Digital transformation is developing Asian economies and strengthening their ties to global trade. Undoubtedly, the biggest beneficiaries of this transformation are SMEs. Digital transformation offers important opportunities to economies. It encourages the development of SMEs’ products and services, increases market success, and facilitates access to finance. Most importantly, it is increasing international trade and employment.
The Association of South East Asian Countries (ASEAN) was established in 1967 to promote cooperation in economic, social, cultural, technical and educational matters. Its members are Indonesia, Malaysia, Thailand, the Philippines, Singapore, Brunei, Vietnam, Laos, Myanmar and Cambodia. In 2017, ASEAN’s GDP reached $ 2.8 trillion. It is the fastest growing economy after China and India. The economies of the region, which is an important base for global trade, provide a trade of approximately 3.4 trillion dollars. Major trade partners include China, the US and the European Union. Also, in the commercial relations with the economies of Turkey’s economy is strengthened. ASEAN’s population has reached 643 million.
48% of the total population is connected to the internet. Although the use of internet in ASEAN economies has increased by 10%, the digital economy provides only 7% of ASEAN GDP. This shows that ASEAN economies have a digital potential gap.
Research by Gonzalez (2019) shows that the use of digital tools in ASEAN countries is low, which prevents trade from reaching sufficient levels. For example, companies in ASEAN economies use simple technology, and the proportion of those who have web pages varies considerably, depending on the country. For example, 15% of food companies in Indonesia have web pages. In the retail sector, this rate is less than 4%. In Cambodia, 41% of companies in the tourism sector have web pages, while this rate is lower than 13% in the industrial sector.
Research on SMEs in ASEAN economies shows that SMEs that have a web page have better export and import capacities. One of the main problems of the ASEAN is the costs. The cost of internet connection is high and can vary according to each country. Monthly wages in Cambodia, Indonesia and Singapore are less than 25-30 dollars, while in Malaysia 50 dollars and Brunei and Myanmar average 75 dollars. Another problem is that the commercial cost that firms face may vary between regional economies. Similarly, while cross-border data flows between regional economies have been tried to be achieved, some economies have imposed restrictions on the flow of data. Such as Malaysia, Philippines, Singapore and Vietnam.
As a result, digital transformation is important for developing trade in both world and regional economies. The increase and acceleration of global trade depends on in the rapid and powerful digital transformation of economies as well as stable economic reforms. In addition, it is important to remove the limitations of data flows in this digital age. Strengthening risk management practices in data transport and storage will help reduce restrictions on data flows.
Reference: Lopez Gonzalez, Fostering Participation in Digital Trade for ASEAN MSMEs, OECD Trade Policy Papers, No. 230, 2019.