In this excerpt from his A Connected ASEAN essay, our Group Managing Director of International and Global Services, David Burns, discusses Australia’s role in defining future technological growth within the Southeast Asian region’s digital economy.
If ASEAN successfully harnesses the benefits of disruptive technologies, it is set to become a major force in the global digital economy. Australia can play a pivotal role.
The inaugural ASEAN-Australia Special Summit marks an important milestone for Australia and Southeast Asia this year, coinciding with a time of global change that will shape our collective future. As the world enters an era defined by digitisation and connectivity, no other region is more poised to benefit than ASEAN.
Counting among its 10 member states some of the world’s fastest growing economies, like Philippines and Vietnam, the World Economic Forum predicts ASEAN will become the world’s fifth largest economy by 2020. Google notes that the region’s internet economy hit US$50 billion in 2017 alone, making it the third largest global region for internet users.
Southeast Asia’s large and growing population is young and enthusiastically taking up new technologies in its cities, while its rural areas are increasingly being connected through the improved internet and mobile infrastructure. The latest data from global social media agency, We Are Social, shows that while just 58% of Southeast Asia’s population is online today, countries such as Indonesia and Vietnam are recording some of the world’s biggest jumps in social media user numbers – at year-on-year growth rates of 23 percent and 20 percent, respectively.
In the one-year period leading to January 2018, Indonesia saw its active social media user base grow by 24 million – a number equivalent to the Australian population. With a population of 265 million, it is incredible to think that Indonesia has 416 million mobile connections and 130 million individuals active on social media. Indonesian consumers spend on average nearly nine hours online every day. With an e-commerce penetration rate of just 11%, Indonesia’s online consumer goods market is worth US$7 billion and growing at more than 20 percent year-on-year.
A recent study by ATKearney found that the implementation of a radical digital agenda could add US$1 trillion to ASEAN’s GDP over the next decade. The question now is how can Australia and Australian companies help their ASEAN counterparts capture this enormous opportunity. This is a question that Telstra has already considered and is working to address in a variety of ways.
One of the most fundamental challenges for the ASEAN region to overcome, as it seeks to capitalise on digitisation, will be the skills gap – a stumbling block for many economies around the world. Telstra’s Connecting Commerce study conducted by The Economist Intelligence Unit found a high level of business confidence in Southeast Asian cities’ digital environments.
Manila led the way in the region, ranking sixth out of 45 cities, while Jakarta ranked eighth and Singapore 14th. Similarly, our previous Connecting Capabilities research saw Singapore topping the Asian Digital Transformation Index – a ranking of 11 Asian markets based on 20 digital transformation indicators – ahead of both the UK and Australia.
In 2014, Telstra established a joint venture with Telkom Indonesia, named telkomtelstra.
Last August, the two companies announced they would launch a talent exchange program, reinforcing their commitment to building bilateral capabilities. This program will develop globally-minded talent, supporting the diverse and growing business of telkomtelstra in the region.
Telstra is also a participant in the New Colombo Plan, a foreign policy initiative launched by the Australian government in 2014 which provides study and work opportunities for Australian undergraduates to deepen their understanding of the Indo-Pacific. Telstra also recently announced a Memorandum of Understanding to explore the establishment of a new Indonesian Global Delivery Centre through our joint venture with telkomtelstra. This will leverage the large pool of digital talent available in Indonesia, and support Telstra’s international growth strategy.
You can read David Burns’ full essay, A Connected ASEAN, on the Asia Society website.