Robust growth, high digital penetration 

The role of AI governance will develop into much more significant as Asia’s digital economy continues to grow. While a tech slowdown has dogged the U.S.—with greater than 91,000 employees laid off in 2022—Asia seems unfazed. In response to a Google, Temasek, and Bain & Company report in October 2022, Southeast Asia’s leading digital economies likely amounted to S$ 200 billion (US$ 149 billion) in 2022, marking a 20% increase from 2021. Removed from this being a short-term growth spurt, the region’s digital economy is forecast to achieve S$ 300 billion (US$ 224 billion) by 2025.

Asia’s ability to defy a digital downturn that has plagued others lies in “big shifts each on the demand side and the provision side,” says Simon Chesterman, senior director of AI governance at AI Singapore. On the demand side, a mix of high web usage, high penetration of digital devices, similar to smartphones, and population-level comfort with technological innovation has seen many Asian individuals and businesses embrace the digital economy at speed, explains Chesterman. 

As of February 2023, 93% of firms in Singapore had adopted some type of digital technology, marking a rise of 19 percentage points from 2018, in response to IMDA. This explains a key point of differentiation with some western economies, says Chesterman. “Once you’ve got fast-developing economies, individuals are more willing to embrace change because they will see the profit,” he says. “Whereas the more comfortable you might be, the more resistant you could be to vary.” 

This willingness to embrace digital technologies has only increased with the worldwide pandemic. Three quarters (76%) of the population in Southeast Asia viewed technology as an enabler somewhat than an impediment in the course of the peak of covid-19, in response to an August 2022 report by VMware—surpassing the worldwide average by 4 percentage points—and 77% say digitalization improves each their work and lifestyles. 

Compounding strong demand within the region has been a gradual supply of innovation from the region’s vast network of enterprises, underpinned by direct support from government. Increased public funding in Hong Kong, for instance, resulted within the creation of three,755 start-ups in 2021, a 12% boost over the previous yr, marking a record high for the Special Administrative Region. The Singapore government has committed S$ 25 billion (US$ 18 billion) to research, innovation, and enterprise from 2021 to 2025, and growing the digital economy was identified as one in all the important thing pillars of that initiative.

Constructing a digital ecosystem

Meanwhile, Singapore’s IMDA, which bills itself because the “architect” of the island’s digital future, has introduced a series of initiatives to entrench the city-state as a world and regional technology hub. It has made strategic investments in each hard and soft infrastructure to speed up digital economic growth within the country. Singapore has achieved nationwide standalone 5G coverage (over 95%) three years ahead of schedule, and IMDA has rolled out digital utilities similar to TradeTrust, which streamlines the exchange of electronic documents. 

IMDA also plays a central role in creating a robust digital talent pipeline and a progressive regulatory framework to foster innovation. By enhancing the credibility and trustworthiness of digital services, it goals to spur growth within the digital economy. In June 2022, for example, it launched a US$ 36.3 million Digital Trust Centre as a part of the country’s R&D efforts focused on enhancing the legitimacy of digital systems.

A advantageous balance

Government intervention often takes a two-pronged approach, Chesterman explains: “Governments should regulate to avoid market failures, since it’s inefficient to expect individual consumers to barter this themselves. The second reason governments regulate, though, is, even when it’s not geared toward efficiency, we have now certain values and principles that we hold to.”