Digital integration keys in Asean

Digital integration keys in Asean

Building consensus from the bottom up is better than waiting for top-down solutions. By Kelvin Tan

Southeast Asia can be a poster child for digital integration but it needs both top-down and bottom-up momentum for that to happen. It also requires regional leadership. Can Thailand play that role?

Southeast Asia's digital economy was worth US$31 billion in 2015, and is forecast to grow to $200 billion by 2025. But this figure could be a substantial underestimate if the region reaches an agreement on a common set of standards for data handling and digital commerce.

In an ideal world, government regulators, digital businesses and multilateral organisations would come together to create a coherent regional architecture to ensure the full benefits of a digital economy are reaped.

But we don't live in an ideal world.

Tan: Keep an eye on standardisation

In fact, at the Asean leaders' summit in Bangkok in June, we saw broad recognition that policy gaps remain. Participants agreed that Asean must identify concrete next steps towards a holistic, coherent and coordinated strategy for the digital economy.

A number of ambitious planning frameworks have been agreed in principle. They include the Thailand-led Asean Digital Integration Framework Action Plan, which aims to accelerate a coordinated, regionally integrated digital economy.

So while we need to keep our eyes on the ultimate aim of creating regionally consistent standards, we also need to supplement this with a new strategy and tactics.


There are two elements to this new strategy. The first is flexibility. Many companies active in the digital sector are used to building platforms that are both scalable and adaptable to new technology as it becomes available. We need to apply that same flexible thinking to standards.

For example, from a banking perspective, a digital banking facility needs to be broad and elastic enough to satisfy divergent, and sometimes conflicting, data regulations. Thus, a Malaysia-based bank offering digital services needs to meet the requirements of Malaysia as well as those of, say, the US and the EU.

The second strategic shift is we need to start building consensus from the bottom up, rather than continuing to hope for top-down solutions.

The history of global standards teaches us they come about in one of two ways. The first is when a dominant power -- in the past it has often been the US or the EU -- creates a standard and the world conforms to retain access to the market. In the new multi-polar world, that path has become less likely.

The second is when clusters of interested parties come together to find common ground and others are persuaded to join them through common interests. This is an opportunity for Southeast Asia.

What this means is Southeast Asian countries should not be afraid of starting small. For example, two nations could focus on a collaboration that could be the start of something much greater.

Thailand has taken this approach to very good effect. The merging of the instant payment schemes of Thailand and Singapore is a clear example of starting small and building.


The Asean central bank governors' meeting in April highlighted several other collaborations between the Bank of Thailand and other central banks and industry players in the area of cross-border payments.

The National Interbank Transaction Management and Exchange of Thailand, for example, has established a roadmap for regional collaboration for cross-border payments across Asia and Asean. This service is expected to be used through an application programming interface switch that acts as an infrastructure hub to a growing ecosystem of cross-border real-time payments.

The defining characteristic of successful, organically grown and holistic standards is they have to be outward-looking: designed for broad mutual benefit rather than to isolate and sustain the privileges of the local market.

Any agreement should allow the free flow of data across borders, a measure that has been proven to foster innovation, while protecting the security and integrity of personal information. To achieve this, regional governments, technology companies and financial services providers need to work together to develop local systems that protect users while creating the openings needed to facilitate Southeast Asia's digital economy.

Kelvin Tan is the chief executive at HSBC Thailand.

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