Repositioning the region in the Asian Century
In 2018, the little red dot in Southeast Asia -- Singapore -- caught the world's attention as a result of the success of the movie Crazy Rich Asians. Viewers saw Mercedes-Benz AMGs and Ferraris, and all the other luxuries that one might expect to see in London or Paris. Indeed, Singapore has offered any experience that one could expect in developed countries. Not only Singapore, other capital cities in Asean -- Jakarta, Kuala Lumpur and Manila -- have increasingly become important business hubs in Asia.
Greater political stability, more open markets and strong human capital have turned the formerly tumultuous Asean into one of the most promising regions in the world. With its 635 million population, rising middle class and sustained economic growth, Asean has become the world's third-largest market.
Since the narrative of a rising Asia first began to emerge in the early 21st century, the discourse has focused mostly on China and India. However, the Asia story is broader than that. Asean will also play a central role in shaping the "Asian Century". As one of the fastest-growing economic areas in the world, Asean is poised to play a leading role in the continent's ascendance.
Even though Asean member states are hit by the Covid-19 seriously, three factors, in particular, should drive Asean's prosperity after the outbreak, which are digital literacy, human development and political stability.
Asean is home to 300 million internet users, with six unicorns (technology companies that have reached a valuation of at least US$1 billion) helping to make Asean the fastest-growing online market in the world. The internet sector here is worth more than US$50 billion and is expected to continue to grow quickly in the coming years. This growth in the digital economy will not only bolster government revenue but will also shape the market connectivity among Asean states, increase job opportunities and reduce inequality.
Having a large population of young people leaves Asean well-placed to master the digital economy. According to Google and Temasek, Asean's e-commerce industry could exceed US$88 billion by 2025 which is a 16-fold increase from today's figure.
E-commerce has created many opportunities for local businesses in places such as Sarawak, Sulawesi and Mandalay, by providing them with equal market access. Recognising the importance of human development in technology, the recent World Economic Forum (WEF) on Asean created the Digital Asean initiative to continue the development of digital skills for locals.
The vast potential of the region's young people will not be realised without having sufficient digital literacy. This potential is intimately connected with the second important factor: human development. As of 2018, there were 213 million young people (aged 15-34) in Asean countries. This population is expected to peak at 220 million in 2038. This represents a big opportunity for Asean, which it cannot afford to squander. Crucially, these individuals can only contribute significantly if they are equipped with skills for the 21st century, such as technological know-how and foreign languages.
Recently, Asean citizens replicated parents in China and India by sending children and young adults to study abroad in Europe, the United States and Australia. The hope is that experience abroad will equip the youth with the skills and perspectives to be able to compete not just regionally, but also globally.
However, among the top 10 Asian universities, only two are from Asean, both of which are in Singapore. High-quality education at all levels, and particularly in higher education, is essential to promote the region's development across all sectors. Good education and international experience are vital components if Asean is to improve its position in the global competitiveness index. Therefore, governments must invest more in their youth through higher research and education spending.
Political stability represents one of Asean's greatest achievements. Prior to Asean's establishment in 1967, Southeast Asia was one of the most volatile areas in the world, with regular conflicts between states. But since Asean's creation, there has been almost no threat of confrontation among members.
Asean has also created a robust framework for cooperation which encourages and supports member states in resolving whatever conflicts may arise.
This stability has made the region an attractive investment destination. Foreign direct investment flows to Asean rose from US$123 billion in 2016 to an all-time high of US$137 billion in 2017, with eight of the 10 member states experiencing a rise. This shows growing trust in the bloc's future. This significant foreign investment will also contribute to the transfer of knowledge and skills to Asean workers.
However, Asean's greatest challenge remains economic inequality. The gap between the region's most developed and least developed Asean member state is still great. Asean should maximise the digital three strength point discussed to bridge the inequality gap among member states, as well as use the all-Asean framework within the Asean economic community to build a more shared and equitable development path. If it can do this, there will be many more crazy rich Asians to come in the region.
Aristyo Rizka Darmawan is an academic and columnist based in Jakarta. He earned master in international law from the Fletcher School of Law and Diplomacy at Tufts University.