Speech by Minister S Iswaran at the Digitize ASEAN Conference 2018

​KEYNOTE ADDRESS BY MR S. ISWARAN, MINISTER-IN-CHARGE OF TRADE RELATIONS & MINISTER FOR COMMUNICATIONS AND INFORMATION AT THE DIGITIZE ASEAN CONFERENCE 2018, TUESDAY, 5 JUNE 2018, 9.05-9.20 AM, RESORTS WORLD SENTOSA

Mr. Robert Yap, Chairman, Digitize ASEAN,

ASEAN Business Advisory Council Members,

Mr. Ho Meng Kit, Chief Executive, Singapore Business Federation,

Distinguished Ladies and Gentlemen,

Introduction

1.             Good morning. It is my pleasure to join you at this year’s Digitize ASEAN Conference. The Conference’s focus on the digital economy in ASEAN is salient, as it dovetails with Singapore’s and ASEAN Member States’ (AMS) shared interest in advancing work in e-Commerce and innovation, amongst other priorities, under Singapore’s Chairmanship of ASEAN this year.

ASEAN in Today’s Global Operating Context 

2.             ASEAN’s economic cooperation and integration efforts have yielded significant dividends since its founding in 1967. We have lowered trade costs, expanded sources of materials and choices for manufacturers, improved trade rules, and created more opportunities for our businesses. ASEAN integration has also allowed our ten Member States to effectively compete for international investments with a collective market of more than 600 million consumers.¹

3.             This is why ASEAN remains an economic bright spot and expected to grow at a yearly average of 5.2% from 2018 to 2022.² It is already the sixth largest economy in the world, with a combined GDP of USD 2.55 trillion.³ Some experts see ASEAN potentially becoming the fourth largest single market in the world by 2050.⁴ (after the EU, US, and China), with an additional 14 million jobs generated for the region by 2025.⁵ The region’s youthful population, growing middle class, and increasing urbanisation also bode well for its continued growth. 

4.             However, there is no room for complacency. For one, technological advancements are challenging traditional business models, and are a new source of competitive advantage for businesses. Over the past 10 years, the top traded companies in sectors such as finance and energy have been displaced by top technology companies such as Google, Amazon, Facebook and Apple.

The Digital Economy in ASEAN

5.             In ASEAN, some estimate that the digital economy has the potential to grow to USD 200 billion by 2025, with e-Commerce alone accounting for USD 88 billion.⁶ If ASEAN governments support digital connectivity and our businesses keep pace with digitalisation trends, the pay-offs can be significant especially when coupled with ASEAN’s demographics and increasing rate of technology adoption. 

6.             Let me highlight three areas of opportunity for ASEAN businesses.

7.             First, in platforms. Business-to-consumer, or B2C, e-Commerce platforms, such as Lazada and Shopee, have been a hit with consumers in South-east Asia because of the easy access and wide product range. It is the fastest growing pillar of the internet economy, and expected to increase eight-fold to US$88 billion by 2025.⁷

8.             Second, in supporting services. Online commerce requires many of the same services as the real economy. These include payments, insurance, logistics and fulfilment, fraud detection, marketing and customer service. As more consumers go online, there will be opportunities to deliver more services online. For instance, Go-Jek, the ride-hailing platform in Indonesia, now allows users to pay utilities bills, collect their medical prescriptions and schedule a home cleaning service on its site. Many sectors are being re-invented, presenting opportunities to break into a market that is still evolving.

9.             Third, in supporting infrastructure. The digital economy still depends on many brick and mortar services, such as fulfilment centres for e-Commerce and data centres. 

10.          Against this backdrop, ASEAN will need to redefine its value proposition to ensure continued centrality and relevance. It is essential that ASEAN governments keep pace with digitalisation, and address the issues that constrain our ability to participate in the digital economy. These include policies that relate to data flows and localisation, intellectual property, cybersecurity, and digital trade facilitation.

