Southeast Asian countries are on the cusp of reaping a digital economic fortune, but the road to riches rests on the region upskilling its labor force, says Rich Lesser, the global chair of the U.S. consultancy Boston Consulting Group.
BCG forecasts that the value of the region’s digital industries, such as e-commerce, will increase from the current $300 billion to $1 trillion by 2030. “But if the right underpinnings are put in place, that figure could even double to $2 trillion,” Lesser told Nikkei Asia in a wide-ranging interview in Bangkok.
This digitization transformation will reshape whole industries, from tech sectors like software, telecommunication and artificial intelligence to those like health care, education and agriculture, he added. “It is going to be very transformative for companies,” Lesser said, “both to drive productivity and to open up new sources of growth.”
Lesser suggests that the region has to prioritize building “human capital in a meaningful way” to tap the potential for digital growth. “The reskilling is not just to have people work at hardware, software, in telcos, but also to let healthcare workers know how to use technology or agri-tech to let farmers use these technologies,” he said.
“ASEAN, like other parts of the world, will have to invest to upskill and reskill the current generations of workers and to offer different kinds of learning and skills development to younger people to make them prepared.”
Lesser noted that U.S. government officials recently had discussions in the Philippines and Thailand on these points, where the U.S. can offer help by bringing in some of its educational capabilities and its universities to provide the ability to reskill.
A clutch of reports has flagged the digital skills gap that needs to be bridged. The ASEAN Digital Integration Index Report 2021, published by the bloc, noted that Southeast Asia has low digital skills and talent scores. A 2021 UNICEF report on digital literacy in education systems across the Association of Southeast Asian Nations revealed that “the majority of young people in ASEAN have a moderate level of digital literacy, but large differences exist between individual countries.”
“The upgrade of digital skill level in the workforce is the responsibility of both the governments and the private sector,” said Pavida Pananond, a professor of international business at Thammasat University in Bangkok.
According to Lesser, the expansion of the digital economy in ASEAN would enhance the bloc’s standing in the global economy over the next 10 years. “It is now a critical part of the supply chains with China and a critical part of the supply chains to the rest of the world, as companies and countries seek to risk manage and build more diversified supply chains.”
He reckons that ASEAN has become more relevant due to how it is navigating the U.S.-China rift. “It is a challenging political area with political risks, and the obvious challenge is to balance the relationships with China and the U.S.,” he said. “ASEAN doesn’t want to be forced to choose sides … and doesn’t want to be dependent on a relationship with China at the exclusion of other relationships with the U.S. and other Western countries.”
The economic and political stakes for ASEAN arise from its strategic position, prompting other countries to deepen their ties out of fear that “if they don’t, others will do so, and they will fall behind,” added Lesser. “It is more from an opportunities and risks framework … because in today’s world of opportunities and risks, ASEAN plays a critical role on both sides of that.” – Nikkei Asia
