Back
About RSIS
Introduction
Building the Foundations
Welcome Message
Board of Governors
Staff Profiles
Executive Deputy Chairman’s Office
Dean’s Office
Management
Distinguished Fellows
Faculty and Research
Associate Research Fellows, Senior Analysts and Research Analysts
Visiting Fellows
Adjunct Fellows
Administrative Staff
Honours and Awards for RSIS Staff and Students
RSIS Endowment Fund
Endowed Professorships
Career Opportunities
Getting to RSIS
Research
Research Centres
Centre for Multilateralism Studies (CMS)
Centre for Non-Traditional Security Studies (NTS Centre)
Centre of Excellence for National Security (CENS)
Institute of Defence and Strategic Studies (IDSS)
International Centre for Political Violence and Terrorism Research (ICPVTR)
Research Programmes
National Security Studies Programme (NSSP)
Social Cohesion Research Programme (SCRP)
Studies in Inter-Religious Relations in Plural Societies (SRP) Programme
Other Research
Future Issues and Technology Cluster
Research@RSIS
Science and Technology Studies Programme (STSP) (2017-2020)
Graduate Education
Graduate Programmes Office
Exchange Partners and Programmes
How to Apply
Financial Assistance
Meet the Admissions Team: Information Sessions and other events
RSIS Alumni
Outreach
Global Networks
About Global Networks
RSIS Alumni
International Programmes
About International Programmes
Asia-Pacific Programme for Senior Military Officers (APPSMO)
Asia-Pacific Programme for Senior National Security Officers (APPSNO)
International Conference on Cohesive Societies (ICCS)
International Strategy Forum-Asia (ISF-Asia)
Executive Education
About Executive Education
SRP Executive Programme
Terrorism Analyst Training Course (TATC)
Public Education
About Public Education
Publications
RSIS Publications
Annual Reviews
Books
Bulletins and Newsletters
RSIS Commentary Series
Counter Terrorist Trends and Analyses
Commemorative / Event Reports
Future Issues
IDSS Papers
Interreligious Relations
Monographs
NTS Insight
Policy Reports
Working Papers
External Publications
Authored Books
Journal Articles
Edited Books
Chapters in Edited Books
Policy Reports
Working Papers
Op-Eds
Glossary of Abbreviations
Policy-relevant Articles Given RSIS Award
RSIS Publications for the Year
External Publications for the Year
Media
News Releases
Speeches
Video/Audio Channel
Events
Contact Us
S. Rajaratnam School of International Studies Think Tank and Graduate School Ponder The Improbable Since 1966
Nanyang Technological University Nanyang Technological University
  • About RSIS
      IntroductionBuilding the FoundationsWelcome MessageBoard of GovernorsHonours and Awards for RSIS Staff and StudentsRSIS Endowment FundEndowed ProfessorshipsCareer OpportunitiesGetting to RSIS
      Staff ProfilesExecutive Deputy Chairman’s OfficeDean’s OfficeManagementDistinguished FellowsFaculty and ResearchAssociate Research Fellows, Senior Analysts and Research AnalystsVisiting FellowsAdjunct FellowsAdministrative Staff
  • Research
      Research CentresCentre for Multilateralism Studies (CMS)Centre for Non-Traditional Security Studies (NTS Centre)Centre of Excellence for National Security (CENS)Institute of Defence and Strategic Studies (IDSS)International Centre for Political Violence and Terrorism Research (ICPVTR)
      Research ProgrammesNational Security Studies Programme (NSSP)Social Cohesion Research Programme (SCRP)Studies in Inter-Religious Relations in Plural Societies (SRP) Programme
      Other ResearchFuture Issues and Technology ClusterResearch@RSISScience and Technology Studies Programme (STSP) (2017-2020)
  • Graduate Education
      Graduate Programmes OfficeExchange Partners and ProgrammesHow to ApplyFinancial AssistanceMeet the Admissions Team: Information Sessions and other eventsRSIS Alumni
  • Outreach
      Global NetworksAbout Global NetworksRSIS Alumni
      International ProgrammesAbout International ProgrammesAsia-Pacific Programme for Senior Military Officers (APPSMO)Asia-Pacific Programme for Senior National Security Officers (APPSNO)International Conference on Cohesive Societies (ICCS)International Strategy Forum-Asia (ISF-Asia)
      Executive EducationAbout Executive EducationSRP Executive ProgrammeTerrorism Analyst Training Course (TATC)
      Public EducationAbout Public Education
  • Publications
      RSIS PublicationsAnnual ReviewsBooksBulletins and NewslettersRSIS Commentary SeriesCounter Terrorist Trends and AnalysesCommemorative / Event ReportsFuture IssuesIDSS PapersInterreligious RelationsMonographsNTS InsightPolicy ReportsWorking Papers
      External PublicationsAuthored BooksJournal ArticlesEdited BooksChapters in Edited BooksPolicy ReportsWorking PapersOp-Eds
      Glossary of AbbreviationsPolicy-relevant Articles Given RSIS AwardRSIS Publications for the YearExternal Publications for the Year
  • Media
      News ReleasesSpeechesVideo/Audio Channel
  • Events
  • Contact Us
    • Connect with Us