Driving Technology Adoption in Singapore 

11.          In Singapore, we have focused on driving the adoption of cross-cutting digital technologies across all levels, to have a transformative impact on the competitiveness of all sectors. Innovation and technology adoption are important components of the Industry Transformation Maps (ITMs) that we have developed for 23 sectors in our economy.

12.          In particular, it is integral that we support the significant cohort SMEs with their digital transformation. In Singapore, we have the SMEs Go Digital Programme, by IMDA, which gives easy access to quick-to-deploy digital technologies that can boost productivity, reduce costs and provide better service. The programme aims to help SMEs with basic and advanced technology needs such as Internet-of-Things (IoT), data analytics and cybersecurity through existing SME Centres as well as a new SME Digital Tech Hub. 

13.          We continue to equip our workforce with the relevant digital skills. This includes core information & communication technology (ICT) and business specific skills and capabilities in order to ensure better employability while building a future ready digital workforce and future ready businesses. For example, we have the Tech Skills Accelerator (TeSA) to help workers upskill themselves and stay abreast of the demands for new skills in the Digital Economy. 

14.          We have also introduced the Global Innovation Alliance (GIA) to strengthen Singapore’s connections with major innovation hubs around the world, including within ASEAN. Besides the establishment of Block71 in Jakarta July last year, GIA Bangkok was also just launched in April 2018. The GIA will further drive partnership between Singaporeans and Singapore companies and their counterparts in the region to jointly create innovative solutions. 

15.          While individual member states pursue their own initiatives, ASEAN offers us the scope to bring together the region’s collective efforts and resources to secure coherent and substantive outcomes.

16.          However, ASEAN must first address the challenges posed by the digital economy such as: How do we facilitate free but secure cross-border flows of data? How do we develop a regional e-Payments network, with the level of penetration and flexibility needed to support a diverse range of companies as they grow and digitalise? How do we update our trade architecture so that it supports, rather than hinders, the new wave of digital opportunities?

Singapore’s 2018 Chairmanship of ASEAN

17.          Singapore’s Chairmanship of ASEAN in 2018 thus comes at an important juncture. Our aim is to deepen ASEAN’s digital connectivity, in complement to our physical connectivity, to position the region for the growing opportunities in innovation and the digital economy, and to be better prepared to meet future challenges.

18.          Singapore is working with ASEAN Member States on specific initiatives such as an ASEAN Agreement on e-Commerce that advances trade rules in e-Commerce, lowers businesses’ operating barriers to entry, and builds up greater digital connectivity, to facilitate e-Commerce flows in the region. This will provide a platform for aspiring entrepreneurs, start-ups and Micro, Small and Medium Enterprises (MSMEs) to market their products and services regionally, while making it easier for them to send and receive electronic payments. 

19.          We are also developing the ASEAN Digital Integration Framework to assess and benchmark our digital ecosystem, and identify how we can empower all stakeholders to benefit from ASEAN’s digital integration initiatives.

20.          Singapore is also working on an ASEAN Innovation Network to strengthen the linkages between innovation ecosystems in ASEAN Member States, which can spark new collaborations and solutions, and help address the demand from an increasingly sophisticated consumer base in the region.

21.          In addition, ASEAN and Australia have agreed on the Digital Trade Standards Cooperation Initiative (DTSCI), which aims to encourage the use of international digital trade standards in our region so as to support economic growth and security.

22.          While the Digital Economy holds much promise, this can only be realised through the building of a safe, secure and resilient cyberspace. With this aim, ASEAN Leaders at the 32nd ASEAN Summit issued a Statement on Cybersecurity Cooperation, tasking ASEAN Member States to adopt basic operational and voluntary cyber norms of behaviour in the region as a means of building a secure and resilient cyberspace.

23.          We also hope to promote the Digital Economy through freer flow of data among ASEAN Member States. Hence, Singapore is working to promote discussions on Digital Data Governance at ASEAN, and add to the ASEAN Framework on Personal Data Protection 2016, which recognised the importance of strengthening personal data protection. 

