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Getting a piece of Southeast Asia’s booming digital economy

The last two decades have seen the rise of the digital platform across the globe. Southeast Asia (SEA), in particular, has become a hotbed for online-to-offline (O2O) platform innovation. These revolutionary new services—from e-commerce to ride-hailing to food delivery—leverage both physical and digital infrastructure and have become a way of life for urban dwellers.

Not only do these platforms increase accessibility and lower transaction costs for consumers, but their fast hold on the consumer market is also having a significant impact on labour and employment, competition, consumer protection, and privacy along with many other facets of the new economic landscape.

Key benefits and opportunities of Platforms
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The Tech for Good Institute, a non-profit think tank that has been formed to foster common ground for stakeholders, surveys the impact that the booming digital economy is having on society and explores how the existing and emerging tech space can be leveraged to achieve greater social impact in the SEA region.

In a panel on the platform economy’s role in inclusive growth, conducted at the Tech for Good Institute’s launch ceremony, Timothy Murphy, Chief Administrative Officer at Mastercard, commented that the Asian model for digital platforms has achieved a much greater scale and reach than Western digital platforms, with innovations such as QR payments and the superapp approach now being adopted in the West.

Below is a summary of the key takeaways from the panel at the Tech for Good Institute’s launch event, which further explores the conclusions in the recently published report on Southeast Asia’s digital platform economy.

Creating Positive Impact with Technology

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Seven in ten of the world’s most valuable brands are digital platforms, transforming a range of industries. In addition to providing excellent value and an outstanding experience for users, the largest home-grown platforms in Southeast Asia such as Grab, GoTo, and Sea are seizing new growth opportunities.

 

SEA Platform Economy

Riding the wave of a fast-growing economic region with rapidly increasing access to the internet and a consumer base with expanding purchasing power, these companies have invested in both digital and physical infrastructure to encourage the adoption of their O2O platforms. More significantly, companies have invested in human capital in the region to increase their capacities and to improve equity for all.

For example, Bukalapak, an Indonesian e-commerce platform, recruited traditional Indonesian kiosks (known locally as warungs) as network agents to facilitate remittance, bill payments, and purchases. This effort supercharged the access of digital services within the informal channels of trade that are common to the region.

 

Quote by professor Sumit

As digital platforms in the region continue to seize opportunities to develop the ecosystems they are a part of and improve the lives of millions of people, it is important to acknowledge their positive impact. One result of all this is an exciting and purpose-driven environment for new entrants, including those from overseas, to contribute to growth in the region.

Intentional Planning for Social Impact

We are at an inflection point in the O2O platform journey as we consider how digital platforms will continue to shape the future of life in Asia. Amplified by the COVID-19 pandemic, the urgency of addressing the digital divide grows along with the influence that digital platforms now hold over people’s daily lives. Understanding and mitigating digital inequality are of utmost importance to ensure vulnerable populations are not left behind.

 

Quote by Timothy

It is promising that, regardless of the challenges, business and government leaders have committed to driving inclusive and sustainable growth. This effort requires the involvement of policymakers, academics, and non-profits, alongside enterprises in an array of areas. One suggestion arising from the panel was to update and harmonise regional trade regime rules to better address trade in the service sector, in which digital platforms mainly operate.

Fortunately, the effort towards sustainable and inclusive growth can be guided by insights and data-driven frameworks. The TechforGood Institute has conducted an in-depth analysis on the SEA-6 to produce the New Economy Progress Index, which measures the development of the key areas of the platform economy— digital infrastructure, physical infrastructure, consumers and Micro-Small-Medium Enterprises (MSMEs). This framework provides a reference for understanding where the most pressing issues lie so that stakeholders can work together to implement measures for change.

 

New Economy Progress Index

Transforming Industries, Transforming Lives

It’s clear that the platform economy is here to stay and that it is transforming industries, labour practices, and lives across the region. While the benefits to the economy are clear, players also remain committed to making a sustainable impact on the region and modelling a more inclusive form of growth, making SEA a unique destination of opportunity.

Singapore is home to an emerging ecosystem of Tech for Good players that are leveraging the digital and physical infrastructure here, as well as our connectivity to the rest of SEA, to build for the region and ensure that the future is one that leaves no one behind. It really is a place for who’s next.

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