      rsis.ntu
      rsis_ntu
      rsisntu
      rsisvideocast
      school/rsis-ntu
      rsis.sg
      rsissg
      RSIS
      RSS
      Subscribe to RSIS Publications
      Subscribe to RSIS Events

      Getting to RSIS

      Nanyang Technological University
      Block S4, Level B3,
      50 Nanyang Avenue,
      Singapore 639798

      Click here for direction to RSIS
Connect
Search
  • RSIS
  • Publication
  • RSIS Publications
  • ASEAN’s Digital Economy: Development, Division, Disruption
  • Annual Reviews
  • Books
  • Bulletins and Newsletters
  • RSIS Commentary Series
  • Counter Terrorist Trends and Analyses
  • Commemorative / Event Reports
  • Future Issues
  • IDSS Papers
  • Interreligious Relations
  • Monographs
  • NTS Insight
  • Policy Reports
  • Working Papers

CO19046 | ASEAN’s Digital Economy: Development, Division, Disruption
Amalina Anuar

18 March 2019

download pdf

SYNOPSIS

What do US-China tensions in the technological sphere mean for ASEAN’s digital ambitions and how can it respond?

COMMENTARY

BOASTING AN increasingly wired and growing middle class, as well as a wealth of data stemming from a 642-million-strong population, ASEAN’s digital economy is ripe for the picking. By 2025, it will be worth an estimated US$240 billion.

The prospects of market dominance and significant data pools to be mined for developing future technologies, combined with ASEAN’s geostrategic location, have lured greater major power interest into the region’s digital economy. Though global tech titans are more visible players in ASEAN’s digital space, greater government-to-government cooperation is emerging as economics and security become increasingly intertwined. What then might this mean for ASEAN?

Development Opportunities

Boosting financing for ASEAN’s infrastructure, digital or otherwise, could increase digital economy take-up. Competing infrastructure partnerships such as China’s Digital Silk Road (DSR) and the Washington-initiated Indo-Pacific Economic Vision (IPEV) could help service hard and soft infrastructure gaps across the region.

Under the DSR, fibre-optic cables have boosted data-carrying speeds, improving telecommunications connectivity. In Malaysia, Alibaba’s Digital Free Trade Zone serves as a cross-border logistics and e-commerce centre, with another digital trade hub servicing Cambodia, Laos, Myanmar, Vietnam, and Thailand mooted for Thailand’s Eastern Economic Corridor.

Generating soft infrastructure, Alibaba has promoted SME (small and medium-sized enterprise)-friendly trading initiatives via the Electronic World Trading Platform— a move that may heighten SMEs’ 10%-30% contribution to ASEAN’s exports.

Benefits could further trickle in for ASEAN’s smart city initiatives. Aside from DSR initiatives, the November 2018 US-ASEAN Smart City partnership followed on the heels of the IPEV launch in July 2018, which allocated US$25 million to prime private sector investment in regional digital connectivity and cybersecurity.

