ASEAN and digital transformation efforts

The Association of Southeast Asian Nations (ASEAN) is leading the digital economic transformation in the Asia-Pacific region. Digital transformation efforts are helping ASEAN expand trade and strengthen economic cooperation.

The presence of QRIS for cross-border transactions makes Indonesia the leading country in ASEAN in digital payment transactions. (Source: Tribunnews)

Digital transformation is a strategy aimed at building a sustainable ASEAN Community, with political cohesion, economic integration and shared social responsibility, ensuring the maintenance of the central position of dynamic Asia.

Cross-border payments

A regional cross-border payments system that Southeast Asian countries have recently launched is expected to help strengthen financial integration among participating countries, bringing the ASEAN bloc closer to its goal of economic cohesion.

Five countries including Indonesia, Malaysia, Singapore, Thailand and the Philippines have agreed to cooperate in ASEAN cross-border payments using QR codes or e-wallets to enable fast payments and allow users to transact in local currencies.

Central banks from five countries, including Bank Indonesia (BI), Bank Negara Malaysia (BNM), Monetary Authority of Singapore (MAS), Bank of Thailand (BOT), and Bangko Sentral ng Pilipinas (BSP), are working together to create a faster, cheaper, more inclusive and transparent cross-border payment system in ASEAN.

Under the agreement, these banks commit to using the local currencies of all ASEAN countries as official means of payment and converted at the current exchange rate in each country.

In January 2023, Indonesia and Malaysia tested a cross-border payment system using QR codes and it became an official payment method on May 8.

Previously, cross-border payment cooperation using QR codes was successfully deployed in Thailand and Indonesia.

Data from Bank Indonesia shows that the number of transactions by Indonesian tourists in Thailand using QR codes reached 14,555 times, with a value of Rp 8.54 billion (Indonesian Rupiah, about VND 13.4 billion). Meanwhile, the number of transactions by Thai tourists in Indonesia with QRIS was 492 transactions, worth Rp 114 million (VND 179 million).

QRIS combines different QR codes from payment system service providers for more centralized and convenient transactions. Users do not need to have an account or use multiple applications to make payments. This makes digital transactions using QR codes easier, faster and more secure.

Bank Indonesia is promoting the use of QRIS as an official payment method in other ASEAN countries so that each central bank can standardize digital payments using digital financial applications, such as mobile banking and e-wallets.

Easy and fast payments can boost trade and tourism within ASEAN. For example, Indonesian tourists do not need to have Ringgit when transacting in Malaysia. The QRIS payment system will instantly convert Rupiah to Ringgit at the current exchange rate when making a transaction.

At the ASEAN Summit last May, leaders also reiterated their commitment to the project, pledging to develop a roadmap to expand regional payment connectivity to all 10 ASEAN members.

The program aims to support and facilitate cross-border trade payments, investments, remittances and other economic activities, aiming to deploy an inclusive financial ecosystem across Southeast Asia.

“A unified cross-border digital payment system would promote a sense of regionalism and ASEAN centrality in managing international affairs,” said Nico Han, Southeast Asia analyst at Diplomat Risk Intelligence, the advisory and analysis arm of The Diplomat magazine.

On September 3, negotiations on the ASEAN Digital Economy Framework Agreement (DEFA) were launched within the framework of the 23rd ASEAN Economic Community Council (AECC) Meeting, demonstrating strong cooperation among ASEAN countries in promoting digital economic transformation in the region. This is considered an important step forward in cooperation among ASEAN countries to exploit the great potential of the digital economy.

Closing the gap

Promoting digital transformation to restore ASEAN after the pandemic and enhance the region's competitiveness in the medium and long term is considered one of the five key recovery strategies of the ASEAN Comprehensive Recovery Framework, which are: strengthening the health system; ensuring human security; promoting intra-regional markets and connectivity; promoting digital transformation; and sustainable development.

In January 2021, ASEAN emphasized the importance of digitalization through the ASEAN Digital Masterplan 2025 (ADM) announced at the first ASEAN Digital Ministers Meeting. The plan aims to transform ASEAN into a leading digital community and digital economy supported by digital transformation services, technology and ecosystems, and ensuring cybersecurity to promote a trustworthy digital space.

However, narrowing the gap and ensuring equality in digital access among countries in the region as well as between people within each country is one of the important factors in building an inclusive ASEAN digital community. At the online conference on Narrowing the Digital Divide in ASEAN in September 2021, experts said that as digitalization adoption increases, ASEAN governments need to invest more in infrastructure.

According to experts, people, especially rural areas and small businesses in ASEAN, should be ready to adapt to create economic value after being connected. A comprehensive approach is necessary to achieve equitable and effective results.

Source: https://baoquocte.vn/asean-va-no-luc-chuyen-doi-so-241176.html