Single e-payment platform can help Asean tap digital economic growth

To tap potential of adding US$1 trillion to their GDP, Asean will need to establish a single digital payment platform across the region and operate markets with no more than four telcos, among others.
Written by Eileen Yu, Senior Contributing Editor

A digital economy can boost the GDP of Asean markets by US$1 trillion over the next decade, but this growth potential will only be possible if these countries implement the necessary policies and address key issues.

The Asean region already had the fundamentals in place to lead the world's digital economy, including a combined GDP of US$2.5 trillion that was growing at 6 percent per year, according to a report by consulting firm A.T. Kearney and telco Axiata Group.

In addition, the region's current smartphone penetration of about 35 percent continued to grow rapidly and it was home to a literate population of more than 600 million, of which 40 percent were below the age of 30. Typically more tech-savvy, this consumer group would be more likely to contribute to the digital economy, said the report's co-author Naveen Menon, who is a partner and Asia-Pacific head of communications for A.T. Kearney's media and technology practice.

Asean nations also had a "well-developed ICT cluster" and a healthy record of innovation and ivnestment in new technology, the report noted. With these on hand, it said the region was poised to become one of the world's top five digital economies by 2025.

Menon added: "The confluence of technology innovation, a youthful population, and robust economies can help Asean leapfrog into the vanguard of the digital economy."

The report pointed to plans to establish the Asean Economic Community (AEC) as a significant boost, as its formation was touted to promote free movement of goods and services, as well as investment, skilled labour, and capital.

To tap its full growth potential, however, Asean markets must first implement the necessary policies and overcome key barriers, the report noted. For one, the region would need to establish a digital strategy that went beyond country level as well as a single digital payment platform first for in-country application, and then across the region.

In addition, each country should release an additional 20MHz of spectrum per operator to further enhance broadband and web access, and have no more than four telcos in their respective market. This, it explained, would provide a better user experience and support the development of the new digital ecosystem and ensure "healthy economics" for telcos.

"Governments in Asean should strive to improve the business case for investment in mobile broadband by ensuring there are no more than four operators per market," it recommended. "The economics of telecom operators throughout the world are deteriorating [and] the trend is more pronounced in Asean."

Citing industry body GSM Association, the report said Asean markets should "support a degree of consolidation or control the number of players", as the telco market functioned better with fewer stronger operators that were financially capable of capex investment, rather than multiple weaker ones.

The report also called for a "comprehensive overhaul" of in-country and cross-border regulations, so conducive policies can be developed to help boost the growth of local enterprises. To drive innovation in the e-commerce and mobile financial sectors, it further urged Asean governments to reexamine inhibitive regulations and support new services such as the creation of digital-only banks.

A national ID also should be created in each country to better facilitate the delivery of public services linked to the citizen's mobile phone. Furthermore, these national IDs should be interoperable across Asean.

To ensure trust and security in the region's digital economy, nations should "harmonise" their cybersecurity, data security, and data privacy laws across Asean. Governments should aim to increase consumer awareness and trust to encourage the adoption of digital services.

Axiata Group CEO and President Jamaludin Ibrahim said: "Through accelerated innovation, mobile network operators are ready to support and grow the Asean digital economies of cashless societies, smart cities, borderless digital services, and financial inclusion.

"However, for mass adoption of the services to drive digital economies, policies and a strong digital agenda are required in the region with visionary government and industry collaboration," Jamaludin said. "It is our hope, therefore, to see operators and governments quickly come together to accelerate this development."

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