The “flywheel effect” of digital economy development in Southeast Asia
The digital economy in Southeast Asia has its own very unique development path, and the wave of digital life transformation is becoming an important driving force for economic recovery in Southeast Asia. According to a survey report recently released by Google, Temasek, and Bain & Company (hereinafter referred to as the “Google Survey”), from 2020 to the present, under the global environment of the epidemic and geopolitical conflicts, Southeast Asia’s digital economy industry is thriving. The region has added 60 million digital economy consumers in the last two years alone. In 2021, the digital economy market in Southeast Asia will reach US$174 billion, and it is expected to double to US$360 billion by 2025, and will grow rapidly to an astonishing US$1,000 billion by 2030. The total population of Southeast Asia is about 655 million, and the median age of the population is only 30.2 years old. This huge market gives people the impression that although immature, but fast-growing young people, it is becoming the “day of heaven” that may lead Southeast Asia’s economic recovery. Chosen Son”.
Southeast Asia’s digital economy shows “flywheel effect”
”Flywheel effect” means: the gear needs a lot of kinetic energy to overcome the resistance when it starts to rotate from a standstill, and once it starts to rotate, the strong potential energy generated by the inertia of the endogenous system can maintain its own operation, and then it will turn more and more with the support of external force faster. The development of the digital economy in Southeast Asia has a similar operating logic. The core component of this “flywheel” is the huge market formed by the huge and young population. According to Google’s survey, the six major markets of Southeast Asia’s digital economy in 2021 are Singapore, Thailand, Malaysia, Indonesia, Vietnam and the Philippines. The six countries currently have 440 million Internet users, of which 80% or about 350 million people have used online shopping , and the scope and depth of use of users are increasing at a high speed.
Although the digital economy market in Southeast Asia is huge, it lags behind the United States and China by more than ten years. With the mature technology and market models of the pioneering regions as a reference, Southeast Asian countries are embarking on a path different from the development process of the digital economy of China and the United States, and promote the rapid rotation of the “flywheel” of the digital economy in a way that is more in line with their own characteristics.
First of all, the governments of Southeast Asian countries are actively promoting the establishment of a multilateral digital economic cooperation framework, and strive to fully connect with the global resource network. Southeast Asia is a late-developing region of the digital economy, and the levels of digital infrastructure construction and economic development vary among countries. Promoting rapid integration into the global digital economic network at the government level will help countries create more market opportunities and deeper cooperation for local companies. For example, Singapore signed digital economic agreements with New Zealand and Chile in June 2020, Australia in December, South Korea in December 2021, and the United Kingdom in June 2022. At the same time, Singapore has been actively discussing digital economy cooperation and cross-border data circulation standards with many countries, including the European Union and India. Malaysia has set up a “Digital Coordination Committee” and signed a memorandum of understanding on digital telecommunications cooperation with China in September 2022. Indonesia is also starting discussions with the EU on improving bilateral cooperation on digital infrastructure and investment in June 2022. These national-level digital economy bilateral and multilateral agreements have greatly promoted the coordination ability of Southeast Asia’s digital economy and the global digital economy market, eliminated rule obstacles and trade barriers, and become the first important force to promote the rapid rotation of the “flywheel” of Southeast Asia’s digital economy. strength.
Secondly, countries in Southeast Asia have independently formulated digital economy strategies and development roadmaps, laying a good foundation for the rapid development of the industry. Unlike the models in the United States and China, Southeast Asia has been able to skip a lot of R&D and trial-and-error processes. With its huge user scale and market potential, Southeast Asia can directly introduce and utilize ready-made technologies, capital, business models and data from advanced countries. In this process, strategic planning and industrial guidance at the government level are particularly important. This has played an important role in promoting better use of external resources and coordinating the healthy development of the industry. For example, Thailand has launched six major digital economy strategies, including increasing digital infrastructure, promoting digital business, promoting equal access to social resources, establishing a digital government, improving workforce development, and enhancing the credibility of digital business. The Indonesian government has also accelerated the development of the digital economy from five aspects: digital infrastructure, formulation of a digital transformation roadmap, integration of national data centers, talent training, and digital financial supervision. In addition, the national digital development strategies of Southeast Asian countries have achieved remarkable results. For example, the usage rate of smartphones in Southeast Asia is close to 70%, and many rural areas lacking wired network infrastructure have skipped the PC Internet stage and directly entered the mobile Internet era. The Google survey also pointed out that in 2021, 60% of the new digital economy users in Southeast Asia will come from rural areas, directly realizing the “curve overtaking” of Internet access.
On July 16, 2021, at the 2021 China-ASEAN Digital Economy Development and Cooperation Forum, Indonesian Ambassador to China Zhou Haoli took a group photo with the staff.
The governments of Southeast Asian countries are also actively promoting the digital payment process at the national level. For example, the Bank of Indonesia encourages major banks and financial institutions to actively promote the digitalization of the system to improve the payment efficiency and payment security of the payment system. Under the guidance of the governments of various countries, the aforementioned six Southeast Asian countries have become the regions with the fastest growing electronic payment in the world. The growth rate of electronic wallet usage will exceed 311% in 2021, and it is expected to exceed 440 million users by 2025. Although the online payment industry in Southeast Asia has not yet seen giants with market dominance like WeChat Pay and Alipay like China, it can be said that a hundred flowers are blooming. Among them are electronic wallets developed by telecom operators (such as Singtel Dash, Gcash, Truemoney, etc.), payment services launched by leading Internet companies (such as Grabpay, Gopay, Zalopay, etc.), and electronic payment programs launched by banks (such as DBS Paylah !, OCBC Pay Anyone, etc.).
