While the pandemic has helped to accelerate digital adoption in many countries around the world
– by a timescale factor of several years according to many analysts – in others it has shone a light on inherent weaknesses and potential barriers, for example the readiness of infrastructure and workforce to benefit from digital advance.
In Southeast Asia, considerable effort has been made over many decades to create a bloc of nation states that can effectively collaborate as an economy and bring increased security and prosperity to the region. So it is no surprise that the pandemic has forced digitalisation to the top of the region’s agenda as a key factor not only for future growth, but now for fast and robust economic recovery.
Recognising the priority, ASEAN (Association of Southeast Asian Nations) has set out a digital blueprint to help guide member state governments and regulators. The ASEAN Digital Masterplan 2025 specifies ‘desirable outcomes’ such as quality and coverage of fixed and mobile broadband, the provision of trusted digital services, consumer protection from digital harm, and a competitive business market for the supply of digital services. The vision is compelling – to be a ‘leading digital community and economic bloc, powered by secure and transformative digital services, technologies and ecosystem.’
On the ground, there is plenty of evidence that this is the desirable direction of travel. A recent World Economic Forum (WEF) survey of young people (aged 16 to 35) across the six largest ASEAN nations, determined that there is an expectation that their governments and employers will embrace a digital future, but that they must recognise and address the challenges, especially for micro and small-medium businesses (MSMEs), including better infrastructure rollout and the means to plug digital skills gaps. Unsurprisingly, the more digital-savvy respondents had fared better during the pandemic, but the need for reskilling and upskilling across the board is clear.
The reality is that for ASEAN countries, digitalisation moves at varying pace, reflecting domestic differences in digital preparedness and governmental leadership. Some economies have had digital programmes and incentives in place for years, while others are still catching up.
Singapore, for example, has the second smallest population of the ten ASEAN nations, but by far the highest GDP per capita. As a gateway to China, one of Singapore’s success factors is being connected to the rest of the world. Unsurprisingly in their 2021 budget, there has been a significant focus on further digital transformation and upskilling, with new emerging technologies and jobs programmes and an increase in financial support packages.
The government of ASEAN’s largest country, Indonesia, has its sight set firmly on digitalisation as the route to becoming a top ten global economy by 2030 – it was ranked 16th pre-Covid, based on International Monetary Fund nominal GDP data. According to Revano Hananta, senior consultant, KAP Hananta Budianto & Rekan, UHY’s member firm in Indonesia, the country’s leadership is looking at infrastructure, governance and a digital society as the main ways forward. “Our government believes that digital infrastructure is the root of the problem,” says Revano, “and they are taking steps to distribute this more evenly across the country. They also recognise the importance of public service transparency so they are implementing the concept of digitalized government services, which will also be more efficient and effective.”
Like its ASEAN neighbours, Indonesia has to address the need for more digital education. “Success depends on the readiness of our society to ‘go digital’,” says Revano. “The government has launched massive digital talent programmes to support this aim, including online access to training.”
Indonesia and Singapore are not alone in recognising the need for better digital systems, skills and policies. Malaysia, a country that has historically lagged behind its ASEAN peers, has done much to catch up, thanks in some part to the impact Covid-19 has had on the business community. Datuk Alvin Tee is group managing partner of UHY in Malaysia, and an elected director of UHY International who has supported MSMEs through an accelerated digital learning curve.
Lockdown up-ended every possible business continuity plan, and disrupted businesses at their very core,” he says. “The unprecedented scramble towards commercial survival was largely dependent on how fast a small business could pivot to online and mobile engagement with its customers, use cashless payments, and develop a contactless delivery model.”
However, beyond the pandemic, Datuk Alvin believes there are still challenges to overcome. “There is no shortage of government initiatives to support digital adoption, and technology-related grants, subsidies, loans for digitalisation training and upskilling are abundantly available. The government has set out a digital plan for public sector services and is pushing hard for a 5G infrastructure to provide 80% coverage of the country. But skills and hardware aside, we have to have digital leadership at the top, where generally leaders are senior to the digital generation and have a more cautious mindset. For me, effective digital transformation remains very much about the depth, effectiveness and scalable positive impact that it makes in an industry, a nation, or a region.”
