The bloc’s members are in a hurry to embrace a digital strategy, but any joint initiatives may falter following AEC disappointments, Pana Janviroj writes
If Asean is shaped by foresighted leaders, the selection of Tan Hooi Ling as co-chairwoman of the World Economic Forum on Asean 2017 is a telling example of the group’s future.
[See aslo: An idea from Latin America]
Topics on digital technology and youngsters dominated this year’s WEF Asean meeting, which took place on May 11 and 12 with four Asean leaders – from the Philippines, Laos, Vietnam and host Cambodia – in attendance.
The star leaders attending the forum were the likes of Malaysian-born Tan, 32, co-founder of Grab, the region’s No 1 mobile taxi booking service network, and William Tanuwijiya of Tokopedia, a start-up from Indonesia. They aired hopes for the future, alongside regional veteran players like Tony Fernandez of Air Asia and Tevin Vongvanich of PTT.
But can Asean members, celebrating the bloc’s 50th anniversary this year, have both the credibility and capability to form a regional “digital economy” strategy to propel the group forward? It certainly has the right profile with just over half of the regional bloc’s 622-million population being of Tan’s generation and younger.
When it was founded 50 years ago, carefully crafted policies on peace and security put the group on the global map. Then came the Asean Free Trade Area (Afta) of the early 1990s, which delivered reasonable successes.
But the Asean Economic Community (AEC), which came into being at the start of this year, has proven to be “a bang with disappointment”. Non-tariff barrier measures among members jumped four times from 2010 to 2015 instead of receding; tariff rates have yet to come down to zero as planned; and the ease of customs clearance has not materialised overall, according to a business study across the 10 Asean economies.
“There was expectation, a promise, but these were not fulfilled… Asean has not transformed into a single market and a single production base,” said a regional business analyst.
On top of this, the bloc is being pulled in all directions by forces beyond its control, particularly with the rise of China.
But the technology-driven world is accelerating. The WEF’s so-called Fourth Industrial Revolution through advancements in genetic engineering, artificial intelligence, robotics and nano- and bio-technology will likely result in job displacement, especially in labour incentive industries – many of which Asean currently excels in.
Asean must prepare its young population for the future.
“Every job is going to change. Asean must train people to be prepared to be flexible, adaptable, and ready for lifelong learning, ready to change as the nature of work and jobs change,” said John Rice, vice chairman of US-based General Electric at a WEF panel discussion.
Despite Tan’s start-up generation push, Asean leaders are far from forming a visionary consensus. Forum host and Cambodian Prime Minister Hun Sen was still toiling on the virtue of “the Asean Way”. Philippine President Rodrigo Duterte wanted to see a “drug-free” Asean. Laotian Prime Minister Thongloun Sisoulith warned of a coming era of “ageing” in Asean.
It was left to Vietnamese Prime Minister Nguyen Xuan Phuc to push the technology agenda to the forefront. He proposed that Asean should set up a working group on education, vocational training and start-up promotion. “As a dynamic member of Asean, Vietnam is working towards sustainable growth by taking advantage of the Fourth Industrial Revolution to raise labour productivity, competitiveness and jump to a higher place in the global value chain,” he said.
Vietnam’s planners are tapping into “knowledge based” sources as the country prepares to host the WEF Asean meeting next year when Singapore, already a regional digital technology hub, will also be chairing the regional bloc. Will they together help Asean “reinvent” itself in the technology-driven era?
Some Asean economies do have seed digital policies.
Thailand, for instance, has embraced the 4.0 Revolution through the Eastern Economic Corridor (EEC) initiative. A package of incentives is available for global firms and talent to come and develop tech projects in Chon Buri, Chachoengsao
and Rayong, where many automobile and electronic industries are based.
Minister for Digital Economy and Society Pichet Durongkaveroj also wants the EEC to serve the CLMV countries – Cambodia, Laos, Myanmar and Vietnam – such as in sharing the fibre-optic network off Laem Chabang for cost competitiveness to all users and scalability.
Indonesia’s Patrick Walujo, managing partner of investment firm Northstar Advisers, sees the chance for Southeast Asia to compete globally in the Fourth Industrial Revolution if the governments pay more attention. Presently, Indonesian start-ups succeed by “natural selection” with no favour from the state.
A digital economy should become a national issue as it encompasses industrial structure, family and human capital. “We can leapfrog with the right national agenda,” pointed out Jamaludin Ibrahim, CEO of Axiata Group of Malaysia, which under the government of Prime Minister Najib Razak has taken on the initiative.
Manpower development is a challenge for almost all Asean members with the exception of Singapore and perhaps Malaysia. According to Christophe Duchatellier, Asia-Pacific head of Adecco Group, there is an acceleration of demand across the region for IT, engineering and life sciences. “These are most difficult to find with insufficient young talents,” he said.
Education reform is the buzzword in all Asean capitals but each finds the implementation hard, let alone carrying it out across the region. The millennia also demands purpose for the work they do, as well as wanting to be in an ecosystem of good people and, of course, get good pay.
Asean can definitely do with a larger start-up population, to which Grab’s Tan outlined ingredients of success: “First, make sure you
solve the real problems; and second, possess a burning desire to solve them in the most innovative way.”
While an Asean digital strategy is subject to further debate and consensus among the group’s leaders, the AEC experience thus far doesn’t bode well for the bloc’s credibility for a new initiative. For many including Nick Nash, president of Sea Group, the missing ingredient is deregulation, so much so that it is often difficult for Asean-based companies to get licences to operate in fellow Asean countries, and make a case for allowing local and regional champions to emerge.
“Asean is the cheapest place to
be rich and the most expensive place to be poor,” he said, implying that small businesses bear a disproportionate burden of compliance with expensive procedures and regulations.
With the lack of evidence on AEC progress, the region’s business leaders are wary of new promises from Asean.
Yet, they are prepared to be pragmatic on further trade and transportation integration of the bloc, and not expect too much. Some advocate going back to the basics of costless initiatives such as making customs clearance more transparent so that trade is seamless and costs can start to come down.
So, is Asean’s digital drive still a world away? Fifty years since its founding, Asean should tap the energy and innovation of its tech-empowered people, reckons Tan. “We equally hold the future of Asean in our hands and should actively shape it,” she said.