Where Washington’s commitment has lagged, moreover, other Quad members – Japan, Australia, India − have stepped up to fill the gap. Besides the smart city partnerships slated for 2019, Japan will train 80,000 ASEAN high-tech specialists. Meanwhile, Tokyo’s upcoming G20 Global Data Governance Agenda, along with 2018’s ASEAN-Australia Digital Trade Standards Initiative, could aid in hammering out multilateral regulatory infrastructure for ASEAN’s internet economy.

Divisive Risks

Yet intense major power rivalry to build and control the infrastructure of the future, specifically 5G networks and their concomitant technologies, could risk a divided ASEAN digital economy.

So far, ASEAN’s response to US pressure to ban Chinese-built 5G networks has been mixed, with the Philippines greenlighting its Huawei-serviced 5G networks, while Thailand and Malaysia have approved Huawei’s 5G trials. Though President Trump recently struck a more conciliatory tone on Huawei, calling for greater competition rather than ‘blocking out currently more advanced technologies’, pressure to aid continued US technological market hegemony may not abate given underlying geopolitical tensions.

A lack of 5G market competition could result in costlier technology and stymied innovation. Delays in rolling out 5G networks may be more detrimental, as 5G is instrumental for harnessing Industrial Revolution 4.0. In countries where 3G is still relatively prominent, ASEAN members could leapfrog to higher levels of economic development by transitioning to 5G — though expectations should be tempered as 5G’s transformative impact may not be felt in the short-term until applications such as smart factories become more ubiquitous.

Another concern is the interoperability of Chinese versus non-Chinese 5G technology. While both types of networks must interact in the future regardless, cross-network transaction and operation costs could rise without seamless connectivity. While global standard setting bodies can craft multilateral frameworks, the tussle over technological rulemaking could stymie progress and adoption.

Hardware aside, competing digital standards split between US-supported liberal versus protectionist rules could undermine the competitiveness of ASEAN’s digital economy, if businesses must tailor operations to disparate regulatory regimes.

Exacerbated socioeconomic divides pose another a risk. Smaller local enterprises may struggle to compete against the various foreign tech titans advancing into ASEAN’s digital sphere, who are bolstered by greater investment capabilities, digital-savvy talent pools, and access to data.

Unpredictable Disruptions & ASEAN’s Response

As technology becomes more integrated into supply chains, security concerns and greater politicisation of market operations via policy-driven economic decoupling will likely continue to disrupt the business landscape. However, the extent of disruption remains unclear.

As businesses adjust, trends to localise or re-shore supply chains in the hopes of avoiding non-tariff security measures may pick up speed. Though ASEAN could benefit from these supply chain redistributions, it could also herald a period of greater business uncertainty and hence, lower economic growth.

Soft infrastructure such as competition policy should be updated for inclusive growth in the digital age. Developing an ASEAN framework to ensure infrastructure projects align with ASEAN interests and economic development visions, as voiced in the Master Plan for ASEAN Connectivity and ASEAN Economic Community goals respectively, would not be remiss.

This could cover monitoring the impact of digital trade and infrastructure projects on SMEs for a people-centric ASEAN with an eye towards including micro-enterprises, dovetailing with Thailand’s goals of Digitising Micro-enterprises as 2019’s ASEAN Chair. Enhanced logistics and market access alone are insufficient for growth without addressing traditional, offline pain points such as lacking SME export strategies and trade financing.

Way Forward

With cybersecurity underpinning the trustworthiness of ASEAN’s digital economy, enhancing ASEAN’s capabilities on this front will become even more critical, especially if the region’s supply chains are to withstand stricter security probes.

Going forward, cybersecurity could be an added consideration under the Thai Chair’s prioritised Digital Integration Framework Action Plan (DIFAP). This could include devising regional security standards applicable to multi-vendor 5G network providers, as excluding Chinese technology from ASEAN’s nascent digital space is not viable in the larger context of the region’s economic interdependence and the potential repercussions of jettisoning neutrality.

