(From left) Dr. Sufian Jusoh, Senior Fellow of CARI; Richard Bolwijn, Head of Investment Research Branch, Division of Investment and Enterprise (DIAE), UNCTAD; Tan Sri Dr. Munir Majid, Chairman of CARI and President of the ASEAN Business Club; Dr. Deborah Elms, Executive Director of Asian Trade Centre and Foong Chee Keong, Group Head of Regulatory Affairs, Axiata Group Berhad pose for the cameras after the ASEAN Roundtable Series on ASEAN Digital Economy: Investment, Gaps, and Policy Implications at Melia Hotel in Kuala Lumpur on 12 July 2018.
Review of trade and investment policies imperative to creating an inclusive ASEAN digital economy
Kuala Lumpur, 12 July 2018 – Despite the projection that the digital economy will add US$1 trillion to ASEAN GDP by 2025, there are policy hurdles that must be overcome by ASEAN to realise the digital economy potential for the region which now has a combined GDP of over US$2.6 trillion.
Among others, ASEAN needs to relook at its various policy initiatives including trade and investment policies in response to the transformative digital economy that is not only impacting international production, trade, services and investment flows, but also changing the rules of world trade. Apart from that, addressing the challenges in digital and telecommunications infrastructure investment is fundamentally crucial in helping the micro, small and medium sized enterprises (MSMEs) of ASEAN integrate with global value chains.
These issues were highlighted during a business roundtable titled, “ASEAN Digital Economy: Investments, Gaps and Policy Implications” which was organised by CIMB ASEAN Research Institute (CARI) today, in collaboration with the ASEAN Business Club and United Nations Conference on Trade and Development (UNCTAD).
The roundtable was chaired by Tan Sri Dr. Munir Majid, Chairman of CARI and President of the ASEAN Business Club. The panel of speakers comprised of Richard Bolwijn, Head of Investment Research Branch, Division of Investment and Enterprise (DIAE), UNCTAD; Dr. Deborah Elms, Executive Director of Asian Trade Centre; Foong Chee Keong, Group Head of Regulatory Affairs, Axiata Group Berhad and Dr. Sufian Jusoh, Senior Fellow of CARI.
Globally, investment in digital economy has been on an upward trend. According to Richard Bolwjin, telecom companies continue to invest in coverage, in upgrading networks to 4G, and increasing capacity to cope with explosive growth of demand. However, such investment should not be limited to telco players.
“Investment in the digital economy is not just about CAPEX by the Telecom companies. Digital industry firms also need to invest, and firms in traditional industries need to invest in the adoption of digital technologies. Also, investment policies play a key role in digital development. The industries most affected by the internet are often also those where foreign investment is most neglected, such as transportation and pooled services,” said Richard Bolwijn.
While regional companies have increased their investment in digital capabilities, there has not been sufficient review of existing investment policies to address the needs of the digital economy.
“Although the underlying principles and aspirations toward embracing the digital revolution have been outlined in the ASEAN Economic Community (AEC) Blueprint 2025, many aspects of the digital economy are not addressed when it comes to international trade and investment policymaking. For ASEAN, it should look at AEC 2025 blueprint whether it is able to meet the challenges of the digital economy,” said Dr. Sufian.
ASEAN aims to enhance the implementation of the ASEAN Comprehensive Investment Agreement (ACIA) to create an open, transparent investment destination. ACIA aims to progressively liberalise the existing investment restrictions in manufacturing, agriculture, fishery, forestry and mining and the services incidental to these sectors. It also envisions to significantly strengthen investment protection; as well as ensure transparency of investment laws, regulations and administrative guidelines.
In reviewing ASEAN policy initiatives, ASEAN must also address the potential impact of digital inequality as a result of digital divide among ASEAN member states, as well as among the peoples of ASEAN.
“The digital economy is transformative. We must, however, make sure it is also inclusive. Don’t forget globalisation too was transformative. But it left many people behind in terms of income and employment, polarising societies in so many countries,” said Tan Sri Dr. Munir Majid who chaired the roundtable.
From the telecommunications industry standpoint, Foong Chee Keong said the bloc should look at the current regulatory framework to strike a balance between ensuring that broadband connectivity is accessible to consumers and the sustainability of telco industry.
“Good broadband connectivity is now an economic ‘must-have’. In developing markets in ASEAN, mobile broadband is important due to the lack of widespread fixed infrastructure. However, the exponential rise of demand for mobile broadband, steep declines in retail prices caused by severe competition, although good for consumers, has created an unsustainable industry structure. Therefore, Governments should review current regulatory frameworks and policies, amending them to be ready for the ASEAN Digital Economy,” said Foong.