The IMF expects the Asia-Pacific region to contribute about 70% of global growth this year, where digitalisation and innovation will be key to boosting productivity and thus overall economic growth. The outlook for Southeast Asia in 2024 is bright as inflation trends down and GDP expectations are projected to be similar or slightly better than 2023. HSBC recently predicted that collective growth for the “ASEAN-6” major economies will hit 4.6% in 2024, up from 4% this year.
This region also boasts some of the world’s fastest growing Gen-Z populations – primed to wield the greatest spending power and influence as this group will make up a quarter of the population of the APAC region by 2025.
Two key technology themes are emerging from this dynamic region: the pace of digital and hyperconnectivity. Southeast Asia is on a digital transformation streak as e-commerce continues to surge and is expected to see continued double-digit annual growth between 15% to 25% for the next five years, according to McKinsey. Complementing that, PwC anticipates that Southeast Asia is “supercharged” to power a shift toward digital payments and other innovations in digital services, thanks to an acceleration in digital transformation.
This digital-first era is being defined by a landscape of distributed workforces, decentralised applications, external ecosystems, and a surge in both machine-to-machine and human-to-machine digital interactions. This is all fueling the need to be hyperconnected on multiple levels. Leading the way is Gen Z, digital natives who are wading into Web3 and the metaverse, further deepening the trend towards a hyperconnected society. That said, much remains to be done to connect unconnected communities in rural Southeast Asia.
As we progress through the first quarter of 2024, we identify the following five key trends shaping the region’s digital economy over the next 12 months.
- Accelerated adoption of AI
AI has already significantly enhanced and disrupted multiple business functions across industries. AI can help organisations deliver better customer experiences, augment predictive capabilities, launch new products and services more quickly, and free up employees’ time to allow them to focus on higher-value work by automating certain tasks. Its impact is only going to accelerate.
Generative AI – one of the three main pillars of AI – has gained recent eminence, including in areas of product innovation, sales and customer experience, and supply chain logistics.
While generative AI will dramatically change how businesses interface with technology, impacting machine-to-machine and human-to-machine interactions, implementing it won’t be easy. Generative AI applications will require the transfer of massive amounts of training data, lower latency, and higher real-time responsiveness, agile data storage and processing capabilities, and robust cybersecurity measures, among others.
Businesses need to accelerate transformation of legacy tech infrastructures to make sure they have a well-designed data architecture, sufficient computing power, and robust connectivity to nurture novel applications and business models to improve efficiency and profitability.
At the same time, it is also important to consider the ethics and responsible application of AI, taking into account its broader human, societal, and environmental impacts. With AI likely to disrupt many jobs in the years ahead, organisations should also adopt a holistic approach to upskill their employees and help them embrace the shift.
- Hyperconnectivity will give rise to digital fabrics
In today’s hyperconnected landscape, the hunger for data and the need to connect and access data are insatiable. Across Telstra International’s Asia-Pacific subsea cable network, data demand is growing between 30% and 40% annually.
The effective use of hyperconnected value chains, both internally and externally, can offer competitive benefits. Such interconnectedness, referred to as a hyperconnected digital fabric, may enhance the transfer of data within an organisation and across its broader network. This integration can also support more streamlined technology and digital service usage, potentially leading to direct business benefits.
A study conducted by Telstra International and IDC indicates that digital fabrics play a foundational role in value creation within the current digital-first context. It notes that organisations that share data, applications, or operations with their ecosystem partners through JVs will increase profits by 5%.
- Satellite to bridge Southeast Asia’s digital divide
Satellite capability and capacity will continue to grow, with global data growth on satellites forecast to grow at a CAGR of 28% from 2020 to 2030.
In Southeast Asia, where there remains a sizable number of communities in remote or rural areas lacking internet access, low-Earth-orbit (LEO) satellite connectivity can provide voice and fixed broadband services.
One of the benefits of LEO satellites is their proximity to Earth compared to geostationary satellites, as part of a “constellation.” This allows them to send and receive signals much faster. Besides offering high data throughput, the proximity of these satellites reduces latency, making them a viable option for services requiring low latency, such as voice and video calls.
- Digital trust and new cybersecurity models for the digital business era
As the hyperconnected digital business era evolves, digital trust strategies will be crucial in evolving end-to-end security postures, processes, and controls. These strategies are essential to protect organisational and customer assets across myriad platforms both within and outside corporate boundaries.
This redefinition of trust extends across digital infrastructure, data, platforms, applications, and processes, including identity, privacy, and security. With connectivity enabling real-time seamless connections, individuals and businesses require assurances that data is being exchanged across trusted networks and platforms.
Cybercrime is now the third largest economy, behind the United States and China. The APAC region saw the highest year-over-year increase in weekly cyberattacks during the first quarter of 2023. With the region’s rapid digital transformation and the complex cybersecurity landscape, it is poised for pioneering development in cybersecurity models and frameworks.
The threat landscape demands a coordinated response across industry and government. Gartner suggests that CEOs empower a single executive, such as the CISO, to tackle the challenge of malinformation arising from generative AI threats. By 2027, 45% of CISOs’ responsibilities are expected to expand beyond cybersecurity, due to regulatory pressure and attack surface expansion. - Responsible business practices
With organisations increasingly making business and procurement decisions with sustainability in mind, having a responsible business strategy will address these concerns and provide an edge over competitors. This also speaks to the importance placed on sustainable business practices by millennials and Gen Z, who are a fast-growing demographic among customers and employees.
Sustainability can encompass environmental measures such as reducing greenhouse gas emissions, and adopting teleconferencing and remote work technologies to reduce business travel and commutes. Beyond doing what helps the environment, it’s also about doing what’s right for society: ensuring a company’s operations and business partners respect human rights across the supply chain. It’s about providing a workplace that’s inclusive and supportive. Additionally, it includes being transparent about the use of customer information and having strict standards to safeguard that.
