Asia driving digital economy transparency and growth

Robust growth, high digital penetration

The role of AI governance will become even more important as Asia’s digital economy continues to grow. While a tech slowdown has plagued the United States — with more than 91,000 workers laid off in 2022 — Asia seems unfazed. According to an October 2022 report by Google, Temasek and Bain & Company, Southeast Asia’s leading digital economies were likely to be worth S$200 billion (US$149 billion) in 2022, an increase 20% from 2021. Far from being a short-term growth spurt, the region’s digital economy is expected to reach S$300 billion (US$224 billion) by 2025.

Asia’s ability to defy a digital downturn that has plagued others lies in “big shifts on both the demand side and the supply side,” says Simon Chesterman, senior director of corporate governance. AI at AI Singapore. On the demand side, a combination of high internet usage, high penetration of digital devices, such as smartphones, and population-level comfort with technological innovation has seen many Asian individuals and businesses adopt the digital economy quickly, says Chesterman.

As of February 2023, 93% of businesses in Singapore had adopted some form of digital technology, representing an increase of 19 percentage points from 2018, according to IMDA. This explains a key point of differentiation with some Western economies, says Chesterman. “When you have rapidly developing economies, people are more willing to embrace change because they can see the benefits,” he says. “While the more comfortable you are, the more resistant you can be to change.”

This drive to embrace digital technologies has only increased with the global pandemic. Three-quarters (76%) of people in Southeast Asia saw technology as an enabler rather than a barrier during the peak of covid-19, according to an August 2022 report from VMware — exceeding the average by four percentage points — and 77% say digitalization improves both their work and their way of life.

Strong demand in the region has been accompanied by a steady influx of innovation from the region’s extensive network of businesses, backed by direct government support. Increased public funding in Hong Kong, for example, led to the creation of 3,755 start-ups in 2021, a 12% increase from the previous year, marking a record for the Special Administrative Region. The Singapore government has committed S$25 billion (US$18 billion) to research, innovation and business from 2021 to 2025, and the growth of the digital economy has been identified as one of the key pillars of this initiative.

Building a digital ecosystem

Meanwhile, Singapore’s IMDA, which bills itself as the ‘architect’ of the island’s digital future, has launched a series of initiatives aimed at making the city-state a global and regional tech hub. . It has made strategic investments in hard and soft infrastructure to accelerate digital economic growth in the country. Singapore achieved nationwide standalone 5G coverage (over 95%) three years ahead of schedule, and IMDA rolled out digital services such as TradeTrust, which streamlines the exchange of electronic documents.

IMDA also plays a pivotal role in creating a strong digital talent pool and a progressive regulatory framework to foster innovation. By enhancing the credibility and reliability of digital products and services, it aims to stimulate the growth of the digital economy. In June 2022, for example, it launched a $36.3 million digital trust center as part of the country’s R&D efforts focused on building the legitimacy of digital systems.

A nice balance

Government intervention often takes a two-pronged approach, says Chesterman: “Governments should regulate to avoid market failures, because it is inefficient to expect individual consumers to negotiate this themselves. The second reason governments regulate, however, is that while it’s not efficiency-driven, we have certain values ​​and principles that we hold to.