Growing ASEAN through E commerce

E commerce: ASEAN’s growth engine

E commerce spending in ASEAN is predicted to rise by 32% to almost US$90 billion in 2025, according to Credit Suisse, with Indonesia’s spending to grow most rapidly in the region at US$46 billion by 2025. This growth is attributed to many factors, such as the growth of young consumer market and middle class in ASEAN and the increase in internet users. For ASEAN-6 countries (Indonesia, Malaysia, Thailand, Singapore, Vietnam, and the Philippines) itself, internet users are predicted to expand by 14% by 2020. As such, it’s no surprise why governments are placing high importance on building ecommerce in Asia.

What is E commerce?

E commerce is any commercial transaction that takes place over the Internet. For instance, you can purchase a pair of shoes from an online store by paying through a secure online payment channel. This saves you time and effort from going to a brick-and-mortar store to look and compare shoes and buy them. Well-known online retailers include Amazon, eBay, and Alibaba.

What are ASEAN countries doing?

To reinforce ASEAN’s part in e commerce growth, there are five policy-related things that should be done. These are:

  1. Build a suitable environment for ecommerce growth in Asia
  2. Improve connectivity through investments in infrastructure and logistics
  3. Innovate financial payment methods, such as e-payment and Internet financing
  4. Develop mobile apps and supporting infrastructure of smartphones
  5. Set policies that stimulate globalization and facilitate cross-border trade

ASEAN itself is currently negotiating and finalizing its e commerce agreement, which is to be completed by the end of this year. This agreement is expected to stimulate trade and online transactions between countries to drive regional economic growth. 

The development of ASEAN Digital Integration Framework will also help member states evaluate their e commerce infrastructure and pinpoint areas in need of improvement. 

Future challenges for Ecommerce in Asia

Before countries can start building their policies, there are four factors that may impede their ecommerce growth in Asia, which are:

  1. Connectivity - includes ease of payment, information exchange, and product and service delivery
  2. Services - need services that are reliable, fast, and transparent
  3. Regulations - require proper international trade rules to ensure security and trust
  4. Labor - need better education system and free movement of skilled labor to effectively respond to e commerce industry changes
The US-China trade war are causing companies to move their production sites to Southeast Asia, allowing ASEAN to see a higher inflow of foreign direct investment.
Vietnam aims to reduce rice export to Asia from 60% to 50% of total rice exports and increase its rice exports to Africa (25%) and the Americas (10%) by 2030.
The 2018-19 National Planning Bill projects the telecom industry in Myanmar to grow by 15 percent in the next fiscal year (October 1, '18 to September 30, '19).
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