ASEAN and Investment in Digital Industry

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According to the research study from ITD and Thammasat University, ASEAN region is the source of digital industry’s investment because the national government in ASEAN countries encourage digital economy and majority of laborers and middle classes use digital technology in their daily life more.

According to the statistics, the number of internet and mobile phone users have grown exponentially. ASEAN has become the fastest growing internet region in the world. It leads to the growth of the middle class and digital economy in the country.

It is predicted that Malaysia’s digital economy will expand from 18% of the total GDP in 2016 to 20% in 2020. Thailand’s digital economy will increase from 17% in 2017 to 25% in 2027. Philippine’s digital economy is predicted to increase from 10% in 2015 to 25% in 2020.

Digital economy booming enables ASEAN to become a destination for investment from all over the world, including investors and international firms.

Digital international firms that invest in ASEAN include internet platform providers, digital solutions providers such as Cloud and E-Commerce, commercial providers, business provider, digital content creators, and ICT companies. ICT companies will lay a foundation for citizens, including customers, entrepreneurs and the Government sector to connect and interact more. ICT companies include both hardware and software producers and telecommunications companies.

Factors in the expansion of digital economy in ASEAN countries are the fast growing of internet, smartphone usage which shows that people in ASEAN countries can access the internet, the expansion of middle class and E-Commerce. The association of economy in ASEAN enables trade of goods and services between countries becomes more convenient. In addition, E-Commerce plays an important role in the digital economy, including digital and foreign companies, which allows the expansion of the digital economy.

In terms of investment, investment value in Thailand is declining during 2010-2016. However, investment value has been increasing continuously since 2016 in accordance with investment in production and service sectors. When compared to other ASEAN countries, the increase of investment in Thailand makes Thailand’s GDP higher than other countries like Malaysia and Indonesia.

Merger and acquisition in Thailand mostly occurs in the electronic industry which is a hardware part of the digital industry. Countries that join companies are Singapore, Japan, and Hongkong. When compared to other ASEAN countries, merger and acquisition investment in Thailand is the third highest after Singapore and South Korea. Investment value in Thailand is worth 20% and 25% of the investment value in Singapore and South Korea.

Foreign investment does not focus on the market in the country but other factors like manpower, infrastructure, and laws supporting digital economy. As ASEAN country members are transforming to digital economy, attracting foreign investment is important for the improvement of digital economy and competition ability in the long run.

Apart from developing factors that attract foreign investment, Thailand and other ASEAN countries have another challenge which is adopting strategy to take advantage of foreign investment for SMEs to employ technology in their business.