Lastly, increasing ASEAN’s appeal as a single market— including by implementing DIFAP— would reduce the risks of a divided digital economy and strengthen its credibility as a production base of choice for businesses, better preparing the region for both the best and worst of times in the digital era.

About the Author

Amalina Anuar is a Research Analyst with the Centre for Multilateralism Studies (CMS) at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Singapore.

Categories: RSIS Commentary Series / Country and Region Studies / Non-Traditional Security / East Asia and Asia Pacific / South Asia / Southeast Asia and ASEAN / Global
comments powered by Disqus

SYNOPSIS

What do US-China tensions in the technological sphere mean for ASEAN’s digital ambitions and how can it respond?

COMMENTARY

BOASTING AN increasingly wired and growing middle class, as well as a wealth of data stemming from a 642-million-strong population, ASEAN’s digital economy is ripe for the picking. By 2025, it will be worth an estimated US$240 billion.

The prospects of market dominance and significant data pools to be mined for developing future technologies, combined with ASEAN’s geostrategic location, have lured greater major power interest into the region’s digital economy. Though global tech titans are more visible players in ASEAN’s digital space, greater government-to-government cooperation is emerging as economics and security become increasingly intertwined. What then might this mean for ASEAN?

Development Opportunities

Boosting financing for ASEAN’s infrastructure, digital or otherwise, could increase digital economy take-up. Competing infrastructure partnerships such as China’s Digital Silk Road (DSR) and the Washington-initiated Indo-Pacific Economic Vision (IPEV) could help service hard and soft infrastructure gaps across the region.

Under the DSR, fibre-optic cables have boosted data-carrying speeds, improving telecommunications connectivity. In Malaysia, Alibaba’s Digital Free Trade Zone serves as a cross-border logistics and e-commerce centre, with another digital trade hub servicing Cambodia, Laos, Myanmar, Vietnam, and Thailand mooted for Thailand’s Eastern Economic Corridor.

Generating soft infrastructure, Alibaba has promoted SME (small and medium-sized enterprise)-friendly trading initiatives via the Electronic World Trading Platform— a move that may heighten SMEs’ 10%-30% contribution to ASEAN’s exports.

Benefits could further trickle in for ASEAN’s smart city initiatives. Aside from DSR initiatives, the November 2018 US-ASEAN Smart City partnership followed on the heels of the IPEV launch in July 2018, which allocated US$25 million to prime private sector investment in regional digital connectivity and cybersecurity.

Where Washington’s commitment has lagged, moreover, other Quad members – Japan, Australia, India − have stepped up to fill the gap. Besides the smart city partnerships slated for 2019, Japan will train 80,000 ASEAN high-tech specialists. Meanwhile, Tokyo’s upcoming G20 Global Data Governance Agenda, along with 2018’s ASEAN-Australia Digital Trade Standards Initiative, could aid in hammering out multilateral regulatory infrastructure for ASEAN’s internet economy.

Divisive Risks

Yet intense major power rivalry to build and control the infrastructure of the future, specifically 5G networks and their concomitant technologies, could risk a divided ASEAN digital economy.

So far, ASEAN’s response to US pressure to ban Chinese-built 5G networks has been mixed, with the Philippines greenlighting its Huawei-serviced 5G networks, while Thailand and Malaysia have approved Huawei’s 5G trials. Though President Trump recently struck a more conciliatory tone on Huawei, calling for greater competition rather than ‘blocking out currently more advanced technologies’, pressure to aid continued US technological market hegemony may not abate given underlying geopolitical tensions.

A lack of 5G market competition could result in costlier technology and stymied innovation. Delays in rolling out 5G networks may be more detrimental, as 5G is instrumental for harnessing Industrial Revolution 4.0. In countries where 3G is still relatively prominent, ASEAN members could leapfrog to higher levels of economic development by transitioning to 5G — though expectations should be tempered as 5G’s transformative impact may not be felt in the short-term until applications such as smart factories become more ubiquitous.

