Promoting the Digital Economy in the ASEAN and APEC Regions

Increasingly all sectors of the economy are being enabled by digitization and digital technologies, blurring definitions between the traditional economy and the emerging digital economy. The pervasiveness, scale, and opportunity of an increasingly digital economy are illustrated by various estimates, including a total digital market worth $3.5 trillion in 2015, or 4.7% of world gross product. This is expected to grow 11% per annum through 2020, resulting in a $5.8 trillion economy. The digital economy is having a significant impact on development, both economic and social. The expansion and interconnection of the Internet globally have transformed business and the way in which businesses interact with consumers. The global nature of the Internet and the ability to move data across borders underpins an increasing amount of economic activity and international trade. The digital economy includes the use of the Internet to search for products, purchase them, and then deliver them on- or off-line. In the ASEAN and APEC regions, the digital economy is expected to have a disproportionate impact. Google and Temasek have estimated that the Internet economy in Southeast Asia alone will grow to $200 billion by 2025. AT Kearney has suggested that the digital economy could add $1 trillion to the GDP of the ASEAN bloc of countries by the same period. At the country level, in Indonesia the total productivity impact is anticipated to be in excess of $120 billion across key sectors of the economy by 2025, and to directly add more than 3.7 million jobs. The digital economy is transforming business and the way in which businesses interact with consumers. Businesses can use the Internet to participate in global supply chains, manage customers, and track production. They are also increasingly using digital inputs, such as accessing IT in the Cloud or using Skype to communicate with customers and suppliers, to increase productivity and competitiveness. This creates the conditions for growth, particularly for small and medium-sized enterprises (SMEs) and micro, small and medium enterprises (MSMEs). The digital economy is also having a significant impact on the way in which businesses interact with consumers. The Internet has enabled businesses to reach overseas customers and sell products online, anywhere. This has created new opportunities for businesses to expand their customer base and increase their revenue. However, it has also created new challenges, such as the need to manage global supply chains and track production. In the ASEAN and APEC regions, the digital economy is expected to have a significant impact on economic growth and competitiveness. The expansion and interconnection of the Internet globally have transformed business and the way in which businesses interact with consumers. The global nature of the Internet and the ability to move data across borders underpins an increasing amount of economic activity and international trade. In order to take full advantage of the opportunities created by the digital economy, governments must focus on how to better enable growth of the digital economy while developing frameworks that govern these emerging trends, such as web services, data privacy, social media, the Internet of Things, and smart grids. This requires a comprehensive approach that addresses the technical, economic, and social aspects of the digital economy.