Mr Tan Chong Huat, Chairman of Asia Foundation of Digital Economics

Mr Tan Chong Huat, Chairman of Asia Foundation of Digital Economics

Asia Foundation of Digital Economics will set up a special fund to promote the digital economy

The digital economy refers to a broad range of economic activities that use digitized information and knowledge as key factors of production. The internet, cloud computing, big data, fintech, and other new digital technologies are used to collect, store, analyze, and share information digitally and transform social interactions. The digitization of the economy creates benefits and efficiencies as digital technologies drive innovation and fuel job opportunities and economic growth. The digital economy also permeates all aspects of society, influencing the way people interact and bringing about broad sociological changes.

Asia’s digital transformation is already having a massive impact on the region’s economies. Asia’s e-commerce transactions account for 25% of the business to consumer (B2C) market in the world, led by the People’s Republic of China (PRC), where companies like Alibaba and Tencent have grown at a break-neck pace. The transaction volume of the PRC’s retail e-commerce market has increased from CNY1.32 trillion in 2013 to CNY42.3 trillion in 2021.

Financial technologies have also given rise to new ways of delivering financial services in Asia, particularly in facilitating payment and lending; it promotes financial inclusion in many developing Asian countries. Fintech-based invest in global reached $27.5 billion in 2021 while the proliferation of technologies further improved the efficiency of the payments system and strengthened Asia’s position as the largest payments market in the world. Further, digitized, networked, and intelligent information and communications technologies (ICTs) enable modern economic activities to be more flexible, agile, and smart.

While Asia continues to benefit from this digital transformation, understanding the digital economy remains a challenge because of its complexity. Digital transformation is about not only big data and digital platforms but also how those advanced technologies can be utilized to maximize opportunities for innovation, new business models and processes, and smart products and services. Further, the digital economy is allowing regional businesses to move away from the local and into the global, in keeping with the long-term trends toward market liberalization and reduced trade barriers.

However, given the widening digital skills gap and differences in the level of regulations and infrastructure in Asia, not all countries can take full advantage of the benefits offered by the digital economy. Many times, people in developing Asian countries do not have access to a basic online account, be it due to lack of digital devices, nationally accepted forms of identifications, or socioeconomic barriers. To create more inclusion in the digital economy, there needs to be a deep understanding of the differences in access and adoption within the populations of different countries. New issues related to trust, privacy, and transparency also need to be addressed as Asia’s digital transformation intensifies.

The digital economy has the potential to radically change the social environment and economic activities of Asia. It is already experiencing high growth, rapid innovation, and broad application to other economic sectors. However, despite the vast opportunities presented by the digital economy, Asia has not yet fully realized the potential of harnessing digital technology for sustainable development, due to (among others) poor ICT infrastructure, inadequate skills development, and socioeconomic barriers that prevent much of Asia’s population from engaging in the digital economy.

Asia Foundation of Digital Economics will set up a special fund to achieve the following objectives:
Promote a better understanding on the role of the digital economy in Asia, particularly how digital technologies impact Asian economies and transform both business practices and societies.
Examine how institutions, policies and regulations, and human skills can be transformed to keep up with the quickening pace of digital transformation in Asia.
Exchange views on the current state of the digital economy in Asia, including issues related to digital flows; e-commerce; financial technology; the role of education, skills, and innovation on digital economy; and implications of digital transformation on Asia’s economic landscape.

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