Another concern is the interoperability of Chinese versus non-Chinese 5G technology. While both types of networks must interact in the future regardless, cross-network transaction and operation costs could rise without seamless connectivity. While global standard setting bodies can craft multilateral frameworks, the tussle over technological rulemaking could stymie progress and adoption.

Hardware aside, competing digital standards split between US-supported liberal versus protectionist rules could undermine the competitiveness of ASEAN’s digital economy, if businesses must tailor operations to disparate regulatory regimes.

Exacerbated socioeconomic divides pose another a risk. Smaller local enterprises may struggle to compete against the various foreign tech titans advancing into ASEAN’s digital sphere, who are bolstered by greater investment capabilities, digital-savvy talent pools, and access to data.

Unpredictable Disruptions & ASEAN’s Response

As technology becomes more integrated into supply chains, security concerns and greater politicisation of market operations via policy-driven economic decoupling will likely continue to disrupt the business landscape. However, the extent of disruption remains unclear.

As businesses adjust, trends to localise or re-shore supply chains in the hopes of avoiding non-tariff security measures may pick up speed. Though ASEAN could benefit from these supply chain redistributions, it could also herald a period of greater business uncertainty and hence, lower economic growth.

Soft infrastructure such as competition policy should be updated for inclusive growth in the digital age. Developing an ASEAN framework to ensure infrastructure projects align with ASEAN interests and economic development visions, as voiced in the Master Plan for ASEAN Connectivity and ASEAN Economic Community goals respectively, would not be remiss.

This could cover monitoring the impact of digital trade and infrastructure projects on SMEs for a people-centric ASEAN with an eye towards including micro-enterprises, dovetailing with Thailand’s goals of Digitising Micro-enterprises as 2019’s ASEAN Chair. Enhanced logistics and market access alone are insufficient for growth without addressing traditional, offline pain points such as lacking SME export strategies and trade financing.

Way Forward

With cybersecurity underpinning the trustworthiness of ASEAN’s digital economy, enhancing ASEAN’s capabilities on this front will become even more critical, especially if the region’s supply chains are to withstand stricter security probes.

Going forward, cybersecurity could be an added consideration under the Thai Chair’s prioritised Digital Integration Framework Action Plan (DIFAP). This could include devising regional security standards applicable to multi-vendor 5G network providers, as excluding Chinese technology from ASEAN’s nascent digital space is not viable in the larger context of the region’s economic interdependence and the potential repercussions of jettisoning neutrality.

Lastly, increasing ASEAN’s appeal as a single market— including by implementing DIFAP— would reduce the risks of a divided digital economy and strengthen its credibility as a production base of choice for businesses, better preparing the region for both the best and worst of times in the digital era.

About the Author

Amalina Anuar is a Research Analyst with the Centre for Multilateralism Studies (CMS) at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Singapore.

Categories: RSIS Commentary Series / Country and Region Studies / Non-Traditional Security

Popular Links

About RSISResearch ProgrammesGraduate EducationPublicationsEventsAdmissionsCareersVideo/Audio ChannelRSIS Intranet

Connect with Us

rsis.ntu
rsis_ntu
rsisntu
rsisvideocast
school/rsis-ntu
rsis.sg
rsissg
RSIS
RSS
Subscribe to RSIS Publications
Subscribe to RSIS Events

Getting to RSIS

Nanyang Technological University
Block S4, Level B3,
50 Nanyang Avenue,
Singapore 639798

Click here for direction to RSIS

Get in Touch

    Copyright © S. Rajaratnam School of International Studies. All rights reserved.
    Privacy Statement / Terms of Use
    Help us improve

      Rate your experience with this website
      123456
      Not satisfiedVery satisfied
      What did you like?
      0/255 characters
      What can be improved?
      0/255 characters
      Your email
      Please enter a valid email.
      Thank you for your feedback.
      This site uses cookies to offer you a better browsing experience. By continuing, you are agreeing to the use of cookies on your device as described in our privacy policy. Learn more
      OK
      Latest Book
      more info