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​Digital Asia: Paths to digital transformation in Singapore, Vietnam and Philippines

19.05.2016

​Digital communications, Internet applications and technologies have long been essential to economic and social development across Asia, and have been fostered by their governments. Perhaps more so than in any other emerging market economies, nearly all governments in Asia have been conscious of the need to invest in telecommunications infrastructure (particularly, but not exclusively, mobile cellular networks) in a coordinated fashion since the late 1980s. Moreover Asia, somewhat late to global liberalisation trends, has steadily deregulated communications markets over the last 25 years, to allow competitive services to spur more industry development, and lessen the state's direct role in voice and data service provision.

A recent Future Watch report shows different paths to digital transformation in Singapore, Vietnam and Philippines. Singapore seeks to stay ahead of the digital economic curve, by investing in leading-edge technologies and applications to increase their national competitiveness in global industries. Singapore is definitely ASEAN's digital leader. The Philippines and Vietnam are digital leapfroggers. Both suffer from infrastructure deficits, so digital technology deployment is focused on mobile commerce, data analytics or 'shared economy' applications to sidestep infrastructure hurdles. Furthermore, financial technologies—particularly around new lending models, mobile payments and blockchain — generates significant attention and investment in the three South-east Asian countries.

Financial technologies — particularly around new lending models, mobile payments and blockchain — generates significant attention and investment in the three South-east Asian countries. Beyond fintech, each of these countries has other distinct sectors from which digital industries are being built:  

  • Singapore's government's well-managed and comprehensive civil bureacracy has been a catalyst for smart city and transportation technologies and applications
  • The Philippines has an incredibly vibrant IT-enabled Business Process and Knowledge Process Outsourcing (BPO & KPO) industry, which dovetails with a healthcare competency, in turn generating innovation around telemedicine and ehealth device development.  
  • Vietnam's digital economy is centered around manufacturing, but there is an increasing amount of innovation and entrepreunerialism around communications and security applications development

The ASEAN Economic Community (AEC) will likely create some digital infrastructure initiatives at a cross-governmental level, but progress will be slow. More important for regional digital development will be two other factors: rapid expansion of South-east Asia's venture capital industry (largely headquartered in Singapore) and the digital knock-on effects of China's "Belt and Road" transportation infrastructure investments in the region.

There is strong commitment to build digital capabilities in each of the three ASEAN countries surveyed in this report. Moreover, each has fast-growing technology entreprenuer sectors, particularly around Fintech. Those seeking to invest in the region, or use it as a platform for international expansion, however, should also be aware of potential limitations in each market: 

  • Singapore's government support, in terms of planning, regulation and direct investment, is strong—perhaps too strong. There is a danger that too much incubation may smother innovation.
  • Vietnam has successfully transformed its export manufacturing sector through an industrial zone development strategy. Relying on this model is not as useful for software and applications development. Vietnam's government has also created ASEAN's most restrictive Internet content environment.  
  • The Philippines, due to its touchy relations with China, will probably not enjoy much of a "Belt and Road" boost. Its IT development policies are heavily weighted towards job creation, and this may stunt digital innovation in an ecosystem which seeks efficiency and process automation.
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