Digital Southeast Asia
Opportunities for Australia–India cooperation to support the region in the post-Covid-19 context
What’s the problem?
Covid-19 and the subsequent public-health responses have disrupted social and economic lives across the globe. Fiscal support measures may have alleviated the initial fallout in some places, but one of the bigger shocks has been the accelerated adoption and integration of and reliance on digital technologies. While this is a positive contribution towards digital development, it has also accentuated the already large gap between those able to adopt digital technologies and those without sufficient means to do so.
For the many fragile democracies in the Indo-Pacific, this is creating conditions that could undermine democratic resilience. A central question for these democratic governments is how to drive accelerating digital transformation and ICT-enabled growth towards poverty reduction, sustainable economic growth and building social cohesion while maintaining resilience to cybersecurity threats.
Southeast Asians are exceptional consumers of online goods and services. The region is also home to a growing number of technology start-ups, and governments are pushing this ‘drive for digital’ through ambitious national strategies. Despite those positives, digital growth within the region and within individual economies is uneven.
Human capital is a central driver of poverty reduction, sustainable growth and social cohesion,1 but, in Southeast Asia, digital literacy and skills are lagging behind usage and infrastructure. The adoption of technology is progressing, but problems of affordability, connectivity and coverage remain. There’s a limit to the growth trajectory due to weak demand from micro, small and medium-sized enterprises (MSMEs) that don’t have the means, skills or opportunities to adopt or integrate digital technologies.
This is particularly affecting the livelihoods of non-metropolitan communities, women, MSMEs and those whose jobs may be affected by the introduction of technology and automation.
The digital divide and rising inequality are now the everyday bromides of earnest policymakers. But the phrases have become policy cliches, stripped of meaning, with no sense of the underlying dynamics at play, making the prospects for any viable solutions slim. The Covid-19 pandemic has offered a harsh look at the role of the digital divide in driving inequality and the unedifying future that lies ahead as major technological advances compound and permanently entrench inequality.
— Huong Le Thu, ‘Investing in Southeast Asia’s tech future’, in The Sydney Dialogue: playbook, 20212
Since the outbreak of Covid-19 in early 2020, digital adoption has further accelerated and driven greater demand for online services in retail, education and health. However, the pandemic has also contributed to the further widening of pre-existing digital divides. Women have been disproportionately affected, as many are employed in the informal and ‘gig economy’ sectors, which were hit hard by lockdowns. The pandemic has also further exposed more users to cybersecurity and online safety risks in an environment in which practices of cyber hygiene are generally poor.
As a result, the region is now faced with a dual transformation challenge: how can we stimulate further digital development while ensuring that future growth is inclusive?
What’s the solution?
This report recommends Australia and India leverage their bilateral partnership in cyber and critical technologies to support inclusive digital development in Southeast Asia, and strengthen the foundations of Southeast Asia’s digital economy.
The governments of Australia and India should take a more coordinated approach to their digital engagements with Southeast Asian countries, and further consider establishing a Joint Working Group on Digital Engagement to bring together like-minded partners.
Given that India and Australia face digital development challenges that are similar to Southeast Asia, an Australia-India spearheaded cooperation should be approached through a troika-type collaboration with Southeast Asian partners. This collaboration should look to address the region’s digital skills shortage, improve cyber resilience and contribute to digital public infrastructure. This requires a multi-stakeholder effort involving governments, the private sector, civil society and the technical community.
A priority area for additional support are efforts that enhance the digital knowledge and digital business skills of the Southeast Asian workforce. International initiatives should seek to augment or connect with existing local digital skilling programs. Specific areas of focus for Australia and India could include support to female digital entrepreneurship, and improvement of access to online courses and training to upskill MSMEs.
To improve cyber resilience operationally, Australia and India could strengthen and deepen relationships with Southeast Asia’s national cybersecurity agencies and national Computer Emergency Response Teams by exploring ways to share collective resources, expertise and experiences more effectively and more widely across each country’s economic sectors and non-metro areas.