24.          We are also in discussions to launch an ASEAN Smart Cities Network (ASCN) to facilitate cooperation on smart cities development, catalyse bankable projects with the private sector, and to secure funding and support from ASEAN’s external partners. The ASCN aims to help member cities prioritise and develop areas of importance, including transport, energy, education, public services, data and information & communication technology (ICT). These, in turn, improve inter-connectivity and the ease of doing business in our economies, expand complementary opportunities, and enhance our ability to harness the digital economy.

Private Sector Initiatives

25.          We are also pleased to see initiatives spearheaded by the private sector. The ASEAN Business Advisory Council, or ABAC, has been working towards having legacy projects, which support ASEAN’s economic growth, every year since 2014. This year’s legacy project, the SG Connect, aims to enable Smart, Sustainable and Symbiotic growth within ASEAN. Through this project, ASEAN Cities can leverage suitable technologies to enhance their efficiency and long term growth.

26.          It is noteworthy that a number of our companies have already made their mark in ASEAN’s digital space. An example is ShopBack, an online loyalty and discovery platform which helps merchants drive sales, earns a commission for each successful transaction and shares this with customers in the form of cashback. With the large and growing e-Commerce industry and a dynamic ecosystem in Thailand, Shopback successfully entered the Thai market by building a strong local team. Building on its success, Shopback Thailand is now in the process of hiring more experienced staff in order to secure a prominent position in Thailand’s e-Commerce scene.

​27.          Another example of a success story is Naiise, which adopted an online-offline strategy when expanding to Malaysia. Naiise is one of the largest, and fastest growing, design retailers in Singapore. It began as an online platform before opening its brick-and-mortar shops in Singapore and Malaysia. With its omni-channel strategy, Naiise is on track to be self-sustainable within a year of entering the market. 

28.          We must complement our digital economy initiatives with trade architecture that is continually updated and enhanced to deliver tangible benefits for our businesses. Singapore is therefore also moving on a range of other fronts such as ASEAN-wide Self Certification, a pathfinder for an ASEAN-wide Authorised Economic Operators Mutual Recognition Agreement, the ASEAN Trade in Services Agreement, and an enhanced ASEAN Comprehensive Investment Agreement. These initiatives will allow the seamless movement of goods within ASEAN, reduce administrative burdens and costs for businesses, and improve the region’s regulatory regime for trade in services and investment.

29.          Some of our efforts have already borne fruit. The ASEAN Single Window entered into operation in five ASEAN Member States, namely Singapore, Indonesia, Malaysia, Thailand and Vietnam, earlier this year. The ASEAN Single Window aims to expedite cargo clearance and cut down paperwork, and will benefit traders by reducing the cost of compliance when exporting and importing within ASEAN.

Conclusion

30.          ASEAN must resist the anti-globalisation rhetoric and sentiment affecting many parts of the world, and instead draw on its shared vision and collective strength to stay resolute in its commitment to regional economic integration. The digital economy offers a new avenue of opportunities for our businesses and our people. Positioning ourselves well to tap into these new opportunities arising from the digital economy and other emerging technologies, will further reinforce ASEAN’s value proposition, and ensure a united and prosperous future for our people. 

31.          I wish all of you a fruitful time at today’s Conference. Thank you.

¹ Source: ASEANStatistics 1967-2017 ASEAN Economic Progress, 2017

² Source: OECD Economic Outlook for Southeast Asia, China and India 2018: Fostering Growth through Digitalisation

³ Source: ASEANStatistics 1967-2017 ASEAN Economic Progress, 2017

⁴ Source: Source: US-ASEAN Business Council ↗ (opens in new tab).

⁵ Source: Asian Development Bank (ADB) and International Labour Organization (ILO), ASEAN Community 2015: Managing integration for better jobs and shared prosperity.

⁶ Source: e-conomy SEA: Unlocking the $200 billion digital opportunity in Southeast Asia, Temasek Holdings and Google, 2016.

⁷ Source: ASEAN Up – Southeast Asia Digital Economy 2025 report.

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