Yusof Ishak Institute (ISEAS), the “Nikkei-ISEAS Forum on Digitalizing Trade in South East Asia and ASEAN” brought together luminaries from the region including the Coordinating Ministry for Economic Affairs, Indonesia, the Organisation for Economic Co-operation and Development (OECD), ISEAS, Honey Consulting Ltd. and Huawei to explore initiatives to unlock the potential of digital trade in the region. The need for a connected, inclusive and multilateral digital trade ecosystem was emphasized during the discussion.
The COVID-19 crisis has accelerated the adoption of digital technology. ASEAN predicts the digital economy will contribute one trillion US dollars to regional GDP. Third-party data shows 132% of SEA population has a mobile connection, 463 million people are internet users.
There are many different trade agreements connecting the region. The importance of collaboration on building the digital trade ecosystem was echoed by participants in the forum. Mr. Choi Shing Kwok, Director and CEO, ISEAS – Yusof Ishak Institute, thanked NIKKEI and Huawei for supporting this meeting of minds, saying, “Digital trade is a promising driver of ASEAN’s trade that came to the fore during the COVID-19 pandemic and we expect it to prevail post-pandemic. By reducing trade costs and increasing productivity, digital technologies such as the Internet of Things, Artificial Intelligence, and 3D printing can increase the growth rate of trade in developing countries, including those in the ASEAN region, by 2.5 percentage points per annum or 22.5 percentage points from 2021 to 2030.”
As a policy-maker, Dr. Rudy Salahuddin, Deputy Minister for Digital Economy, Manpower, and SMEs at Coordinating Ministry for Economic Affairs of the Republic of Indonesia, highlighted the crucial role of digital trade in boosting digital economy at large, especially in realizing a resilient economic recovery. He also mentioned the ASEAN faces challenges in ICT infrastructure gap and uneven rate of ICT adoption, to which ICT partners including Huawei can contribute.
“Digital Trade offers golden opportunities for collaboration to support common goals such as regional economic recovery and tackling the climate crisis,” said Craig Burchell, Senior Vice President of Global Trade Affairs, Huawei, who also supported collaboration to unlock the potential of digital trade to benefit SEA and ASEAN. He referred to the Economist Report on the “Costs of Deglobalizing World Trade” as a warning signal on decoupling, and called for greater collaboration and advocated “Technology for All” policy to optimize digital services, such as 5G, Cloud and AI, to enable new trading opportunities for all.
Further developments on the statistical front will be required to develop a meaningful measure of digital trade, said Annabelle Mourougane, Head of the Trade and Productivity Division at OECD, “This will support evidence-based analysis and inform firms’ investment choices and policymaking. All actors, including ICT and technology providers, need to be involved to advance the reflection in a fast-changing environment. Huawei’s Digital Trade White Paper is in this regard a useful contribution to the debate.”
Stephanie Honey, Principal of Honey Consulting Ltd, noted that while SEA enjoys a vibrant digital business community and consumer market, fragmented trade rules within the region and beyond meant that businesses were not able to realise the full potential of the digital economy. It would be essential to have collaboration, flexibility and multi-stakeholder participation in developing new digital trade rules, and to integrate approaches across as many economies as possible. There were a number of innovative regional agreements that could be used as models, including the Digital Economy Partnership among Singapore, New Zealand and Chile.
During the forum, the idea of further nourishing open, inclusive digital trade policies gained recognition from speakers. Dr. Rudy Salahuddin, suggested policy-makers across the region should focus on cross-cutting regulations to enable the digital economy and to ensure fair sharing of the benefits of digital trade, with policies including trade facilitation, data governance, privacy, logistics, and cyber security.
Given the differences in approach between the world’s largest trading blocs on some digital topics, Craig Burchell emphasized “There is a need for greater collaboration on new rules and better governance of the global digital ecosystem, and this work would benefit from an inclusive approach aimed at pursuing co-existence and interoperability rather than convergence.”
A follow-up webinar themed “Facilitating Digital Trade in the Region” will take place on Sept. 14th. After the event, ISEAS will publish a policy brief on digital trade.