Investing in South-East Asia’s Tech Future
An Initiative by
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.
A tenth-grade student, Trần Thị Cẩm Tiên, and her sister, both from a Vietnamese island near southern Cần Thơ province, once excelled in school. Now, they worry about their future as the critical preparation window for university exams approaches. There are many in Vietnam, and across South-East Asia, who face similar anxieties. Without internet connectivity at home, Tiên and her sister have to travel every day, armed with a stool and a portable table, to a hut from where they can catch glimmers of phone and internet reception. Their family cannot afford a computer, and a stable internet connection is not even a matter of affordability but simply accessibility in their community. Their teacher borrows a laptop to conduct classes. The two young women are at risk of falling behind peers and failing in the intense competition to secure a university place.
In South-East Asia, as in many developing regions, education has been the single most important pathway to overcoming poverty, mitigating inequality and increasing social mobility, particularly for women and girls. But the pandemic has disrupted that pathway for many. Some 1.5 billion children in Asia and beyond have been impacted by school closures, and 463 million students, many in developing Asia, have been unable to participate in remote learning due to a lack of internet access at home. The long-ranging implications of the lack of educational access, if not mitigated, will affect society as a whole, and women and girls disproportionately.
Digital transformation is happening on a major scale in South-East Asia: there are some 70 million new internet users since the pandemic began. This Covid-19-induced acceleration of digital adoption could be a remedy to the pandemic-induced economic crisis. But it has also entrenched inequality, making the post-Covid world even more polarised. The adoption of frontier technologies in developed countries reduces the labour-cost competitiveness of today’s less industrialised economies. As developed countries advance on the frontier technologies, developing countries are still at the level of adopting and developing the basic infrastructure. Technology advancement speeds up development, creating a greater gulf of inequality – potentially even an unbridgeable one.
Developing countries now face dual challenges: catching up in adopting frontier communications technologies while continuing to diversify their production bases by mastering existing technologies.
Australia, along with Indo-Pacific partners – including the Quad partners – who are looking to support South-East Asia’s post-pandemic recovery should focus on the region’s technological capacity. That should start with three simple suggestions.
- Address the digital divide in education
In 2019, Australia, along with the United States, the United Kingdom and Japan, was the most attractive tertiary education destination for the best and brightest in South-East Asia. But the pandemic has had a lasting detrimental effect on the university sector. Instead of waiting for flows of international students from South-East Asia to resume, such countries should actively invest in primary and secondary students in the region.
If basic education is considered a fundamental human right, access to the internet should follow if online learning is here to stay. The Asia Foundation, which, in partnership with Google, provides digital literacy training for 25,000 youth and adults in the Philippines, is a good model to develop throughout the region. Big tech companies, especially those that grew exponentially during the pandemic, such as Amazon, Google and Facebook, should contribute to large-scale digital literacy programs and scholarships as a part of their corporate social responsibility.
Through supporting and partnering in programs, including those related to STEM, the Indo-Pacific powers can influence development and bridge the digital literacy gap in the region. This will position them well to play a leading role in the technology wave breaking upon the region.
- Invest in talent and incubating startups
China’s big tech companies have already invested in incubation centres and training programs in South-East Asia; others in the Indo-Pacific need to catch up. Alibaba has had early influence in the region’s developing e-commerce, e-payment and app startups. In 2019, Alibaba established the Netpreneur Training Initiative, designed to facilitate digital transformation in businesses, which has recently concluded its fourth intake. Huawei has been investing big bucks to incubate South-East Asian startups, its latest pledge being US$100 million over three years.
Investment in talent is essential for the tech sector to grow. Indo-Pacific countries should partner with big tech companies to sponsor technology and STEM scholarships. They should consider, along with vaccine diplomacy, donating computers and internet routers, which may have an even more lasting effect. China’s ‘Taobao villages’, in which Alibaba invests in rural communications infrastructure and empowers the local communities through e-commerce and employment of women, is a model worth replicating for many corners of remote South-East Asia.
- Prioritise research and development
In 2019, the World Bank estimated that nearly 56 per cent of all jobs in Cambodia, Indonesia, the Philippines, Thailand and Vietnam were at high risk of being displaced by technology and automation in the next two decades. The pandemic has brought about a massive digital adoption in the region – it has stimulated e-commerce, online delivery and e-services, accelerating the digital economy. It has also sped up the process of job displacement: it has seen a reduction in manufacturing and medium-skill jobs in developing countries, and an increase in services and higher-skill jobs. Indo-Pacific countries should partner with industry in the region to support research and development schemes, which could lead to greater technological innovation and the creation of new jobs. Such investment would also be a step forward in the Quad leaders’ recent commitments towards quality and responsible infrastructure in the region.
Digital adoption is vital, both for post-pandemic economic recovery and for modernising society. South-East Asia needs to catch up in adopting frontier technologies while continuing to diversify production bases by mastering existing technologies. The region cannot afford to miss this breaking ‘tech wave’. South-East Asian governments must invest in innovation and harness their population dividends to foster a competitive and resilient tech future.