Key Messages: 1. The digital divide is closing but still exists in the region –although those online use the Internet for social and browsing at world-leading levels 2. The digital economy is about more than being online –and there are various indications that business use of digital technology to grow is not at its full potential 3. Government has a key role to play in addressing barriers in connectivity, skills, payments, and logistics –as several of the most important digital economy enablers 4. Cross-cutting digital policy frameworks are underdeveloped –especially in data privacy and protection; and in addressing trust and security deficits

1. 1

2. Digital Economy in SE Asia
Key Enabling Factors
Marcus Bartley Johns
Senior Private Sector Specialist, World Bank Group
2

3. Individuals are using the Internet at world-leading
levels for messaging, social media, and browsing
of consumers get information on
products/services from social media
social media penetration rates
hours of mobile internet/day
78%
30-60%
3.6
Photos: Business Times; Straits Times; Gojek

4. But the digital economy is about more than getting people online
Source: World Bank Enterprise Surveys
Indonesia
Malaysia
PhilippinesThailand
Vietnam
Overall DAI Business
People Government
Basic indicators of firm use of
technology (e.g. having a
website) lag comparators
Only 31% of firms in Southeast
Asia have their own website
• Global average: 44%
• East Asia and the Pacific
average: 36%
• China: 66%
• India: 49%

5. What are some of the key enabling factors for growing the digital economy in
SE Asia?
This is a prerequisite and a physical underpinning to the digital economy and
includes the availability of affordable access to broadband, devices and safe
cyberspace that instils user trust.
Connectivity
Access to safe and secure digital payment services provide the opportunity to
engage in electronic transactions either as consumers or entrepreneurs,
domestically or in overseas markets.
Payments
In a digitally-driven economy, skills needs range from basic digital and data
literacy, to specialized skills to harness the productivity benefits of digital
innovation.
Digital skills
The expansion of the digital economy highlights the importance of a
developed and cost-effective logistics sector given the higher demand for
delivery of goods, especially at low values, both within and across borders.
Logistics
Policy and regulation specific to each of the other pillars affects their
progress. There is also a further set of cross-cutting policies and regulations
that shape the digital economy.
Digital policy
and regulation

6. Connectivity: the digital divide persists, even if mobile broadband usage has
grown – and fixed broadband lags, with affordability and speed of connection
key weaknesses
87%
98%
113%
124%
132%
133%
134%
141%
147%
153%
157%
181%
35%
44%
56%
69%
44%
49%
89%
55%
53%
50%
48%
80%
5%
14%
12%
9%
0%
58%
43%
27%
93%
3%
36%
14%
0% 100% 200%
Laos
Myanmar
Philippines
Brunei
Timor-Leste
Malaysia
Thailand
Southeast…
Singapore
Vietnam
Indonesia
Cambodia
4G 3G Mobile
0%
1%
3%
3%
14%
23%
24%
36%
38%
39%
56%
118%
0% 50% 100% 150%
Myanmar
Timor-Leste
Laos
Cambodia
Indonesia
Southeast Asia
Philippines
Malaysia
Thailand
Vietnam
Brunei
Singapore
Broadband Penetration
Mobile and Mobile Broadband Adoption Fixed Broadband Adoption
Key issues for
governments:
1. Competition
along the
broadband value
chain
2. Infrastructure
sharing
3. Rights of way
Source: ITU 2017 and GSMA 2018

7. Digital skills: policy needs to build long-term foundations while also helping
meet short-term needs
Key issues for
governments:
1. Combining long-
term education
system
development with
short-term
responsiveness
to need
2. Supporting
lifelong learning
3. Coordinating with
the private sector
to define and
meet skills gaps
Advanced skills
(e.g. analytics, coding)
Complementary
skills
(e.g. complex tasks,
processing information)
Basic digital skills
(e.g. computer use)
Foundational skills
(e.g. literacy and numeracy)
Complementary skills
• WEF Human Capital Index, ranks from 24th
for Singapore to 112th for Myanmar
• Indonesia, Cambodia, Lao PDR, Myanmar
in bottom 50% of countries
• Most jobs are medium- or high-skilled,
but gender gap in workforce participation
is generally high across ASEAN
Basic digital skills: a mixed picture
• Online population is tech-savvy…
• But only half the population is online
Foundational skills: high literacy
(>80%)

8. The region needs to catch up in the use of digital payments: a lack of trust
and low consumer awareness driving a continuing preference for cash
payments
% of account holders that access accounts digitally Means of payment for online purchases
0%
10%
20%
30%
40%
50%
60%
Low-income Middle-income East Asia & Pacific
Source: ITU 2017 and GSMA 2018
0% 20% 40% 60% 80% 100%
Vietnam
Malaysia
Thailand
Singapore
China
Global Middle-income
Cash Online
Key issues for governments: Setting appropriate regulatory frameworks;
facilitating e-payment adoption through government payments

9. Logistics: central to e-commerce and trade, and a key sector for digital
transformation
The region is witnessing many innovations in
logistics associated with the digital economy…
… but could be doing more to
strengthen logistics performance
Changing industry
dynamics
Entry of new players, e.g.
retail giants
Growth of 4PL models for
organizing supply chains
New industry pressures
Growth driving small
parcel deliveries &
premium on time
Auto manufacturing place
premium on timeliness VS
labor costs
Digitalization
Data-driven analytics for
supply chain optimization
Cloud logistics
Blockchain
New logistics
technologies
Drones
Automated vehicles
Automated warehousing
Both affected by
– and a building
block – for the
digital economy
• Logistics regularly features as a key
barrier to e-commerce growth
• Overall logistics performance (LPI)
includes some top performers and a
number of fast-improvers
• Cross-border logistics barriers seen
as the weakest area of performance
Key issues for governments: Lowering
barriers to entry in logistics for new
players; addressing cross-border e-
commerce facilitation barriers

10. Digital policy and regulation: key aspects of national and regional policy
frameworks are underdeveloped
Framework for e-
commerce
transactions
largely present
• E-transactions laws in
most countries
Framework for data
privacy and cross-
border data flows
less mature
• Malaysia, Singapore,
Philippines have
comprehensive data protection
laws
• Draft laws in Thailand and
Indonesia
• Several regulations but no
comprehensive law in Vietnam
• No public plan for laws in
Myanmar, Brunei, Cambodia,
Lao PDR
Framework to
promote trust and
security is
underdeveloped
• Consumer protection: trust
deficits a key barrier to
consumer adoption (e.g.
payments, product quality)
• Cybersecurity legal
frameworks, enforcement
capacity, expenditure
relatively limited
1. National policy frameworks: all countries have some kind of digital economy strategy  in
most cases, institutional mechanisms to prioritize implementation and monitor are needed
2. Regional policy frameworks: growing body of high-level regional goals/principles  need to
move to concrete implementation; technical discussions on coherence of regulations

11. Key Messages:
1. The digital divide is closing but still exists in the region – although those
online use the Internet for social and browsing at world-leading levels
2. The digital economy is about more than being online – and there are
various indications that business use of digital technology to grow is not at its
full potential
3. Government has a key role to play in addressing barriers in
connectivity, skills, payments, and logistics – as several of the most
important digital economy enablers
4. Cross-cutting digital policy frameworks are underdeveloped – especially
in data privacy and protection; and in addressing trust and security deficits
11

12. 12