Event Highlights, Past Events

Paving the Way for ASEAN-Japan Digital Economy Integration

The Tech For Good Institute (TFGI) participated in a roundtable panel “Aspiring to an ASEAN-Japan Digital Economy Cooperation,” organised by the Japan Center for Economic Research on 27 June 2023.

Top left to right: Maria Monica Wihardja, Visiting Research Fellow, Japan Center for Economic Research; Ming Tan, Executive Director of Tech For Good Institute; Eric Chua, Director (Economic Regulations) from Ministry of Communications and Information, Government of Singapore

Middle left to right: Kazumasa Iwata, President, Japan Center for Economic Research; Titik Anas, Special Advisor to the Minister of Finance, Government of Indonesia; Shiro Armstrong, Associate Professor at Australian National University, Visiting Scholar at the Research Institute of Economy, Trade and Industry in Japan, Visiting Associate Professor at Keio University

Bottom left to right: Toshiyuki Zamma, Director General at Digital Agency of Japan; Yasumasa Yamamoto, Specially Appointed Associate Professor at Kyoto University; Lili Yan Ing, Lead Advisor, Southeast Asia Region, Economic Research Institute for ASEAN and East Asia

Moderator and panelists:

Maria Monica Wihardja, Visiting Research Fellow, JCER
Kazumasa Iwata, President of JCER and former Deputy Governor of Bank of Japan
Toshiyuki Zamma, Director General at Digital Agency of Japan
Eric Chua, Director of Economic Regulations, Ministry of Communications and Information, Government of Singapore
Yasumasa Yamamoto, Specially Appointed Associate Professor at Kyoto University, Unicorn Investor, FinTech professional
Shiro Armstrong, Associate Professor at Australian National University, Visiting Scholar at the Research Institute of Economy, Trade and Industry in Japan, Visiting Associate Professor at Keio University
Lili Yan Ing, Lead Advisor, Southeast Asia Region, Economic Research Institute for ASEAN and East Asia
Ming Tan, Founding Executive Director of Tech For Good Institute, Singapore
Titik Anas, Special Advisor to the Minister of Finance, Government of Indonesia

The roundtable discussion on advancing Digital Economic Cooperation between ASEAN and Japan emphasised the importance of collaboration to enable deeper ties across the Asia Pacific region and strengthen governance of emerging technologies and the business they enable. Such cooperation would complement efforts to integrate the ASEAN digital economy, with initiatives such as the ASEAN Digital Community 2045, and the upcoming ASEAN Digital Economy Partnership Agreement. The discussions addressed the challenges and opportunities in the digital economy, including the development of generative AI, talent development, copyright issues and the rise of digital protectionism. Recognising these challenges, participants highlighted the need for inclusive and responsible governance of emerging technologies and the importance of regional and bilateral agreements to facilitate cooperation within and across the region.

Key Insights from the panel:

Trusted cross-border data flows are essential for digital economy cooperation

Data flows across countries play a pivotal role in the digital economy as they enable companies to access resources and expand into new markets beyond their geographical borders. However, concerns over data stewardships, cross-border barriers, and digital protectionism can limit cross border data flows, costing businesses substantially. Multilateral alignment to govern cross-border data flows should emphasise transparency, curb protectionism, and recognise jurisdictional diversity. Regional and bilateral arrangements serve as foundational building blocks to this effort, such as Japan’s contribution to promote a principles-based approach to fostering cross-border data flows with the G7 agreement on Data Free Flows with Trust. Collaboratively, ASEAN and Japan can work towards closing the regulatory gap and achieving regulatory interoperability.

Encouraging innovation while addressing risks is a delicate but necessary balancing act

The rapid advancement of digital technologies is accelerating. The challenge lies in striking a delicate balance between nurturing innovation and addressing potential risks, which has become a defining task in governing these technologies. In this regard, both Japan and Singapore have showcased their shared interests and leadership in AI governance by embracing a balanced and progressive approach that promotes global interoperability of frameworks and tools.

For example, Singapore’s Infocomm Media Development Authority (IMDA) has launched the AI Verify initiative to tackle existing gaps in AI governance. This initiative focuses on developing standardised evaluation metrics and accountability frameworks. With AI Verify, organisations gain access to an AI governance testing framework and toolkit, empowering them to conduct voluntary self-assessments of their AI systems using a combination of technical tests and process-based checks.

Similarly, Japan has taken significant strides in ensuring the interoperability of AI frameworks by introducing the ‘Hiroshima AI Process.’ This initiative aims to foster global dialogue on inclusive AI governance and interoperability. By promoting discussions and collaboration, the Hiroshima AI Process seeks to establish a framework that allows AI systems to work harmoniously across borders.

Together, these efforts by Japan and Singapore contribute to a more comprehensive and inclusive approach to AI governance.

Cooperation to enable digital economy growth extends beyond data flows

Digital IDs that are recognised across borders offer consumers easier access to services in different countries. As nations develop their respective national IDs, it is crucial to prioritise cross-border recognition in both technological advancements and policy considerations. In addition, national payment systems have made substantial progress in promoting convenience and encouraging cashless payments. This is particularly significant considering that a significant portion of consumer payments in Southeast Asia’s largest economies is still conducted in cash. Apart from benefiting e-commerce, interoperable cross-border payments also support various sectors, including tourism, which is a vital pillar for many ASEAN economies.

Addressing the digital divide and diversity is crucial in driving inclusive economic growth in Southeast Asia

Southeast Asia is not only culturally and economically diverse, the region faces a significant digital divide within countries and across the region. Despite making strides in digital transformation during the pandemic, achieving full participation in the digital economy remains a challenge. While approximately 75% of the population is online, primarily using mobile devices, about 30% still lack reliable internet access.

Recognising the importance of MSME inclusion, ASEAN governments have placed a high priority on digitalisation efforts. Initiatives such as the e-commerce provisions within the Regional Comprehensive Economic Partnership demonstrate a commitment to supporting MSMEs in their growth journey. Additionally, under Indonesia’s chairmanship, ASEAN is currently working on the ASEAN Digital Community 2045, which emphasises four key pillars: value added, governance, digital connectivity, and digital inclusivity. This initiative underscores the urgency of digital transformation and underscores the establishment of a cohesive ASEAN digital community.

ASEAN member states are also at different stages of digital transformation, with varying pace of regulatory evolution. Regulatory alignment and operational certainty are vital for businesses to grow with confidence. Practical and feasible implementation is crucial for businesses. ASEAN’s Model Contractual Clauses (MCCs) serve as a practical solution for small businesses. These standardised contractual terms and conditions can be readily adopted in legal agreements involving cross-border transfers of personal data. By providing such templates, ASEAN facilitates smoother operations and compliance for businesses in the region.

In conclusion, the roundtable discussion highlighted the dual importance of cooperation amongst states, and between the public and private sector, to drive economic growth and inclusive, sustainable development in the region.

About Japan Center for Economic Research (JCER)

The Japan Center for Economic Research (JCER) is a nonprofit private research institute established in 1963. Under the rapidly globalizing economic environment, JCER has conducted macroeconomic forecasts from an advanced and long-term perspective as well as researches and studies in various fields: economy, finance, industry, and management. They have been also actively providing policy proposals to both domestic and global issues. JCER is widely connected in academia, government, and industry. About 340 leading companies, organizations and universities mainly in Japan are supporting JCER activities as theirr members. They are also expanding their global partnership through collaborative researches, seminars and cooperative activities among others.

Please also find the official minutes of the virtual roundtable written by Maria Monica Wihardja, Visiting Research Fellow, JCER here.