The Asian Development Bank (ADB) is pushing for further adoption of digital platforms and other technology-based tools in Asia in order for the region to tap into new growth opportunities for businesses in all industries in Asia and the Pacific.
The multilateral lending agency said further adoption of these could mean further opportunities for the region’s sustainable recovery from the coronavirus disease 2019 (COVID-19) pandemic.
“Countries in Asia and the Pacific have leveraged rapid technological progress and digitalization to recover and reconnect to the global economy during the pandemic.
Technology is helping to forge new global linkages, which offer enormous economic opportunities, but also present new risks and challenges,” said Yasuyuki Sawada, ADB chief economist.
“It is imperative to implement policies and regulations that manage the disruptions and maximize the gains from the burgeoning digital economy, and to lock in these gains through enhanced regional cooperation,” he added.
ADB looked into the potential of digital platforms to drive growth in Asia and the Pacific through its publication, the Asian Economic Integration Report 2021.
ADB said an accelerated digital transformation “can potentially boost global output, trade and commerce, and employment.”
It noted that a 20 percent increase in the size of the global digital sector can increase global output by an average of $4.3 trillion yearly from 2021 to 2025.
“Similarly, Asia and the Pacific would reap an economic dividend of more than $1.7 trillion yearly or more than $8.6 trillion over the 5 years to 2025. There will be about 65 million new jobs created yearly in Asia and the Pacific until 2025 from increased use of digital technologies, with regional trade also expected to increase by $1 trillion yearly over the next 5 years,” it said.
The ADB noted that business-to-consumer revenues of digital platforms reached $3.8 trillion in 2019 globally, with Asia and the Pacific accounting for about 48 percent of the total or $1.8 trillion, equivalent to 6 percent of the region’s gross domestic product.
“These figures are expected to have significantly increased in 2020 as more business transactions – such as ride hailing, food delivery, and e-commerce – migrate to the digital space amid restrictions imposed to curb the spread of COVID-19,” it said.
ADB urged Asian governments to initiate reforms that could leverage on the technology and reap the benefits of the emerging digital economy –improve digital infrastructure and connectivity, as well as access to them.
“These steps include promoting fair competition and improving ease-of-doing business processes, as well as enhancing labor security and social protection measures to align with digital jobs,” it said.
While the region’s trade was hit hard during the first half of 2020 due to COVID-19, it is expected to recover faster than anticipated, according to the ADB.
Asia’s merchandise trade volume growth hit the bottom at -10.1 percent year-on-year in May, and has recovered gradually, turning into positive territory since September 2020.
Investment flows globally and to the region are estimated to have fallen further in 2020, following a 7.7 percent slide in foreign direct investment to Asia in 2019 at $510.5 billion.
“Nevertheless, recent firm-level activity in mergers and acquisitions in the region shows signs of recovery, as countries start to reopen and ease some pandemic-related restrictions,” ADB said.