to be between US$220 billion and US$625 billion in 2030, 4 to 12 per cent of the region's GDP that year.

For Asean to be competitive in the global economy, especially to compete with better-organised and larger markets such as India and China, two sets of actions are critical.

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First, individual governments need to create a safe, seamless and efficient ecosystem for data-sharing and use. They can do so by addressing three critical aspects.

  • Designing regulations to ease data flows: For example, regulators could be "digital by default" and push themselves to ask "why not" rather than "why" to data-sharing issues. They could start by mandating that all aggregated and anonymised public-sector data, as well as any data derived from the same, be "open data", to multiply the data generated and improve access for all. This is being quickly adopted by many countries around the world, including UK, Denmark, Estonia, New Zealand, Australia and Singapore.
  • Protecting personal privacy: There should be a clear national personal-data protection Act that builds consumer and business confidence. This may evolve over time, based on citizen feedback. Singapore solicited public opinion while drafting its data-protection laws; India is also doing it.
  • Sharing role-model data for societal benefit: This can be done, for example, by creating a public website that shares public-sector data and allows for application programming interfaces (APIs) to plug in seamlessly to use such data for innovation in the private, public or social sectors. This is also being done in countries such as the US, India and the EU.

Several cities and countries have made huge strides toward this direction and realised immediate benefits. For example, Mexico City received an award at the Data for Climate Action Challenge, for using open data to develop solutions that reduce or eliminate air pollution. Cambodia built a malaria information system to effectively enable data-sharing and response coordination between national control programme, research institutions and various commercial and civil-society organisations.

Estonia also offers a great case study for the Asean countries to look at. It created X-Road, a service-oriented architecture platform that enables data exchange among various government-agency systems. This resulted in citizens being able to access all government services seamlessly in one spot.

The private sector can also now connect with X-Road to leverage government data and share its own. X-Road has been able to save an estimated 800 years of working time. Following the success in Estonia, this solution has been rolled out in Azerbaijan, the Faroe Islands, Finland and Namibia.

Secondly, as the individual governments work to create the data ecosystem, it is equally important to focus on collaboration; acting as a unified market is critical for Asean Collaboration among member states, and can amplify government efforts, establish uniform standards, and direct economic growth.

To realise the potential of the data these nations hold, Asean needs to encourage cross-border data flows. In 2014, barring Singapore, all Asean countries ranked below 40, among 118 countries, in the data component of MGI's Country Connectedness Index, which measures cross-border Internet traffic. Also, Asean countries are only starting to consider unified thinking on data governance and sharing frameworks.

To help them become more connected, the Asean nations can take several steps. The bloc needs to work collectively on encouraging sharing of high-quality data across its member countries. This will strengthen trust and result in faster progress toward realising the benefits of a data-driven economy. To this end, five areas of collaboration could be especially effective:

  • Promoting legal and regulatory convergence to make it easier for companies to operate across Asean. For example, early this year, the European Union stopped geo-blocking, a practice in which residents of some member states are prevented from using e-commerce services offered in others. This will help realise the full potential of the internal market and improve GDP through innovation and improved productivity.
  • Strengthening the data-sharing ecosystem across all Asean members by helping governments design unified policies around data classification, portability and security. Addressing the challenge of balancing personal privacy protection and enabling innovative data uses will be central to the efficacy of these initiatives.
  • Developing an open data sharing platform for the region, with specific objectives such as aiding the economy or improving citizen services. An example to consider: the European Commission in 2017 suggested allowing free flow of non-personal data across borders within the bloc as part of their strategy to increase the value of the data economy within the European Union to 4 per cent of its GDP by 2020.
  • Creating regional centres of excellence to promote applied research and to share knowledge about emerging technologies and trends as well as implications on businesses in the region, such as artificial intelligence and blockchain. For example, the European Union has set up the European Institute of Innovation and Technology, whose role is to enable knowledge sharing across various research institutions across Europe, through increased industry interactions and pan-Europe partnerships.
  • Creating structured programmes to help governments, businesses and other stakeholders within the region effectively leverage any pan-Asean data-sharing ecosystem. This could be done by developing a standard tool kit, which includes training programmes, especially for countries lagging in the necessary skills, data sandboxes and regional frameworks and policies to enable cooperation in enforcing regulations.

All these efforts will come with their fair share of risks. With rising globalisation and the challenges it poses to the ability of smaller economies to remain competitive, Asean's best bet is play to its strength - the common threads of history and culture that tie these countries together, along with carefully woven networks of trade, business and some shared resources.

  • The writer is associate partner at McKinsey & Company