For all its potential, Southeast Asia’s economic future largely remains unclear given the different stages at which its members find themselves. Its story is characterized by the positive elements of any growth narrative, and these factors will not easily be shaken. But, even as it begins to weather (though not entirely overcome) long-standing and well-publicized impediments to unlocking further possibilities, it is now being confronted with new and defining challenges that are as varied as they are far-reaching.
Some of these problems include: global markets in flux looking to Asia to serve as the world’s growth engine; economic repositioning in China that will have inevitable impacts on its neighbours; an energy shortfall that sees around one-fifth of Southeast Asia’s population go without access to electricity; and new administrations, older governments under pressure and other geopolitical concerns creating doubts about the security of growth and relations between countries. These matters are underscored by the ongoing difficulty of effectively implementing regional integration initiatives such as the ASEAN Economic Community.
However, the issues of today pale in comparison to those that will prevail tomorrow if high-level action is not taken soon. The Fourth Industrial Revolution is a new beast, incorporating technologies such as robotics and concepts like the Internet of Things to rewrite not just how business is done, but also how governments deliver basic services to people.
Given this context, it is clear why technology was the primary focus of this year’s WEF on ASEAN event in Malaysia. Digital transformation is at least to some extent being experienced the world over, but Southeast Asia – with multifaceted economies that combine the best and worst of both emerging and developed markets – will particularly feel it. The risk of falling far behind the new world order, at a time when the region can ill afford to do so, must be curbed if ASEAN hopes to become an economic power in its own right. Of particular concern is that, with the Association pushing for ever stronger ties and integration, the region will only be as strong as its weakest link.
The key to tackling this is to fully understand just how damaging it will become if left unaddressed. The strongest impacts may be on the future of jobs and, with that in mind, how the region’s education system will need to adapt to a more digital world and increasingly digitized workplaces. Digital literacy among Southeast Asia’s workforce has become a key concern for governments and business alike, perhaps highlighting a need for significant public-private partnership to reskill the region’s existing talent pool.
There is now a clear impetus for legislators and policymakers to determine how digital skills and understanding can be infused into school curriculums from the earliest ages – a particularly important consideration given the nature of ASEAN’s young and growing population (approximately 60% of its people are below the age of 30).
However, it is not only a matter of mastering digital intricacies; in fact, as industry continues to move towards greater automation, it will need highly-skilled talent to do more than man machines. Instead, it will require people that can collaborate effectively and work with technology, rather than just operate it. Initiatives promoting the interdisciplinary and cohesive approach of STEM education (science, technology, engineering and mathematics), rather than teaching these areas in isolation, become more important in this context.
Another technology-focused concern for the region is how increasing mechanization is diminishing the size of the job market by cutting away more traditional, but soon futile, roles. Aside from disrupting business models for companies operating in this part of the world, this development also impacts the workings of other sectors of the economy with particular concerns around prevalent unemployment and diminished disposable income / domestic consumption.
These factors accelerate the importance of moving away from labour-intensive, export-based manufacturing as the primary driver of economic growth and empowerment of the population. While this may be how a significant part of Southeast Asia’s growth story began, for it to continue ASEAN must diversify its means.
All of this is happening at time when the region continues to focus on increasing the potential for borderless business and movement – that is, one regional market styled in part after the European Union. While ASEAN ‘only’ consists of 10 nations, its 625 million people are not dwarfed by the combined European population, illustrating the enormity of the challenge – though one that is not insurmountable and, from all reports, is worth pursuing.
It is no surprise, then, that strengthening regional cooperation was a major message underlining almost all of what was discussed at WEF in Kuala Lumpur. ASEAN is not just a collection of countries at different stages of development linked by their geography, but is also home to some of the world’s most exciting markets. Almost in unison, these countries are realizing the need to urbanize, industrialize, modernize through technology and, in some cases, liberalize.
The diverse political and cultural backgrounds that make up ASEAN also ensure a unique sense of excitement for the venture, with hopes for vibrant conversation and dynamic problem solving based on varying perspectives. And, putting aside for a moment its potential as an exporter and manufacturer of goods, it is worth noting that ASEAN’s number of consumer households will double by 2025 to significantly increase the region’s domestic base – a sizable market to which products, services and technologies can be sold for decades to come.
The ASEAN Economic Community was mooted for several years and, despite being signed off in 2015, has yet to be truly rolled out in any comprehensive way (at the event, Malaysian Prime Minister Najib Razak called for ASEAN to quicken its pace toward integration while Cambodian Prime Minister Hun Sen questioned the true commitment of members to build an inclusive economic region). This will remain a process; Southeast Asia, like Rome, was not built in a day, and ASEAN has taken a slower and more cautious approach to opening up its borders. However, concerns remain that rivalry for regional preeminence may come to the fore, not unlike how other pan-regional coalitions have played out, and this will need to be carefully managed when the time comes.
All of these factors, from technology to inclusive growth to stronger integration, will significantly impact how companies tell their own stories. The new Southeast Asian context must be taken into account when discussing products and services, and more importantly these solutions need to be effectively positioned as a response – that is, problem solvers or enablers – to the opportunity-rich issues confronting the region.
How can a product help bring different cultures together? How does a software-based service better leverage a new technology and change the game in a specific market? How does a company’s evolving production approach increase the new-age skillsets of its employees? Are efforts being taken to bring the rural poor back into the mainstream community? These are the kinds of questions we must now ask to better position content and increase its relevance and credibility.
As ever, Southeast Asia remains a region of great possibilities, but one with doubts that still need to be addressed – something that events such as WEF on ASEAN go some way to doing. Within the context of the Fourth Industrial Revolution, for example, how will old ‘evils’ like corruption and lack of regulation play out? Furthermore, how will older dominant industries built around natural resources evolve with the times? Or, in the case of underestimating the impact of drought (which threatens agricultural production), how can swifter action be encouraged? The small farmers currently dealing with destroyed crops don’t have time to wait, and nor does ASEAN.
It seems this latest regional event, presided over by leaders of both government and business and furthering the dialogue on what this exciting part of the world needs to do to fulfill its promise, has generated more new questions than answers to old ones. Of course, we wouldn’t have it any other way: potential should not be bound by known limitations. ASEAN’s true worth remains undiscovered.
– Petar Miljkovic
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May 9, 2018