By Ming Tan, Founding Executive Director, Tech For Good Institute
What might a leapfrog mean for Southeast Asia?
The allure of a step change in achieving national priorities through technology is strong. The general narrative of “leapfrogging” suggests that less-developed countries may not need to follow traditional development stages but can instead adopt new technologies to accelerate progress. Examples such as mobile digital payments M-Pesa in Kenya and digital identity Adhaar in India are often cited as case studies of such a leap. The assumption is that by adopting new technology and the new business models they enable, it is possible to catch up and perhaps even overtake from behind.
Indeed, the interest in the ASEAN Digital Economy Framework Agreement (DEFA) currently being negotiated amongst ten ASEAN Member States (AMS), for example, is in no small part fueled by the suggestion that progressive implementation of the DEFA may unlock up to US$2 trillion by 2030 in the region’s digital economy. The narrative is even more exciting with the prospect that lower-middle income AMS could potentially benefit more from an inclusive agreement, compared to more mature economies. These goals were summarised as “enabling a leapfrog” towards a “North Star” DEFA. This optimism is often grounded in the rapid digital adoption across the region over the last five years, accelerated by the COVID-19 pandemic.
Approximately 100 million of the region’s 493.4 million internet users came online between 2019 to 2022. The young populations of AMS – over 60% under the age of 35 – are not only “digital native”, but also “mobile-native” and “AI-native.” Businesses and individuals are skipping traditional service providers such as banks. For example, three quarters of small businesses with loans from digital providers in 2021 had previously been unable to secure financing from banks and other lenders. While credit cards are highly variable across ASEAN, from 30% in Thailand, 11% in Vietnam, and a mere 6% in Indonesia, digital payments now make up over 50% of total transaction value.
Leapfrogging has tended to focus on technology, either by avoiding technical debt from legacy technologies through adoption of the latest technologies (stage skipping), or defining new ways to achieve outcomes (path-creating). The adoption of mobile technology is a prime example of stage-skipping, while the use of digital financial services by the unbanked or underbanked can be regarded as path-creating. Nandan Nilekani, co-founder of Infosys and Chairman of the Unique Identification Authority of India, cited the scale of large Internet databases, mobile and data connectivity, biometric technology, device technology such as smartphones, and battery technology, as complementary essential factors to the rollout of India’s digital ID programme, Aadhaar.
Similarly, Bakong, Cambodia’s digital payment system, leverages blockchain technology to address the shortcomings of traditional financial infrastructures. Developed by the National Bank of Cambodia in partnership with the Japanese company Soramitsu, and named after the first great temple built by the Khmer Empire, Bakong represents a leapfrog upgrade of legacy interbank transfer and point-of-sale payment systems. The decentralised and immutable nature of blockchain enhances security and transparency, increasing resilience against cyberattacks, fraud, and tampering, while promoting inclusion and interoperability. As of March 2025, Bakong supports 30 million wallets—1.69 times the population of Cambodia—and processes payment volumes exceeding three times the country’s gross domestic product. Notably, the growth in transactions in the local Riel currency was three times higher than the growth in USD transactions.
Yet, technology itself is not enough. Leapfrogging requires concerted effort to drive confident adoption, fit-for-purpose business models and forward-looking regulatory environments.
While technological innovation makes leapfrogging possible, adoption is needed to realise the potential. Nilekani cited in 2013 that the Aadhaar programme was running 25,000-30,000 enrolment centres, implemented by over 100,000 partners complementing the 300 people working within the Authority. In Malaysia, the national effort to promote artificial intelligence literacy, “AI Untuk Rakyat” partnered with community centres, schools and volunteer organisations to raise awareness for the programme and even offer incentives for adoption. The programme was also offered in Bahasa Malaysia, English, Tamil, and Mandarin for accessibility. In the Philippines, the Social Security System (SSS) developed partnerships across digital platforms to increase enrolment into their social protection schemes. For example, SSS set up booths at roadshows organised by Grab to onboard driver-partners.
Digitalisation has enabled new business models across almost every industry. Technologies such as the collection and management of data, automation, predictive analytics and the Internet of Things (IoT), to name a few, inform decision-making, increase efficiency and facilitate real-time operational monitoring. The intimacy of the mobile phone and mobile apps allows businesses to engage with customers anytime for a hyper-personalised digital customer experience. The platform economy, from vehicle sharing to transport to e-commerce to travel, capitalise on these capabilities to aggregate supply and demand to meet the needs of multiple stakeholders in the private, public and civil sectors.
Technology and business model innovations require good governance that is effective and fit-for-purpose. This can prove a challenge when the pace of innovation can leave policies outdated or incomplete. For example, Malaysia, Singapore, and the Philippines enforced their personal data protection laws in 2013, 2014 and 2016, respectively. Thailand and Indonesia implemented similar laws six years later in 2022, while Vietnam passed its comprehensive data protection law in 2023. Best practices in data protection regulation have evolved significantly over the past decade, shifting from a focus on consent and compliance to a greater emphasis on accountability and risk management. Countries with older laws have had to amend and update them in response to the evolving landscape. Effective policy coordination and experimentation can support new technologies and business models, benefitting from an iterative, learning-based approach that supports both innovation and effective governance.
For example, while Vietnam’s per capita electricity consumption has increased more than eight-fold from 2000 to 2022, nearly half of its power generation is from renewable sources, surpassing many most developed countries.
Similarly, Singapore’s moratorium on data centers from 2019 to 2022 led to an increase in data center construction in neighbouring countries, but allowed Singapore to develop green data center standards in tropical climates and foster private-sector innovation for more sustainable solutions and designs.
Southeast Asia’s rapid adoption of tools such as generative AI, voice search and e-payments point toward general tech optimism. Furthermore, openness to reskilling, coupled with enabling regulatory environments around AI governance, suggest that the region has the potential to adopt digital technologies to accelerate progress towards national priorities. This opportunity to leapfrog towards sustainable development requires continued investments in digital foundations and inclusive adoption with an eye towards future readiness and sustainability.
About the writer
Dr Ming Tan is the founding Executive Director at Tech for Good Institute, a non-profit organisation seed-funded by Grab to catalyse research and collaboration on social, economic, and policy trends accelerated by the digital economy. She is concurrently a Senior Fellow at the Centre for Governance and Sustainability at the National University of Singapore. Her interests lie at the intersection of technology, business and society, including sustainability and innovation
