Harnessing Digitization To Power Up Governance In ASEAN

Claus Andresen

As ASEAN celebrates 50 years of its establishment this year, one of its key achievements has been the formation of the ASEAN Economic Community (AEC)—a platform that enables the economic integration of its ten member states. It is already making an impact on the economy of the region, which would be far greater in the years to come.

The potential for ASEAN is huge: With 630 million people (more than half of whom are under 30) and a US$1.5 trillion consumer market, it is poised to be the shining star of foreign investors. Southeast Asia is the fourth-largest exporting region in the world, accounting for 7% of global exports. As a single economic entity, ASEAN would be the world’s seventh-largest economy. The region has seen economic growth average a healthy 4-5% per annum since its formation.

Member countries in ASEAN are fully cognizant of this huge potential, and their goals of accelerating the economic growth, social progress, and cultural development in the region through joint endeavors and promoting regional peace and stability underline that. The ASEAN goals are aligned with the United Nation’s Sustainable Development Goals: to end poverty, protect the planet, and ensure prosperity for all as part of a new sustainable development agenda. From a development and governance point of view, it also includes goals such as sustainable cities and communities, and responsible production and consumption.

Key challenges before ASEAN

However, in a fast-changing and volatile world where digital transformation is impacting businesses, governments, and even individual lives, ASEAN faces some key challenges that will test the resilience of governments: the increasing pace of business and tech life cycles, the rise of the disruptive platforms and their impact on services, use of data analytics to engage citizens, the rise of technologies such as artificial intelligence (AI), machine learning (ML), and robotics and how they have upped the ante for governments, and the constant threats of cybersecurity.

The larger impact of these challenges faced by ASEAN nations today have implications for the economic conditions of their citizens, loss and automation of jobs, and the overall quality of life. These problems will only grow in complexity in the coming years.

Solving society’s problems through digitization

While digitization has been a disrupter, it also has the potential to solve some of ASEAN’s key problems.  It will touch upon businesses, people, and governments to bring growth, jobs, and service delivery.

For this to happen, governments in ASEAN should go for smart, connected, ubiquitous, and disruptive “intelligentization.” The World Bank recommends that digitization must be “a whole of government agenda” and cannot just be done in siloes.

Digitization can accelerate growth for countries as it enables organizations to reach new markets, improves service delivery for citizens, and strengthens institutions. For example, World Bank studies show that Vietnamese firms that are using e-commerce have high total factor productivity growth. Similarly, in the space of service delivery to citizens, digitization increases the capacity to resolve complaints quickly and creates transparency in e-government systems. Similarly, digitization strengthens institutions through population registers, payment platforms, and information delivery mechanisms.

To increase the pace of digitization, ASEAN governments will have to invest in making the Internet more affordable and sorting out the legal and regulatory issues to make digitization ubiquitous. Currently, Singapore and Thailand lead the region in terms of both broadband and mobile Internet speed. The good news is that countries like Indonesia, Thailand, Malaysia, and the Philippines are also investing heavily in developing their national broadband networks and smart city projects.

The move towards smart nations and cities

The best way governments can deal with the challenge of digital transformation is to endeavour to convert the whole nation into a smart nation, composed of numerous smart cities.

While Singapore took the lead in this direction, all major countries in ASEAN are focusing on building their model smart cities. In its neighbourhood, countries like India, Japan, and Korea are pushing for smart cities in a big way. India has announced an ambitious project to build 100 smart cities.

Smart cities and smart nations are built on data, engagement, and collaboration, and by meshing up these three principles/approaches, governments can take a 360-degree approach to serve their citizens. For example, the Singapore government has created SingPass as a ubiquitous product with 3.3 million accounts. It helps in extending digital identity of users for 220 services across 80 agencies. Contrast this with Indonesia, the biggest economy in the block. It does not even have a common ID but it wants to harness technologies such as Big Data and AI in tax fraud detection. In the Jakarta Smart City, the Indonesian government is using community data for startups, which are building apps to solve problems such as garbage collection from municipal areas.

Harnessing digitization to build better citizen services in ASEAN

While connectivity remains a big issue for ASEAN countries and skills gaps still need to be tackled, Big Data, analytics, and AI will be the biggest game-changers for ASEAN economies. By bringing together both transactional processes and analytical intelligence – and combining all agency knowledge sources in one platform – organizations can turn data into actionable information. That will allow decisions based on facts and provides predictive insights. As issues arise, agencies can be more agile and responsive, incrementally adding connected solutions to address new problems – without disrupting operations.

For more on how technology is shaping the future of cities and their economies, see Future Cities: A Nexus Of Smart Utilities, Smart Transport, And Smart Tourism.


Claus Andresen

About Claus Andresen

Claus Andresen is President and Managing Director for SAP Southeast Asia (SEA). He is responsible for business strategy, operations, profit and loss, and sustainable growth for SAP across SEA, building on SAP’s success in its 28-year establishment in the region. Claus leads high-performing teams across Singapore, Malaysia, Thailand, Indonesia, Philippines, Vietnam, and other emerging markets in SEA.