Fit for Purpose: Regulating and Encouraging Innovation in the Digital Economy

Regulating fast changing data-driven digital solutions such as AI remains a challenge for the region. This article looks at ways in which stakeholders can achieve the goal of promoting responsible and continued innovation in this area.

By Ming Tan, Founding Executive Director, Tech For Good Institute

Data-driven digital solutions promise to level the playing field for Southeast Asia. Access to finance, for example, has been a longstanding barrier to growth faced by MSMEs in the region. Using non-traditional datasets comprising transport movements, geo-location, and in-app transaction data to build credit profiles of their customers, fintech companies are now promising to serve millions of unbanked and underbanked consumers, micro-entrepreneurs and small businesses. In the words of Agustín Carstens, General Manager of the Bank for International Settlements, “data can substitute for collateral.” Indeed, the Tech For Good Institute’s study on the Platform Economy last year found that approximately 70% of digital lending users surveyed did not have prior access to loans.

Governments across the region are themselves also investing in areas significant to national or developmental goals, such as access to services, or to improve social or environmental outcomes. Malaysia implemented its “City Brain” initiative in 2020 using image recognition from a base of 382 camera feeds and input from 281 traffic light junctions to analyse traffic conditions, optimise traffic signals, and detect accidents or traffic incidents. During the pandemic, Thailand launched the “AiMASK” project to measure mask-wearing, social distancing, and body temperatures using real-time scanners so that the public can be alerted where the risk of COVID-19 transmission may be high. Indonesia, too, has initiated research into remote-sensing applications to predict forest fires by observing changes in forest and land topography, deforestation, forest and land fire danger levels, and hotspot detection-based forest and land fires. 

Yet there remains concern about whether the pace of regulation can keep up with the speed of innovation. Technology driven by data and algorithms has been compared to the steam engine in its potential for application across many sectors. Just as different applications of the steam engine – from trains to industrial machinery – are regulated differently, fundamental policy frameworks may be complemented with efforts to prioritise innovation in key sectors.  

Sectoral or industry-specific approaches may be key to striking a balance between ecosystem developments and regulatory approaches, and can help encourage the adoption of AI in key sectors. The sector-specific approach also helps to strike a balance between encouraging innovation, driving growth, and mitigating ecosystem-specific risks with careful consideration of the risks, biases, and nature of underlying training datasets involved in operationalising a technological solution. For example, Singapore launched the Model Artificial Intelligence (AI) Governance Framework in 2019, setting guiding principles pushing for AI decision-making to be explainable, transparent, and fair, and that AI solutions should be human-centric. Meanwhile, the Land Transport Authority of Singapore has spearheaded the adoption of laws to enable deployment of autonomous vehicles on Singapore’s roads, while the Monetary Authority of Singapore is rolling out a governance framework and toolkit specifically to help financial institutions utilise AI and data analytics responsibly, along the principles of fairness, ethics, accountability and transparency (FEAT). Ensuring that these principles are actually adhered to in practice is another necessary goal. To this end, MAS recently released a comprehensive set of guidelines detailing the assessment methodologies for testing alignment with the FEAT principles. Malaysia, Singapore, Thailand, Indonesia, and the Philippines have also created sandboxes in which fintech firms may experiment with limited risk. The State Bank of Vietnam is also expected to create a regulatory sandbox for fintech operations in banking.

Of course, the onus of developing human-centric, responsible products and services falls on the companies that build them. At the same time, if government-deployed solutions are held to the same standards as the private sector, citizens can value principled and responsible innovation at a consistent standard of transparency and accountability. 

Public awareness and education is not a job for one party – companies, governments, and civil society must continue to raise awareness to nurture the digital citizens of the future. Above and beyond broad national strategies, governments in Southeast Asia must also have a full range of policy instruments at their disposal: from governance, guidance, and fit-for-purpose frameworks to public education, industry support, and other incentives and enablers. Partnership between the private and public sectors will not only drive, but also shape, the responsible growth of the digital economy in Southeast Asia.

Photo by Hack Capital on Unsplash

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Mouna Aouri

Programme Fellow

Mouna Aouri is an Institute Fellow at the Tech For Good Institute. As a social entrepreneur, impact investor, and engineer, her experience spans over two decades in the MENA region, South East Asia, and Japan. She is founder of Woomentum, a Singapore-based platform dedicated to supporting women entrepreneurs in APAC through skill development and access to growth capital through strategic collaborations with corporate entities, investors and government partners.

Dr Ming Tan

Founding Executive Director

Dr Ming Tan is founding Executive Director for the Tech for Good Institute, a non-profit founded to catalyse research and collaboration on social, economic and policy trends accelerated by the digital economy in Southeast Asia. She is concurrently a Senior Fellow at the Centre for Governance and Sustainability at the National University of Singapore and Advisor to the Founder of the COMO Group, a Singaporean portfolio of lifestyle companies operating in 15 countries worldwide.  Her research interests lie at the intersection of technology, business and society, including sustainability and innovation.


Ming was previously Managing Director of IPOS International, part of the Intellectual Property Office of Singapore, which supports Singapore’s future growth as a global innovation hub for intellectual property creation, commercialisation and management. Prior to joining the public sector, she was Head of Stewardship of the COMO Group and the founding Executive Director of COMO Foundation, a grantmaker focused on gender equity that has served over 47 million women and girls since 2003.


As a company director, she lends brand and strategic guidance to several companies within the COMO Group. Ming also serves as a Council Member of the Council for Board Diversity, on the boards of COMO Foundation and Singapore Network Information Centre (SGNIC), and on the Digital and Technology Advisory Panel for Esplanade–Theatres on the Bay, Singapore’s national performing arts centre.


In the non-profit, educational and government spheres, Ming is a director of COMO Foundation and Singapore Network Information Centre (SGNIC) and chairs the Asia Advisory board for Swiss hospitality business and management school EHL. She also serves on  the Council for Board Diversity and the Digital and Technology Advisory Panel for Esplanade–Theatres on the Bay, Singapore’s national performing arts centre.


Ming was educated in Singapore, the United States, and England. She obtained her bachelor’s and master’s degrees from Stanford University and her doctorate from Oxford.