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Florian Hoppe: Digital Integration in ASEAN

Bain Partner Florian Hoppe discusses the importance of small and medium enterprises to the region's economy.


Florian Hoppe: Digital Integration in ASEAN

While Southeast Asia continues to have a bustling economy, the region has yet to reach its full potential in digital. Florian Hoppe, who leads Bain’s Digital practice in Asia-Pacific, discusses the importance of small and medium enterprises to the region's economy, and how boosting digital integration in this sector can unlock a $1 trillion opportunity by 2025.

Read the Report: Advancing Towards ASEAN Digital Integration

Read the transcript below.

FLORIAN HOPPE: Southeast Asia remains one of the most vibrant economies in the world. But it hasn't yet leveraged its full potential on digital. Today the digital economy in ASEAN only contributes 7% of GDP. That contrasts with 16% in China and 35% in the US.

One particular area where we feel ASEAN could leverage its digital potential more is in the space of SMEs. SMEs contribute 50% of ASEAN's GDP and 80% of ASEAN's employment, but today, only 20% of the exports. We conducted a large effort to survey SMEs across all of ASEAN's 10 member states and found that only 16% of SMEs today leverage digital to its full potential, while 75% believe they could benefit significantly from further digital integration.

We shaped a number of recommendations that we believe would be critical for ASEAN to really lift the SME's full potential in digital integration. Most of them are related to trade. Ensuring that nontariff trade barriers are kept at a minimum will be critical for SMEs. But beyond this, and related to this, we need to heavily think around how we not inhibit data flows across ASEAN that support this trade.

SMEs also really struggle with concerns around fraud and cybersecurity related to payments. So ensuring digital ID systems across the region working well and that payment systems are truly seamless and interoperable across the region will further elevate SME's potential. SMEs tell us that another critical area for them would be to really unlock the digital capabilities in their business talent. And this is not around specialist new capabilities in sectors like analytics. This is about their average employees today and truly enabling them to operate in a digital economy. By following these recommendations, we believe ASEAN can truly unlock its digital economy and generate significant additional GDP upsides, to the tune of $1 trillion by 2025.

Related Bain Brief

Advancing Towards ASEAN Digital Integration

Empowering small and medium enterprises to build ASEAN’s digital future.


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