At a strategic level, through the Australia-India Joint Working Group on Cyber Security Cooperation, the two countries could consider the possibility of sharing strategic assessments of the regional cyber threat landscape with Southeast Asian partners.
Finally, India and Australia should explore regional marketplaces for digital public goods and infrastructure which could offer further business incentives to digital, technology and cybersecurity communities in Australia, India and Southeast Asia.
Introduction
Southeast Asia is home to one of the world’s fastest growing markets of internet users. Pre-pandemic, there was enormous optimism about the growth of Southeast Asia’s digital economy. Estimates from 2019 showed a trajectory that would triple its US$100 billion internet economy by 2025.3 During the first year of the Covid-19 pandemic, the region’s internet economy gained more traction, and even achieved double-figure growth in Vietnam and Indonesia.4
Today, the region continues to struggle with new and more contagious variants of the virus, as the majority of the region’s population remains unvaccinated.5 Economic hardship, overburdened health systems and, in some cases, repressive public-order responses are posing challenges to political stability and societal resilience. As a consequence, when combined with the effects of climate change, there’s uncertainty about the long-term economic and social effects and the shape and speed of economic recovery.
Digital technologies6 are playing an integral part not just for contact tracing or getting public-health messages out into the community but also as a driving force for post-pandemic economic recovery. For years, governments in Southeast Asia have been pursuing ambitious digital transformation agendas that have laid a foundation for their emerging digital economies. In a post-Covid world, international partnerships of governments, industry and civil society organisations, such as between India, Australia and Southeast Asia, could form a key element in the region’s digital economic recovery and help set digital standards and norms.
Focusing on Indonesia, Malaysia, the Philippines, Thailand and Vietnam, which are some of the region’s largest and emerging technology-enabled economies, this report explores what efforts can be made by an Australia–India collaboration to support Southeast Asia’s digital capacity and resilience in the aftermath of the Covid-19 crisis. Collaboration between Australia and India in the area of cyber and critical technology is an emerging partnership that brings opportunities for strengthening both countries’ digital cooperation with Southeast Asian partners.
What are the digital economy, digital transformation and Industry 4.0?
There’s no agreed definition or framework that defines the digital economy. Different frameworks highlight, to varying degrees, macro policy foundations (such as competition, trade, governance), digital enablers (infrastructure, platform policies, skills, finance) and sectoral transformation (such as ICT applications in key economic sectors such as public services).7
Digital economy frameworks rarely consider the whole digital ecosystem and its interaction with the rest of the economy. The Asian Development Bank, for instance, has introduced the term ‘core digital economy’,8 which it defines as the contribution to GDP of any economic transaction involving both digital products and digital industries. In this report, we also consider wider aspects within the digital economy, including gender and inclusion.
Digital transformation refers to the process of moving from analogue to digital processes, integrating technology into working processes and, in its most advanced stages, doing so under the guidance of a strategy.
Industry 4.0 or the ‘fourth industrial revolution’ (4IR) refers to the application in industry of the convergence of physical and digital technologies. This can include artificial intelligence, machine learning, ‘internet of things’ (IoT) devices, advanced robotics, augmented reality, cloud computing, big data and analytics, and 3D printing.
The first section of the report reviews the enablers and attendant challenges of Southeast Asia’s digital economy, such as the supply of infrastructure, demand for digital services and general uptake of technology by individuals and businesses. In addition, it looks at intersecting policy issues that enable, support and sustain digital transformation, such as inclusivity; skills and talent; online security and safety; and regulations and governance. It then touches upon the region’s adoption of advanced technologies such as 5G and artificial intelligence (AI) that could equally be enablers of the region’s next leap in digital transformation.
The second section offers an overview of the pandemic’s effects on Southeast Asia’s digital landscape. Although there’s been continued investment into digital infrastructure, it shows there are fundamental weaknesses in the rate of digital growth within MSMEs.
