Cooperation between Japan and ASEAN in the area of digital transformation could be the linchpin for establishing multilateral rules on digital governance amid rising techno-nationalism, protectionism and the fragmentation of technologies.
Earlier this month, Indonesia, as this year's ASEAN chair, announced the opening of negotiations for the bloc's planned Digital Economy Framework Agreement. The pact is to be legally binding and consist of a set of comprehensive regulatory frameworks intended to expand national capacity and shape ASEAN into a single digital economic community by 2045.
Member states aim to complete the talks by 2025. The agreement is expected to boost the value of the bloc's digital economy to $2 trillion by 2030.
However, the vast disparity that now exists among bloc members in terms of readiness for high-standard digital integration remains an obstacle to achieving an ASEAN-wide digital future. Southeast Asia is not only culturally and economically diverse, but also faces significant divides within and among its member states.
The challenges that ASEAN member states face are not only about digital connectivity but also in terms of regulatory diversity and interoperability. Regulatory gaps persist in terms of data privacy, data localization, cybersecurity and competition policies.
These gaps can be barriers to trusted data flows. While data is recognized as a key element of the digital economy, barriers to cross-border data flows can be extremely costly and hurt productivity growth.
Japan has been leading the global dialogue on the Data Free Flow with Trust (DFFT) plan. As president of the Group of Seven, Japan launched the Hiroshima AI Process, which aims to facilitate international discussion on inclusive governance for artificial intelligence technologies. This is timely and necessary as the world grapples with both the opportunities and risks brought by generative AI.
Among ASEAN states, Singapore shares with Japan a common interest in AI governance and leadership. As each has adopted a balanced and progressive approach, they could work together to ensure alignment of the Hiroshima AI Process and ASEAN AI governance initiatives.
Digital talent is scarce everywhere. Due to serious human resource shortages, aging Japan has a dire need to attract digital talent from developing ASEAN countries whose workers still see Japan as an attractive work destination.
But due in part to the weak yen, wages in Japan are becoming unattractive to technology workers from developing ASEAN countries. An agreement for the mutual recognition of technology qualifications would help to ease the movement of digital talent between the two areas.
Cooperation between ASEAN and Japan in digital transformation could go beyond data, emerging technology governance and human resources.
Many ASEAN members are in the process of implementing national ID systems. As a bloc, ASEAN would like to promote the interoperability of digital ID and digital recognition systems.
ASEAN countries may be able to provide technical assistance to Tokyo and share their experience to assist with the implementation of Japan's struggling MyNumber unified ID system.
Cross-border e-payment systems could be another area of cooperation. ASEAN central banks have made great progress in linking national e-payment systems such as Singapore's PayNow and Thailand's PromptPay. ASEAN is now working on setting up a blocwide QR-based e-payment system. Cross-border e-payment links between Japan and ASEAN would support e-commerce as well as service activities such as tourism, online freelancing and remittances.
ASEAN's dynamic startup ecosystems could provide useful resources for Japan too. Consider for example Indonesia's Duithape which provides facial recognition systems for financial inclusion. Given the acute demographic challenge affecting some regions of Japan, such technologies could play a role with vulnerable populations, such as the aged.
Japan, meanwhile, is at the frontier in terms of some "deep tech" areas including robotics, AI, blockchain and biotechnology. Startup entrepreneurs, venture capitalists and technologists from ASEAN and Japan could work together in these areas.
Under Indonesia's ASEAN chairmanship this year, development has started on a blocwide peer-to-peer digital lending platform to match investors with startups and other small business borrowers. Japan could potentially be included in this initiative.
In the longer term, ASEAN-Japan digital economy cooperation could take the form of something like the digital economy agreements Singapore has signed with countries like the U.K.
The key to cooperation between ASEAN and Japan in digital transformation will be equal partnership. By working together, ASEAN and Japan can help to slow or even reverse the digital fragmentation now spreading around the globe.
Source: Nikkei Asia
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<p>Time: 2024 By: Ministry of Industry and Trade</p>