Vietnam and the Philippines are two ASEAN nations yet to achieve the digital momentum of their peers. Sharing similar population numbers and productivity, both countries have some catching up to do.
Pre-pandemic in 2019, Vietnam’s Government signed Resolution 52, setting out guidelines and policies to enable the country’s full participation in the benefits of the Fourth Industrial Revolution, dubbed Industry 4.0. It prompted a number of plans and improvement programmes from ministries, sectors and local jurisdictions with targets and goals for phased digitalisation including mobile online access, provision of public services, online government records and information systems, and digital banking.
“There are also plans to have three smart cities in three economic areas by 2025,” says Thanh Nguyen, partner at UHY Auditing & Consulting Company Limited. “For this, and the further goal of regional – and global – smart city connectivity by 2030, we expect the Government will work hand in hand with the private sector as and when necessary to build out telecommunications infrastructures and achieve its objectives and plans.”
While results so far on infrastructure are apparent, the ‘softer’ (skills-based) part has been slower in coming. The country has slipped down various global indices on measures such as knowledge and technology innovation, research, and talent competitiveness. Thanh, however, remains optimistic.
“Despite our national focus on Industry 4.0, other countries are doing this faster, I agree,” he says. “But although there is no official announcement yet around specific training or retraining finance, for example, Resolution 52 is clear about the necessary support and incentives for business and individuals to participate in education, training and upskilling.
“Reports like the WEF ASEAN youth survey, and others, simply reconfirm the strong desire of our national workforce to be more digitally savvy. While there is a lot to do to upskill people in response to digital transformation, it is a responsibility that must be shared between individuals, employers and Government. Together they can drive the sustainable economic growth we need.”
The Philippines is another ASEAN country which is busy digging in and getting on with addressing the challenges of a rapidly digitalising world. According to Mike Aguirre, managing partner, UHY M.L. Aguirre & Co. CPAs, things are improving.
“It is true that a 2020 World Bank report suggested our country’s challenges were due to the slow penetration of high- speed broadband,” says Mike, “but improvements have been made in the last year, and there has been a surge in telecommunications infrastructure rollout. In many ways the Covid-19 pandemic has accelerated digitalisation and we are seeing, for example, far greater use of digital payments and fund transfers now.” Indeed, Philippines central bank reported an increase in consumer digital transaction volumes in 2020 compared to 2019, and massive increases in both volume and value of fund transfers over the same period.
And it is not only consumer payments that have been positively impacted. “The pandemic has given rise to a number of innovations in business and government operations,” says Mike. “Online ordering systems with mobile courier vans, motorbikes and bicycles have facilitated food and other product deliveries to consumers, and we have online apps enabling passengers to ride tandem on motorbikes or to ride in private cars acting as surrogate taxis.”
Even judicial proceedings are conducted online using videoconferencing tools; education is delivered through digital platforms with the use of computers and laptops; and the government has recently set out a digital plan to improve the Philippines’ readiness for the global digital economy.
“Things are moving forwards” says Mike, “but unlike some other ASEAN countries the issue of\ reskilling or upskilling for a digital economy, while a persistent problem, is not the biggest problem. We have a greater need to address unemployment and underemployment, especially among the young. Two out of every three unemployed Filipinos are under 35 years of age and, according to the government’s own labour force survey, there are nearly three and a half million between the ages of 15-24 who are not in education, employment or training.”
The ASEAN digital blueprint shows good intent but clearly there are multiple and various reasons why its member nations will move at their own pace. There seems little doubt about the destination, or the political and societal will to get there, and in that sense a connected ASEAN region is inevitable and a prize to be cherished. As Datuk Alvin Tee in Malaysia puts it, “Digital transformation, be it for an individual organisation or a nation, is a journey of effort, discovery and leadership.”
It is going to be an interesting journey to watch…