3 Keys to Build a Strong Digital Economy in ASEAN

Small and medium-sized enterprises (SMEs) in Southeast Asia have benefitted massively from ASEAN integration. Reduced tariffs and improved regional connectivity have made the bloc the world’s sixth-largest economy.

SMEs now need to look beyond their countries’ borders and explore opportunities for regional trade. While that might have been a difficult undertaking ten years ago, nowadays, SME’s can leverage digital and internet-based technologies to reach out to the international market.   

The ASEAN digital economy

Currently, ASEAN’s digital economy is 7 per cent of its GDP, compared to China (16 per cent of GDP), the EU-5 (27 per cent of GDP) and the U.S. (35 per cent of GDP). Thus, there is a massive digital opportunity.

Three steps will be essential to unlocking this potential:

Free flow of data

The availability of data is critical for companies, especially those that build digital business models. Data is necessary to leverage digital marketing channels effectively, to come up with innovative products and services, and to lower operational costs. Thus, ASEAN institutions need to create a legal and regulatory framework that enables businesses to collect, store, and use data. Moreover, companies need to gather the expertise and tools to use data effectively.

Digital payments systems

ASEAN still lacks an open and interoperable regional digital payments system. That makes it difficult for businesses to establish digital sales channels and conduct cross-border transactions. A connected network of national payment systems would support Southeast Asian consumers and corporations to conduct financial transactions seamlessly, enhancing trade and business activity. Earlier this year, eight ASEAN countries agreed on ASEAN Payment Connectivity, which aims to cut transaction fees for businesses. That’s a step in the right direction. 

Regulations on transborder commerce

Harmonized and streamlined national regulations on transborder commerce will enable companies to reduce their spending when navigating different jurisdictions. Currently, complex customs regulations and lack of transparency create difficulties for cross-border trade. 

Export Portal’s trade platform includes solutions for each of the three keys described above: Users can gather, manage, and store their data on a blockchain, conduct electronic payments directly via the platform, and manage customs documents without the need to exchange paperwork physically. Thus, a trade solution like Export Portal might be exactly what ASEAN-based SMEs need right now.