The third section looks at a troika type of collaboration between India, Southeast Asia and Australia. As the digital development challenges faced by Southeast Asia are equally relevant to Australia and India, we provide a selection of relevant skills, expertise and flagship programs that India and Australia could contribute to the region in a common effort to adapt to a digital future that’s free, open and secure.
Finally, this report concludes with a set of policy recommendations for Australia and India on areas in which they could extend meaningful and targeted support to Southeast Asia’s digital economic recovery.
Download Report
This report continues with chapters on;
- The state of digital Southeast Asia in 2021
- The impact of Covid-19 on Southeast Asia's digital landscape
- India-Australia and cyber and technology cooperation in Southeast Asia
- Conclusion
- Recommendations
Readers are warmly encouraged to download the full report.
10 Feb 2022
Author
Acknowledgements
ASPI and ORF would thank all of those who peer reviewed drafts of this report, including Arindrajit Basu and Akshay Mathur, for their valuable feedback. We would also like to acknowledge the contributions of Baani Grewal, Samyak Leekha, Antara Vats, Ariel Bogle, Karly Winkler and Albert Zhang to this report. We are also grateful to the individuals consulted across government, industry and academia, including participants at the Southeast Asia Internet Governance Forum and the ASPI-ORF-hosted Track 1.5 Dialogue on Digital Southeast Asia that helped to shape and focus this report.
This report was commissioned by the Australian Department of Foreign Affairs and Trade (DFAT). The work of ASPI ICPC wouldn’t be possible without the support of our partners and sponsors across governments, industry and civil society.
A draft of this report was shared with DFAT and valuable comments were incorporated, but, as with all our research, ASPI remains fully independent in the editorial judgements and policy recommendations made by our authors.
About the Observer Research Foundation
ORF seeks to lead and aid policy thinking towards building a strong and prosperous India in a fair and equitable world. It sees India as a country poised to play a leading role in the knowledge age—a role in which it shall be increasingly called upon to proactively ideate in order to shape global conversations, even as India sets course along its own trajectory of long-term sustainable growth. ORF helps discover and inform India’s choices. It carries Indian voices and ideas to forums shaping global debates. It provides non-partisan, independent, well-researched analyses and inputs to diverse decision-makers in governments, business communities and academia and to civil society around the world. Our mandate is to conduct in-depth research, provide inclusive platforms and invest in tomorrow’s thought leaders today. ORF’s website is at https://www.orfonline.org/.
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The Australian Strategic Policy Institute was formed in 2001 as an independent, non‑partisan think tank. Its core aim is to provide the Australian Government with fresh ideas on Australia’s defence, security and strategic policy choices. ASPI is responsible for informing the public on a range of strategic issues, generating new thinking for government and harnessing strategic thinking internationally. ASPI’s sources of funding are identified in our annual report, online at www.aspi.org.au and in the acknowledgements section of individual publications. ASPI remains independent in the content of the research and in all editorial judgements.
ASPI International Cyber Policy Centre
ASPI’s International Cyber Policy Centre (ICPC) is a leading voice in global debates on cyber, emerging and critical technologies, issues related to information and foreign interference and focuses on the impact these issues have on broader strategic policy. The centre has a growing mixture of expertise and skills with teams of researchers who concentrate on policy, technical analysis, information operations and disinformation, critical and emerging technologies, cyber capacity building, satellite analysis, surveillance and China-related issues.
The ICPC informs public debate in the Indo-Pacific region and supports public policy development by producing original, empirical, data-driven research. The ICPC enriches regional debates by collaborating with research institutes from around the world and by bringing leading global experts to Australia, including through fellowships. To develop capability in Australia and across the Indo-Pacific region, the ICPC has a capacity building team that conducts workshops, training programs and large-scale exercises for the public and private sectors.
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First published February 2022. ISSN 2209-9689 (online). ISSN 2209-9670 (print). Cover image: Wes Mountain.
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