The Role of Digital Transformation in ASEAN's Economy

The Role of Digital Transformation in ASEAN’s Economy

  • InCorp Editorial Team
  • 4 April 2023
  • 5 minute reading time

Digital transformation has become a hot topic in recent years, particularly in the business world, and the ASEAN economic landscape is no exception. It raises a question, how digital transformation in Asean looks like now?

The COVID-19 pandemic has compelled numerous industries to adopt digital initiatives to stay afloat. Moreover, it has accelerated the shift towards digitalization, highlighting digital transformation’s crucial role in enabling businesses to grow and remain sustainable.

In this article, we will delve into the state of digital transformation in the ASEAN economic landscape, examining the obstacles businesses encounter and the opportunities that await them.

ASEAN Economic Landscape and Digital Transformation

On numerous occasions, Indonesia has expressed intentions of strengthening its digital economy through collaborations with foreign companies. 

The focus was on leveraging technology to increase productivity, create jobs and enhance trade relations between countries. Indonesia’s upcoming ASEAN 2023 chairmanship is also integral to supporting the goal of digital transformation. 

The desired deliverables of this chairmanship are sustainability, digitalization, facilitation of e-commerce, and strengthening the roles of small and medium-sized enterprises in ASEAN. 

The COVID-19 pandemic has pushed the ASEAN region closer to achieving its development objectives and spurring the adoption of digital initiatives. As a result, the region has integrated the Fourth Industrial Revolution into its recovery strategy.

The strategy comes as the Consolidated Strategy of the Fourth Industrial Revolution for ASEAN to help build a digital community across the three pillars and maximize the benefits of this digital transformation. 

ASEAN Secretary-General Dato Lim Jock Hoi emphasized the importance of ASCC’s role in harnessing the opportunities of digital transformation to support regional recovery and improve people’s lives. 

The ASEAN Comprehensive Recovery Framework (ACRF) and the Ha Noi Declaration on the ASEAN Community’s Post-2025 Vision have recognized that inclusive digital transformation is necessary to create social and economic opportunities for people and reduce social disparity. Therefore, ASEAN must adapt to this new era promptly.

Read more: ASEAN’s Plans to Implement an Online Payment Gateway

The Digital Transformation in Indonesia’s Economic Development

The Role of Digital Transformation in ASEAN's Economy

Indonesia, as the only Southeast Asian country in the G20, championed the digital transformation agenda during its G20 presidency in 2022, focusing on digital economy issues and post-pandemic recovery. 

As Indonesia transitions from the G20 presidency to the ASEAN chairmanship in 2023, it has a unique opportunity to push for international cooperation in digitalization. 

During its ASEAN chairmanship, Indonesia can push for policy convergence in digital trade, improve digital literacy and skills for vulnerable groups, and reduce unnecessary regulatory burdens in labor mobility to support the region’s dynamic digital economy. 

Indonesia should lead ASEAN with a bolder digital transformation agenda amidst concerns about the upcoming “tech winter.”

“Tech winter” refers to a potential downturn in the technology industry, similar to the dot-com bust in the early 2000s. In addition, there are concerns that the current valuations of tech companies are inflated and unsustainable, leading to a potential market correction. 

Indonesia’s role in leading a bolder digital transformation agenda in ASEAN becomes even more crucial amidst these concerns. 

By prioritizing policy convergence in digital trade, improving digital literacy and skills for SMEs and vulnerable groups, and reducing regulatory burdens in labor mobility, Indonesia can help pave the way for a more inclusive, empowering, and sustainable digital economy in the region.

Given that the technology sector has played a crucial role in propelling economic growth in Southeast Asia, it is especially significant to acknowledge that the pandemic has hastened the move towards digitalization in various aspects of life.

By focusing on these critical policy goals, Indonesia can help ensure that the region’s digital economy is well-positioned to weather potential challenges and continue to drive growth and digital innovation in the future.

The Challenges of Digital Transformation in Indonesia

Digital transformation initiatives can be complex and challenging, and the benefits of digital transformation may only sometimes be apparent.

Implementing technology and digital strategies requires a clear vision and a willingness to embrace change. Organizations may need to adjust their expectations to achieve their desired outcomes. Some of the challenges are:

1. Global Digital Divide

Many developing countries need help achieving the same technological development level as more economically developed countries.

Despite having a technologically savvy population, Indonesia needs a more substantial ICT infrastructure to catch up with technological advancement.

2. Cybersecurity Threats

The widespread adoption of new technologies and increasing reliance on digital technologies raises concerns about privacy, security, and potential misuse or abuse.

Indonesian people must improve their personal data protection awareness, as they risk falling victim to cyberattacks and digital crime.

3. IT Talent Shortage

The demand for IT professionals is exceeding the available supply worldwide, and IT job functions revolve around ensuring an organization’s technology systems and processes are both practical and efficient.

How to Successfully Implement Strategies for Digital Transformation in Indonesia

1. A Comprehensive Digital Transformation Plan

The process should encompass an in-depth examination of the organization’s current procedures, pinpointing areas suitable for digitization, and prioritizing endeavors based on their feasibility and impact.

2. Build A Solid Digital Infrastructure

It involves investing in robust digital networks and infrastructure to ensure businesses and individuals can access high-speed internet, cloud computing, and other digital technologies.

3. Partnerships and Collaborations

Collaboration between the government, private sector, and academia can help accelerate digital transformation by providing access to resources, knowledge, and expertise.

Conclusion

Organizations can expect to undergo digital transformation in the coming years by adhering to the steps above. However, to achieve this, it is essential for businesses first to identify and overcome any obstacles they may encounter. 

In some cases, businesses may require assistance, and InCorp Indonesia (formerly Cekindo) provides one-stop business licensing and process outsourcing services to help them do so.

In conclusion, considering Indonesia’s chairmanship for ASEAN in 2023, it presents the best opportunity for businesses to embark on digital transformation.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

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