Retail Asia 2018 RA September.October 2018 (Online) | Page 42

E-COMMERCE
ASEAN digital economy
could potentially boost GDP
by US$1 trillion come 2025
While ASEAN is already a key global economy today, its digital opportunity is still
relatively untapped. However, a new research shows it has massive potential to
become a digital leader in the future.
A
new report from
management consultancy
Bain & Company (in
association with Google,
Internet company Sea and senior
policy fellow at the Economic Research
Institute for ASEAN and East Asia
Tan Sri Rebecca Fatima Sta Maria),
Advancing towards ASEAN Digital
Integration, surveyed more than 2,300
small and medium-sizes enterprises
(SMEs) across all 10 ASEAN member
states and found that harnessing the
collective power of the region’s digital
economies could accelerate intra-
regional trade and growth (digital
integration) and stimulate a Growth
Domestic Product (GDP), uplift of
US$1 trillion across ASEAN by 2025.
ASEAN’s digital economy
represents just 7% of GDP today,
which is just half that of China’s and
one fifth of that of the US’. The report
identifies SMEs as playing a critical role
in further expanding digital integration
across ASEAN. SMEs employ more
than 80% of the workforce and
contribute to more than 50% of
ASEAN’s GDP, but on average, account
for only 20% of their country’s export
value. While most SMEs in the region
see digital integration as an opportunity,
only 16% utilise digital tools to full
potential.
“The digital economy is currently
lagging in ASEAN, but there is huge
growth potential,” said Florian Hoppe, a
partner with Bain & Company in South-
east Asia and a co-author of the report.
“The findings from our research suggest
there are significant gains if ASEAN
countries can come together and grow as
a single regional digital economy, rather
than operating separately.”
Small companies leaving big
impact
The research shows that SMEs across
sectors experience immediate and
sustained benefits as they integrate with
the digital economy. Retail SMEs who
use e-commerce platforms see an average
15% increase in sales, while logistics
SMEs that use digital tools improve
productivity by 10%-20% on average.
Of the SMEs that adopt digital tools,
more than 95% participate in exports —
demonstrating how digital integration
“SMEs can be the powerhouse of
the next phase of South-east Asia’s
growth if they are empowered
with the resources and skills to
unlock their true potential.”
— Forrest Li, Founder, Chairman & Group CEO, Sea
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Retail Asia September/October 2018
can help SMEs expand their reach
beyond their local markets.
“SMEs can be the powerhouse of the
next phase of South-east Asia’s growth if
they are empowered with the resources
and skills to unlock their true potential,”
said Forrest Li, Sea’s chairman and group
CEO. “We see huge momentum in
e-commerce as more SMEs tap into new,
fast-growing markets online, but it is
vital that more SMEs are given access to
this opportunity.”
One of the roadblocks that SMEs
face on the path to digital integration
is the absence of seamless cross-border
payment options, making cross-border
trade logistically fraught. Additionally,
more than 50% of SMEs surveyed
identified non-tariff barriers and poor
logistics as hurdles to engaging in cross-
border physical trade, while digital SMEs
are increasingly concerned about digital
trade barriers such as data localisation.
SMEs also often lack knowledge and
understanding of digital technology;
more than 40% of those surveyed see
gaps in workforce digital skills.
Working together
While these hurdles pose barriers to
digital integration, Bain said ASEAN
member states can work together to
accelerate digital progress by 2025 and
potentially boost the region’s GDP.
ASEAN policymakers can focus their
efforts in several key areas:
n Continue efforts to facilitate
seamless trade. Continue to eliminate
non-tariff barriers and focus on
the implementation of existing
transportation agreements.
n Protect data while supporting
digital trade and innovation.