The digital economy development strategies formulated by the governments of Southeast Asian countries have promoted the integration and allocation of resources inside and outside the region at the national level, promoted the investment and development of key digital infrastructure, and ensured the rapid and orderly development of the digital economy industry. a major force.
Finally, the government, enterprises, consumers and capital in Southeast Asia are promoting the “positive growth order” of market development. Different from the development trend of free competition in digital economy first-mover markets such as the United States and China, the digital economy development model in Southeast Asia has shown a positive growth order of “government guidance, enterprise innovation, consumer recognition, and capital support”. With the support of the government’s digital strategy, Southeast Asia’s huge digital economy market and demographic structure conducive to rapid development have attracted the attention of a large number of international capital. Digital startups in Southeast Asia received $25.7 billion in venture capital in 2021, compared to $9.4 billion in 2020. The epidemic and geopolitical factors have prompted global capital to pay more attention to the Southeast Asian market, and the level of mergers and acquisitions has reached an all-time high. The influx of a large amount of capital has promoted the vigorous development of technology companies in the region. According to the survey results of Hurun Global Unicorn List in 2022, as of June 30, 2022, there are a total of 28 unicorn companies in Southeast Asia, including 12 in Singapore, 5 in Indonesia and Vietnam, and 3 in the Philippines. , 2 in Thailand and 1 in Malaysia. The main areas of these unicorn companies are related to the digital economy, distributed in various industries including financial technology, e-commerce, gaming and logistics. Since the outbreak of the epidemic in 2020, the online medical and online education industries in Southeast Asia have developed rapidly. The financing scale in the first half of 2021 reached US$1.1 billion and US$250 million, respectively. Southeast Asian consumers’ embrace of the digital economy has also become an important part of this positive growth order, and young consumer groups are extremely enthusiastic about various digital services. Consumers’ recognition has promoted the vitality of the digital economy market, enhanced the innovation motivation of enterprises, and attracted a large amount of capital to participate in it, and finally gained the government’s attention and the introduction of favorable policies.
Digital economy becomes the engine of economic recovery in Southeast Asia
At present, the global economy is not only facing adverse factors such as the new crown epidemic and the rise of “anti-globalization”, but also multiple crises in energy, finance, and supply chains caused by geopolitical conflicts. The digital economy is under such pressure. It is becoming a new force to reshape the global economic factors, economic structure and competition situation. According to the “Global Digital Economy White Paper (2022)” data released by the China Academy of Information and Communications Technology, the added value of the digital economy in 47 countries around the world will be 38.1 trillion US dollars in 2021, a year-on-year increase of 15.6%, which has far exceeded the overall global economy in the same period. Growth.
The growth rate of Southeast Asia’s digital economy is three times higher than the global figure, reaching 47%. Moreover, since the business model development of the digital economy in the region is still in its infancy, the growth rate of users is fast, and the market potential is great, which will make an increasing contribution to the economy in the future. First of all, the digital economy industry in Southeast Asia has a stimulating effect on investment in the region. On the one hand, excellent start-up technology companies attract a lot of investment, and on the other hand, they will also bring a lot of returns to capital through their own valuation growth, thus forming a positive incentive for the capital input-output cycle in the social economy. Secondly, the endogenous demand for the development of the digital economy in Southeast Asia will drive the introduction of relevant government support policies and the continuous strengthening of digital infrastructure, laying a better foundation for overall economic development. Thirdly, the new jobs created by the innovative digital economy industry will absorb a large number of jobs, which will contribute to the balanced development of economic factors in the region and the stability of the overall social structure. Finally, the personalized service and convenient experience of the digital economy will promote the social consumption level in Southeast Asia. Google’s survey has shown that digital services have increased consumers’ willingness to spend by 30%.
The urban construction level of Jakarta, Indonesia is perfect, and the city is full of modern atmosphere.
Although the prospect of the digital economy leading the economic recovery in Southeast Asia is very optimistic, there are still several unfavorable factors affecting it. First of all, data is the core of the digital economy. ASEAN countries need to establish a unified governance mechanism for cross-border data management, thereby ensuring the free flow of data in the region and the standardized and coordinated development of the cross-border digital economy. Otherwise, the advantages of the large regional market will be difficult to achieve. Secondly, the development of the digital economy requires a stable market with integrated platforms and interconnection. At present, the unbalanced development of Southeast Asian countries and the poor connection of customs and trade still pose obstacles to market circulation and commodity logistics in the region. Thirdly, the digital economy infrastructure and professional level of talents in Southeast Asia are still seriously insufficient, and many successful technology applications and business models from the United States and China cannot be directly replicated in Southeast Asia, and continuous exploration and trial and error are still needed. Finally, after the end of the current high growth rate of users, the digital service market in Southeast Asia will also enter the “Red Sea Era” of price and efficiency competition. At that time, whether the entire industry can balance the negative impact of good and bad competition will face huge challenges. challenge.