The Tsunami of Digital Innovation at The Doorstep of ASEAN
In many ways, digital innovation is already upon us in ASEAN but so far, except for a few areas affected by headline grabbing services like Facebook, AirBnb, Netflix and Uber, our businesses (Singapore excluded) have been largely spared from the huge disruptions across many sectors experienced by developed economies. While we have seen the proliferation and some significant successes of tech start-ups in ASEAN (e.g., Lazada, Grab and Zalora), their overall impact remains minor at present.
However, this may be about to change. The virtual earthquake has occurred offshore and the digital tsunami is on its way to disrupt our businesses. We must look into innovating and disrupting our own businesses to compete in this new digital world of doing business. Amazon and Alibaba are halfway inside the front door already and there are hundreds if not thousands more behind them spanning all types of businesses.
Some may reason out that ASEAN has time to change to adapt to the digital tsunami. There are conditions here that hamper such from taking full effect including low broadband accessibility, low credit card penetration, inefficient logistics, and the lack of credit facilities. On the other hand, Alibaba has successfully demonstrated in China how it resolved all of these problems within a short period of time.
What is different in this digital age is that physical borders are becoming less and less significant.
What is different in this digital age is that physical borders are becoming less and less significant. For example, services are being provided to local consumers and businesses by offshore companies that most haven’t even heard about. Competition in many sectors is becoming increasingly global. Who would have thought that “taxi” services or retail services would be provided by global companies in our domestic markets?
The pace of innovation and disruption is not abating but instead it is speeding up. Over the next decade with the advances in artificial intelligence, blockchain, cloud services, image recognition, battery technologies, driverless vehicles, and additive manufacturing, expect to see major disruptions in the retail, banking, energy, manufacturing, transportation, and healthcare sectors among others.
What can companies do? First, we must embrace digital innovation and live and breathe it ourselves. We need to understand and learn very quickly what this digital world is all about. We need to upgrade our people and their skills. We need to recreate our organizations to be more flexible and agile so that changes can happen in months instead of years. We must digitize data to the fullest extent to support an agile organization.
Governments have key roles to play as well. National laws have to be upgraded to enable local businesses to compete and thrive in an increasingly digital economy. There are many examples such as taxation matters of local companies hampered by laws that do not apply to foreign-based players. In crafting new laws, such as those on data privacy, local legislators must take extreme care that the new laws and regulations do not unduly burden the local companies from competing with their foreign counterparts in the domestic and international markets.
And this is where ASEAN plays a significant role. A coordinated policy and legal environment (e.g. tax fairness between local and offshore entities, easier cross border movement of goods and services within ASEAN, common data privacy and data security rules) across all ASEAN states will have a huge positive impact on helping ASEAN businesses achieve a successful transition to a digital economy. It is timely that Singapore – the digital technology leader in our region – [the] ASEAN Chair in 2018. As Chair, Singapore [is pushing] for the digital economy agenda as one of the pillars of its chairmanship.
About Teresita Sy-Coson
Teresita Sy-Coson is the vice chairperson of SM Investments Corporation (SMIC), a Philippine company with interests in retail, banking and property development. She is the chairperson of BDO Unibank (BDO), the Philippines’ leading bank, to date. Her expertise has helped transform the Group’s retail business. She is also an advisor to the board of SM Prime Holdings, one of the largest integrated property developers in the Philippines that is into mall, residential and commercial, and leisure and tourism development. She serves as the vice chairperson of SM Foundation, Inc. (SMFI), which takes the lead in effecting a community impact template that improves the quality of life of its host communities and promotes initiatives to enhance the sustainability of the environment. She is currently the Philippine representative to the ASEAN Business Advisory Council.