Asean ‘must stay on integration course to thrive in digital era’

SINGAPORE — Economic integration has become even more important in the digital era and the Association of South-east Asian Nations (Asean) must embrace connectivity in order to thrive in the future economy, Minister for Trade and Industry (Industry) S Iswaran said yesterday.

Integration efforts such as Asean Single Window to expedite customs clearance and help authorities exchange information electronically, as well as the Asean Customs Transit System, which seeks to reduce uncertainty in the length of time it takes for goods to move within the region, should be the “front and centre of the economic agenda”, he added.

His comments, made in a keynote speech at the 9th Asean & Asia Forum yesterday, come at a time when scepticism about keeping economies open and integrated is mounting in many parts of the world. Traditionally open economies such as the United Kingdom now face challenges such as Brexit, while the United States is going through a “particularly divisive” presidential election campaign.

“We must not allow such anti-trade perspectives seizing the policy agenda because that would be detrimental to the long-term interests of our countries and people … It is evident that economic integration has, and in many ways, will continue to sustain opportunities and better living standards for the 600 million residents of Asean,” Mr Iswaran said.

“If Asean governments support digital connectivity and Asean businesses keep pace with the shift towards digitisation, the pay-offs will be significant.”

He also echoed Prime Minister Lee Hsien Loong’s message in his National Day Rally on Sunday that the digital economy offers significant benefits to small and medium enterprises (SMEs), allowing them to reach out to a larger pool of consumers, and test new markets without having to make heavy investments.

But challenges remain. These include facilitating free but secure cross-border flows of data as well as developing a regional e-payments network with the level of penetration and flexibility needed to support companies as they grow and digitise.

“We will also need to update our approach to trade facilitation, to ensure that the trade architecture that has served us well over the past few decades does not become a hindrance to this new wave of digital opportunities for our SMEs, because in a digital economy, we prize speed and leans towards small-value, small-volume transactions. And this is really in the sweet spot for many SMEs,” he said.

Citing figures from the World Bank and Google, Mr Iswaran noted that South-east Asia is the world’s fastest-growing region in terms of Internet adoption, with 3.8 million new users coming online every month. And Asean’s digital economy has the potential to grow to US$200 billion (S$270 billion) by 2025, with e-commerce accounting for US$88 billion, he added.

It is for this reason that Asean must continue working together towards integration to make the best of its potential. Member states must stay committed to the goals drawn up under the Asean ICT Master Plan, which include building interconnected smart cities and enabling an interconnected and inter-operable digital economy within the Asean Economic Community.

“Asean member states, and in general the people of Asean, must resist inward-looking tendencies that we see around the world, stay the course, and continue to build the integrated, single market we laid the foundations for almost 50 years ago. The digital economy offers a new degree of freedom and a new wave of opportunity for our businesses and our people,” Mr Iswaran said.