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Industry must help build Asean digital community

WHEN Kelvin Choa established his home hardware firm 20 years ago, he was already looking beyond Singapore's small market. Today, Excel Hardware exports to countries in Asia, Africa and Latin America.

He was doing what the merchants and businessmen of South-east Asia have done for generations. The region's entrepreneurs know that to compete with businesses from countries such as China and India, they have to look beyond their local market. They understand instinctively that if you want to go big, you need to go regional.

The success of South-east Asia's entrepreneurs depends on the region's continuing integration. Since its founding in 1967, Asean members have worked hard to eliminate tariffs and improve regional connectivity. Because of these efforts, Asean is the sixth-largest economy in the world today.

For Asean to entrench its position among the world's leading economies, it needs to take advantage of the Fourth Industrial Revolution. Digital and Internet-based technology is creating new business models, making it cheaper and faster to come up with new products and ideas. If South-east Asia rides this wave of technological empowerment, and if it does so together as a region, the opportunities for its SMEs and the region's economy are unprecedented. According to newly published research by Bain & Company, Asean digital integration could stimulate a US$1 trillion GDP uplift by 2025.

Currently, Asean's digital economy is 7 per cent of its GDP, compared to China (16 per cent of GDP), the EU-5 (27 per cent of GDP) and the US (35 per cent of GDP). This is clearly a massive digital opportunity for Asean. A single Asean digital community would enable Singapore SMEs to sell their goods and services to the 330 million Internet users in Asean rather than just the 4.8 million in Singapore. As local entities, SMEs may lack room to expand. But as regional enterprises, they have access to the world's sixth-largest economy, its third-largest population and a young, rapidly growing middle class. The region's SMEs account for 50 per cent of its GDP and employ more than 80 per cent of its workforce. They need to contribute to growth if Asean's digital economy is to benefit everyone.

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There are three measures that are key to unlocking this opportunity for South-east Asia's SMEs. First, free flow of data. The free flow of data across borders is essential to support digital trade, drive increased innovation and lower costs of regional operations for businesses. Second, an open and interoperable digital payments system. A connected network of national payment systems would help South-east Asian consumers and corporations make financial transactions across borders seamlessly, enhancing trade and business activity. Finally, harmonised and streamlined national regulations on trans-border commerce will enable South-east Asian companies to spend less on navigating different jurisdictions and more on bringing their goods and services to other countries.

Industry also needs to support governments in building a more integrated digital community. Companies have a responsibility to invest in the communities we work in. At Google, we believe that SMEs are the backbone of local communities and the future of any economy. If SMEs in Asean do well, everyone in the region is uplifted as well. That's why Google is committed to supporting SMEs in Asean.

So, we will train three million SME workers across all 10 countries of Asean in digital skills by 2020.

Last month in Singapore, Asean economic ministers adopted a framework to advance Asean digital integration. This is an important first step towards empowering the region's SMEs to drive a US$1 trillion increase in GDP by 2025. More remains to be done. It is time for us to work together in realising a brighter, digital future for everyone in Asean.

  • The writer is general manager of the Next Billion Users initiative and Payments at Google.

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