Countries need to tackle cross-border issues and ease trans-border ow setbacks

by SHAHEERA AZNAM SHAH / Pic by AFP

ASEAN countries need to establish a digitalisation framework at the regional level to tackle cross-border issues and ease trans-border flow setbacks.

ISEAS-Yusof Ishak Institute CEO and director Choi Shing Kwok said the pertinent factors that should be emphasised, especially for the e-commerce sector, is the high Internet connection penetration rate, smartphone adoption, strong financial infrastructure, good logistics ecosystem, effective e-commerce legislation, as well as transaction protection laws.

“Some key issues that deserve special attention are managing the sharp rise in digital services, taxes on cross border delivery of digital goods and services, tackling concerns over cybersecurity and data protection as well as managing digital and data sovereignty.

“Asean collective action is needed at the regional level to establish and implement a consistent legal framework that enhances digital trade in the region,” he said during the virtual NIKKEI-ISEAS Forum: Digitalising Trade in South-East Asia and Asean yesterday.

He added that without the collective regional efforts, there would be a stretch of digitisation standards and requirements that would halt a smooth flow of cross-border transactions.

“Without regional effort, individual member states tend to develop different trade rules that meet their own immediate domestic needs and that can lead to a variety of digital trade standards and requirements.

“A variety of rules will hinder cross-border flows in the Asean market and this complexity increases uncertainty among customers.

“As a result, Asean would not be able to unlock its full potential in regional digital trade as firms are unable to increase their customers base,” he said.

Choi said digitalisation could help technology firms in reducing trade costs and connecting the supply and demand, as well as overcome informational constraints related to different markets.

He added that by reducing trade costs and increasing the productivity of digital technology such as the Internet of thing, artificial intelligence and 3D printing, it can increase the growth rate of trade in developing countries including those in the Asean region by about 2.5% per year or 22.5% from this year to 2030.

“The World Trade Organisation predicted that the growth in merchandise trade volume in Asia would rise from 0.3% in 2020 to 8.4% in 2021, and then moderate back to 3.5% in 2022.

“This positive short-term outlook trade recovery, however, is contingent on Asean reducing the risk of Covid-19 outbreak and enhancing regional value chain resilience.

“Digital trade is a promising driver to Asean trade during the pandemic and we expect it to prevail throughout the pandemic,” he said.

Although economic activities in Asean declined during the pandemic due to movement restriction and customers’ anxiety about social interaction, Choi said businesses with established online presence or those who have quickly shifted towards online have been in a better position in taking advantage of consumer demands.

“While the search during the pandemic has reinforced the importance of digital trade and strengthened digital trade recovery, digitisation benefits for firms are not automatic.

“The firms are required to invest in technologies and acquire new skills to leverage on new data-driven innovation.

“Thus, Asean governments are required to provide a supportive domestic environment and regulated operating framework at the national level as a conducive business environment is essential for the e-commerce sector,” Choi added.