Asia's digital revolution
Author | Tahsin Saadi Sedik |
Pages | 31-33 |
September 2018 | FINANCE & DEVELOPMENT 31
A new wave of digital innovation is reshaping Asia, raising the region’s growth potential
Tahsin Saadi Sedik
A
sia is embracing the digital revolution.
Companies such as Alibaba, Tencent,
and Baidu are providing a wide range
of services from e-commerce to fintech
and cloud computing for customers in China and
elsewhere. In Indonesia, GO-JEK offers services
including ride-hailing, logistics and digital payments.
ese and other Asian companies are exploiting
recent advances in artificial intelligence, robotics,
cryptography, and big data that promise to reshape
the global economy and fundamentally alter the way
we live and work in the same way that the steam
engine and electricity did in centuries past. In Asia
as elsewhere, the digital revolution is rippling across
industries from retailing and banking to manufac-
turing and transportation.
Southeast Asia will face distinct challenges as the
new technologies disrupt global value chains—the
network of interlinked stages of production for the
manufacture of goods and services—and undermine
the model of labor-intensive, export-led manufac-
turing that has powered the region’s growth. But the
new technologies will also open opportunities for
small businesses and offer the potential of enhanced
productivity, something that Southeast Asia will need
in order to move beyond middle-income status. For
frontier economies like Cambodia, Lao P.D.R., and
Myanmar, digital technologies can be powerful new
tools in the struggle to end poverty.
Asia at the forefront
Asian players are in t he lead in nearly every aspect of
digitaliz ation, but some economies lag signific antly
behind. Asian ec onomies lie all along the income
spectrum, and corre spondingly, the region has the
highest dispersion in terms of t he adoption of digital
technologies, with Japan, Korea, Hong Kong SA R,
and Singapore being global trends etters. But at any
given income level, Asian economies are at the f ron-
tier relative to their global peer s. Moreover, even for
relatively poor Asian economies , such as Cambodia
and Nepal, digitali zation is accelerating.
E-commerce and fintech are other areas in which
Asia leads. For instance, China accounted for less
than 1 percent of global e-commerce retail transac-
tion value about a decade ago, but today, that share
has grown to more than 40 percent. e penetra-
tion of e-commerce, as a percentage of total retail
sales, now stands at 15 percent in China, compared
with 10 percent in the United States. E-commerce
ASIA’S DIGITAL
REVOLUTION
SOUTHEAST ASIA
PHOTO: ISTOCK / THOMASSOELLNER
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