Originally published in Advancing ASEAN in the Digital Age Book, 14 November 2017.

The Opportunity for ASEAN in the Next 50 Years: Building a Community of Digital Innovations

The 50th anniversary of the founding of ASEAN is a globally-significant milestone that deserves congratulations from government and business leaders around the world. Binding together 10 Southeast Asian countries with diverse populations, languages and cultures, ASEAN is an economic community that celebrates open collaboration, showcasing a development model with remarkable symmetries to today’s global digital economy.

Established two years before the birth of the Internet, ASEAN’s development coincided with the third industrial revolution powered by computing, Internet and ICT technologies. ASEAN has become a critical player in the global economy – collectively, ASEAN and China now account for a higher percentage of global trade than the United States. Grouping together ASEAN and neighboring countries such as China and India, the super-region is now the world’s most economically-dynamic growth engine, constantly adding new impetus to the global economy, and more important, is a bulwark of peace and stability.

Today, the fourth industrial revolution based on mobile Internet, big data, cloud computing, artificial intelligence and intelligent manufacturing is in motion. To drive ASEAN’s sustainable growth in the next 50 years, digital innovations are key for member countries to make the quantum leap and seize the opportunities generated by the new industrial revolution, accelerating economic and societal development. Personally, there are three underlying drivers that make me very positive about ASEAN’s future.

The increasing prosperity of ASEAN’s growing middle-class demographic is driving higher-value consumption, and rising consumer demand is a catalyst for digital transformation of industries.

First of all, ASEAN’s strong economic growth has created the foundation for digital innovations to thrive. In recent years, the average annual economic growth rate of ASEAN member countries has hit 5 percent, and growth rates in some emerging countries such as Cambodia, Myanmar and Laos exceed 7 percent. The increasing prosperity of ASEAN’s growing middle-class demographic is driving higher-value consumption, and rising consumer demand is a catalyst for digital transformation of industries. The confluence of demand- and supply-side synergies is creating a virtuous cycle to propel economic development in the region. Across ASEAN, we are seeing tremendous opportunities for new digital innovations and business models including O2O (Online to Offline) and the sharing economy, similar to what we observed in China. For example, Go-Jek, an Indonesian company that received an investment from Tencent, now has more than 250,000 drivers in its network, helping to reduce traffic congestion and shorten delivery times, bringing convenience to consumers in metropolitan centers including Jakarta.

Secondly, the relatively young demographic and the strong need for infrastructure upgrades in ASEAN countries mean there is large scope for digital innovations to flourish and deliver outsized economic benefits. Almost 70 percent of ASEAN’s population of 630 million are under the age of 40, and this not only creates an enormous market for consumption of goods and services today, but also provides a deep talent pool that will drive digital innovations for tomorrow. ASEAN lacks well-developed transportation, communications and retail infrastructure compared to developed countries. However, youths across the region have an inherent passion to embrace new technologies, driving digital innovations that expedite the development of future-ready, next-generation infrastructure. Indeed, China has similar experiences: in the past, personal computers had a lower rate of adoption in China, compared to developed countries. Far from being detrimental to China, this was a factor that drove the country to lead the rest of the world in migrating quickly to mobile Internet. China’s relatively low financial and credit card penetration rate has also, to a certain extent, driven world-leading innovations in mobile payments.

The Southeast Asian region, including ASEAN and China, has become the world’s second largest center of innovations behind only North America. This extended digital innovation community in the East is delivering technologies that seamlessly integrate hardware, software and services, not only enabling ASEAN and China to grasp the opportunities brought about by the new industrial revolution, but also helping to enhance the quality of life of billions of consumers globally. China’s experience in “Internet Plus” and digital economy will help ASEAN countries move into the digital innovation fast-lane in a smoother and easier way. Cloud, mobile payments and other new infrastructure will also help stimulate entrepreneurship and innovation in ASEAN countries. As China is a neighbor to many ASEAN countries, our affinity in lifestyles and culture is a great advantage for us to work together to create digital services such as games, animation, online literature and music. For example, Tencent’s online music application JOOX is now very popular in Southeast Asia.

Looking forward, we hope that ASEAN countries will further deepen their collaboration with China’s technology centers such as the Guangdong-Hong Kong-Macao Greater Bay Area, taking advantage of policies such as the “Belt and Road Initiative” to create new catalysts that help accelerate the growth of our shared community of digital innovations. We are fully confident about the continuing success of ASEAN in the next 50 years.

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About Ma Huateng