Breaking down the digital divide to stimulate growth

April 28, 2022 | 17:00
Southeast Asia is ushering in a digital decade, with its internet economy set to surpass previous estimates to reach $1 trillion in gross merchandise value by 2030.
Breaking down the digital divide to stimulate growth
Jeff Paine - Managing director Asia Internet Coalition

The pandemic was a catalyst for the shift in consumer behaviour, accelerating trends that saw digital platforms and services become an even more integral part of everyday life as consumers mitigated restrictions on movement by going online for their needs. For businesses that were able to pivot quickly to selling online, their nimbleness proved critical in cushioning against the full economic impact.

As we look to transition to an endemic, maximising the immense potential of the digital economy will be vital to the region’s overall economic recovery efforts. However, this requires that businesses and consumers are ready to join the Internet economy and take advantage of its tremendous promise. Businesses need to be connected to new technology infrastructure, such as 5G networks, and consumers must be able to access goods and services online.

While countries such as Singapore have largely closed the access divide and are working to bridge the digital skills divide, many countries in Southeast Asia are still lagging in this regard. In fact, an estimated 30 per cent of the adult population in the region – 150 million adults – are digitally excluded.

A recent digital inclusion index, created by consultancy firm Roland Berger, ranked Southeast Asia fifth out of seven global regions based on the scores of 82 countries measured across four digital inclusion levers: accessibility, affordability, ability, and attitude.

A recent research project, commissioned by the Asia Internet Coalition and carried out by Economist Impact, surveyed 200 senior executives across India, Indonesia, Malaysia, Singapore, Thailand, and Vietnam to better understand their views on the opportunities and challenges pertaining to the region’s digital economy. The majority of respondents (89 per cent) saw digital inclusion as critical for rapid economic recovery during and after the pandemic.

However, respondents agree that more attention needs to be given to improving digital inclusion (67 per cent) and that more investment and resources are needed from the government to bridge digital divides (65 per cent).

Nevertheless, the digital development journeys across the region are as diverse as the region itself. Digital inclusion should not just look at providing access, it should also address unequal digital literacy and a lack of trust in tech and raise awareness of the benefits of users going digital.

With these in mind, the report outlines key recommendations to bridge the digital divide in Southeast Asia.

With greater digital inclusion, countries will benefit from socioeconomic opportunities that can accelerate economic recovery during and after the pandemic. Businesses could become more competitive both locally and globally and there will be more jobs and upskilling programmes available for individuals.

However, bridging the digital divide cannot be done by any one sector alone. Different stakeholders must work in synergy to achieve valuable outcomes. This includes open dialogue between the public and private sectors on current and prospective technology challenges.

Meanwhile, digital inclusion must capture all populations, including disabled people and those in rural communities. This ensures that all members of society can reap the maximum benefits.

In addition, regulation can aid in expanding infrastructure and building online trust to improve digital inclusion in the region. Contrary to perceptions, the private sector welcomes regulations if they can lead to greater digital inclusion, such as in areas including data protection and cyber-security.

Finally, it is imperative that people understand how they can utilise digital tech platforms in a productive manner. Stakeholders must place equal importance on digital skills training and education to make the most out of the internet economy.

The time to tackle digital divide barriers is now. Despite the challenging environment caused by the pandemic, the momentum of the region’s digital economy has not been derailed. Governments need to seize the moment and accelerate digital inclusion to build an ecosystem that will power the overall recovery of the region’s economies.

Leveraging digital transformation in Vietnam

Vietnam’s economy is expected to converge to a pre-pandemic growth rate of 6.5 per cent in 2022 and 6.7 per cent in 2023, thanks to the fast progress of vaccination, sustained global economic recovery, and certain key drivers of economic growth, which include digital transformation.

The country has already found initial success in developing a digital economy in the last five years, including improvements in its legal framework, digital infrastructure, ICT sector, digital platforms, and cybersecurity. It has also made significant advances in digital finance, catalysed by increased use of digital payments, a young and tech-savvy population, and a boom in smartphone penetration. The financial subsectors of banking, securities, and insurance have also successfully adopted new digital technologies in the last five years.

With a strong commitment from the government and policy incentives and regulations in place for startups and emerging financial services, including a sandbox regime to test new products, Vietnam’s digital finance sector is expected to record unprecedented growth this decade as it promotes non-cash payments, financial inclusion, and green finance. Source: Asian Development Bank

By Jeff Paine

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional