Digital platforms and other technology-based tools provide new growth opportunities for businesses of all sizes and industries in Asia and the Pacific. This is a new trend that has the potential to make a significant contribution to the region’s continued recovery from the coronavirus disease (COVID-19) pandemic. This is in accordance with research reported by the Asian Development Bank (ADB).
The Asian Economic Integration Report 2021, ADB’s leading publication, analyzes Asia and the Pacific’s progress in regional cooperation and integration and examines the impact of the pandemic on trade, cross-border investment, financial integration, and people’s movements.
This latest edition features a dedicated chapter on the role and potential of digital technology in inclusive and sustainable development, how digital technology can drive post-pandemic recovery in the region, and ways to accelerate digital transformation while effectively managing its risks.
During the pandemic, countries in Asia and the Pacific are leveraging advances in technology and digitalization to recover and reconnect to the global economy. Technology is helping to forge new global links, which opens up enormous economic opportunities, but also carries with it its own risks and challenges.
It is critically important to implement policies and regulations to manage disruption and maximize the benefits of this growing digital economy, as well as to sustain its benefits through enhanced regional cooperation.
Revenue from business-to-consumer digital platforms reached $3.8 trillion worldwide in 2019, with 48% of it or approximately $1.8 trillion coming from Asia and the Pacific, equivalent to 6% of the region’s gross domestic product . This figure is expected to increase sharply in 2020 as more business transactions—such as ordering motorcycle taxis and taxis, food delivery, and e-commerce—migrate to the digital space amid restrictions to contain the spread of COVID-19.
The acceleration of digital transformation has the potential to increase output, encourage trade and business, and createI jobs globally. According to the report, a 20% increase in the size of the global digital sector could increase global output by an average of $4.3 trillion per year from 2021 to 2025.
By the same token, Asia and the Pacific will receive economic dividends of more than $1.7 trillion per year, or more than $8.6 trillion over the 5 years to 2025. Increased use of digital technology will create approximately 65 million new jobs annually in Asia and the Pacific by 2025, while regional trade is also expected to increase by $1 trillion per year over the next 5 years.
Governments in many Asia Pacific countries can explore and benefit from a growing digital economy through policies and reforms to advance digital infrastructure and connectivity, as well as access to such infrastructure and connectivity.
These steps include encouraging fair competition and improving various processes related to ease of doing business, as well as increasing job security and social protection to align with digital work. The report also emphasizes the need for attention to data privacy and security, taxation, partnerships between public and private institutions, and cooperation at the regional level.
The report also notes that the Asia Pacific region’s trade performance, although badly hit in the first half of 2020, is likely to recover more quickly than expected. The growth in the volume of trade in goods in Asia recorded the worst figure of -10.1% years on year in May but has slowly continued to improve and has been at a positive level since September 2020.
Investment flows globally and into Asia are expected to fall even further in 2020, after previously experiencing a 7.7% decline in foreign direct investment to Asia to $510.5 billion in 2019. However, corporate mergers and acquisitions in Asia have recently lately showing signs of recovery, as several countries reopen and restrictions related to the pandemic begin to be eased.
The cooperation of countries in the Asia Pacific region is able to achieve a prosperous, inclusive, resilient and sustainable Asia and Pacific, and continue its efforts to eradicate extreme poverty.
Pandemic Drives Acceleration of Digital Transformation in Asia Pacific
Until now, various countries, including Indonesia, are still struggling against the Covid-19 pandemic. The health crisis due to the global pandemic indirectly accelerates digital transformation and encourages massive use of digital technology. Today, working from home and distance learning have become the new normal activities undertaken by the community.
The Covid-19 pandemic has driven the acceleration of digital transformation in all levels of society in the world. Since last year, the government and business people have made various innovations to stay afloat and keep people’s activities running.
This year is expected to be a year of revival in various sectors and we expect the GDP of countries in Asia Pacific to increase by around 3% to 8%.