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Economy 23 March 2015

The Internet as a driver of regional integration in Southeast Asia

By Noelle Francesca De GuzmanDirector, Policy and External Engagement

In 2007, the 10 economies of the Association of Southeast Asian Nations (ASEAN) decided to accelerate ASEAN Vision 2020 by five years, publishing a blueprint for an ASEAN Economic Community (AEC), which aims to build the region into a single market and production base in less than 10 years.

The AEC goes into effect this year, and while are still some kinks to iron out,  ASEAN has made progress in areas like cross-border tariff elimination, equally crucial targets such as the free movement of capital and skilled labour are far from being achieved. Perhaps more importantly, Southeast Asia remains a region of stark contrasts. You can see this in basic indicators like as gross domestic product (GDP) per capita, but also in more advanced factors like ICT readiness between countries.

But it’s also a time of promise.

Southeast Asia is one of the most dynamic regions in the world, with a young workforce, a rapidly expanding middle class, and 5.4% projected growth rate per annum until 2018, according to OECD figures. As a block, it already has a combined GDP of $2.5 trillion and intra-regional trade of $1 trillion.

The Internet Society’s Asia-Pacific Bureau is releasing a new study that takes a close look at what the Internet could bring to the people of South East Asia.

The study compares data on Internet connectivity, infrastructure and investment across ASEAN and proposes broad and specific measures by which it can, with the Internet’s help, achieve the objectives of the AEC, not only to move as a single economic entity but to ultimately make a difference in the lives of its 600 million inhabitants.

Here are some of the key findings:

1. Internet penetration

ASEAN, while diverse, can be clustered into three groups by Internet penetration rates:

  • Above 60%: Signapore, Brunei, Malaysia
  • 25%-50%: Thailand, Philippines, Vietnam
  • 1%-20%: Indonesia, Cambodia, Laos, Myanmar

2. Wholesale and Retail Prices

In many economies, particularly in lower-income countries, Internet connectivity costs remain high and unaffordable.

3. Mobile Phones and Wireless Devices

In all ASEAN countries the use of mobile phones has over taken fixed lines, and as the cost of devices such as smartphones and tablets fall, there is a clear trend towards even greater usage of mobile devices to access the Internet.

There are still significant gaps in national network coverage in several ASEAN countries that urgently need to be filled in if the Internet is going to be more universal.

4. Broadband

Wireless broadband has a growing role in helping to enable Internet access for low and middle-income citizens of ASEAN economies.

5. Network capacity

In cases of market failure, governments play an integral role in helping to bridge the gap between supply and pent-up demand until a sustainable virtuous cycle of Internet development has developed.

6. IXPs

The lack of international bandwidth, along with anti-competitive market conditions for IXPs and ISPs, translate to unaffordable Internet access and poor speed in countries that need it most.

The study will be released today in Manila, Philippines – currently the region’s fastest growing economy and site of the fastest growing Internet population in the world. The launch, the first of a series of regional roundtables planned around the report, will have key stakeholders from relevant sectors provide further context to Internet development in ASEAN, and thresh out ways by which the study’s recommendations can be put to concrete action – both in the Philippines as well as the wider region.

Photo: “Kuala Lumpur” © 2012 musimpanas CC BY-ND 2.0

Disclaimer: Viewpoints expressed in this post are those of the author and may or may not reflect official Internet Society positions.

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