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Digital Southeast Asia

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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.

ADF

Australian Defence Force

ACSC

Australian Cyber Security Centre

IEC

the International Electrotechnical Commission

IEEE

Institute of Electrical and Electronics Engineers

IoT

Internet of Things

IoTAA

Internet of Things Alliance Australia

ISO

International Organisation for Standardization

USB

universal serial bus

IIOT

Industrial Internet of Things

ASD

Australian Signals Directorate

CCP

Chinese Communist Party

MERICS

Mercator Institute for China Studies

PRC

Peoples Republic of China

VPN

virtual private network

AI

Artificial Intelligence

SCS

Social Credit System

BRI

One Belt, One Road initiative

CETC

China Electronics Technology Group Corporation

NGO

nongovernment organisation

RFID

radio-frequency identification

CFIUS

Committee on Foreign Investment in the US

SVAIL

Silicon Valley Artificial Intelligence Laboratory

UTS

University of Technology Sydney

ATO

Australian Taxation Office

COAG

Council of Australian Governments

DHS

Department of Human Services

DTA

Digital Transformation Agency

FIS

Face Identification Service

FVS

Face Verification Service

TDIF

Trusted Digital Identity Framework

NUDT

National University of Defense Technology

PLAIEU

PLA Information Engineering University

RFEU

Rocket Force Engineering University

STEM

science, technology, engineering and mathematics

UNSW

University of New South Wales

ZISTI

Zhengzhou Information Science and Technology Institute

AFP

Australian Federal Police

ACIC

Australian Criminal Intelligence Commission

A4P

Action for Peacekeeping

ASEAN

Association of Southeast Asian Nations

C-34

Special Committee on Peacekeeping Operations

CTOAP

Peacekeeping Training Centre (Timor-Leste)

F-FDTL

Timor-Leste Defence Force

MFO

Multinational Force and Observers

MINUSCA

UN Multidimensional Integrated Stabilization Mission in the Central African Republic

MINUSMA

UN Multidimensional Integrated Stabilization Mission in Mali

MONUSCO

UN Stabilization Mission in the Democratic Republic of the Congo

PNGDF

Papua New Guinea Defence Force

PNTL

National Police of Timor-Leste

RAMSI

Regional Assistance Mission to Solomon Islands

RFMF

Republic of Fiji Military Forces

RPNGC

Royal Papua New Guinea Constabulary

RSIPF

Royal Solomon Islands Police Force

UNAMI

UN Assistance Mission for Iraq

UNAMID

UN–African Union Mission in Darfur

UNAMIR

UN Assistance Mission for Rwanda

UNAVEM

UN Angola Verification Mission

UNDOF

UN Disengagement Observer Force

UNIFIL

UN Interim Force in Lebanon

UNIKOM

UN Iraq–Kuwait Observation Mission

UNIOGBIS

UN Integrated Peacebuilding Office for Guinea-Bissau

UNISFA

UN Interim Security Force for Abyei

UNOSOM

UN Operation in Somalia

UNMHA

UN Mission to Support the Hodeidah Agreement

UNMIBH

UN Mission in Bosnia and Herzegovina

UNMIK

UN Interim Administration Mission in Kosovo

UNMIL

UN Mission in Liberia

UNMIS

UN Mission in Sudan

UNMISET

UN Mission of Support to East Timor

UNMISS

UN Mission in South Sudan

UNMIT

UN Integrated Mission in East Timor

UNOTIL

UN Office in East Timor

UNSMIS

UN Supervision Mission in Syria

UNTAC

UN Transitional Authority in Cambodia

UNTAES

UN Transitional Administration for Eastern Slavonia, Baranja and Western Sirmium

UNTAET

UN Transitional Administration in East Timor

UNTSO

UN Truce Supervision Organization