Digital platforms have emerged as

one of the most powerful catalysts

that transform the way we produce,

consume, contribute, and transcend

traditional value chains – creating a

competitive advantage for

organizations and society in general.

Today, most manual activities in

organizations are being digitized,

and the platforms that enable this

offer greater convenience to

consumers, and help micro, small,

and medium-sized enterprises get

wider access to resources – thereby

MAKING DIGITAL PLATFORMS THE DRIVERS OF THE SOUTHEAST ASIAN ECONOMY

amplifying global reach. However, as

is the case with any technology or

innovation, the platform economy

offers benefits, as well as challenges.

The question that immediately comes

to mind is, ‘Can we fully leverage

these benefits while addressing the

challenges?’ Let’s look at the

Southeast Asian (SEA) economy and

discuss how it can successfully adopt

an orchestrated approach to its

advantage.

Broadening opportunities for employment and work-life balance

Digital platforms have been known for creating new jobs such as crowd workers,

drivers of ride-hailing apps, riders of food delivery services, etc. While some of

these jobs are not new per se, the modalities of matching workers to jobs

through platforms definitely are – thanks to payment schemes and value

accumulation in platforms. The likes of Grab and Gojek are now evolving into

‘super apps’ and labor platforms, providing employment to individuals who had

no prior work experience. Another defining feature of digital platforms is the

flexibility they provide – giving the power back to the people, by offering

short-term tasks at relatively low costs (‘firm-driven’ flexibility), at the same time,

allowing workers to achieve work-life balance (‘worker-driven’ flexibility).

Digital platforms offering a plethora of opportunities in SEA

Before the pandemic, SEA had a

collective GDP growth rate of

approximately 5%, which is 2

percentage points above the global

average, making SEA one of the

world's best performing regions.

While the region has amassed

economic prowess over the last

decade, there is still significant

disparity in the economic

progression amongst the constitute

markets of this region. A majority of

these constituent markets are in a

developing stage, struggling to get

the investments needed for inclusive

growth. Nevertheless, the

emergence of digital platforms and

opportunities to leapfrog to new

ways of working are enabling

organizations and the societies alike

to reap substantial benefits.

1

Improving accessibility

Lack of access has been a traditional

barrier, and although not completely

eliminated, is starting to get

addressed as digital platforms expand

cross-border trade through

e-commerce – particularly in moving

goods across national borders. In my

view, e-commerce has transformed

trade in at least three ways –

improving cost-efficiency in the flow

of information and products across

borders, accelerating the flow of

funds through e-payment systems

with built-in validation mechanisms,

and growing the traffic of parcelized

cross-border shipments.

Digital payments and QR codes triggering growth

It’s a known fact that the emergence

of digital payments and QR codes

has favoured e-commerce, not just

across borders but in every

household. A number of studies have

posited that digital payment solutions

tend to catalyze consumer spending –

even for offline businesses. Digital

payments also enable financial

inclusion, the rise of mobile money

and fintech payment systems in

general, while fostering financial

inclusion of previously unbanked or

underbanked individuals. For example,

in Association of Southeast Asian

Nations (ASEAN) economies, close to

41% of fintech payment users in 2018

were unbanked or underbanked. The

relative importance of card and

e-money payments is significant,

and rising in emerging economies,

accounting for over 60% of the total

cashless payment volume in Southeast

Asia. As a result, mobile money

Bridging the digital gap

With rising literacy, digital platforms

are playing a crucial role in closing

the digital gap. They are filling the

gaps and providing services and

solutions – especially in places where

state mechanisms are unavailable. For

example, unbanked populations in

underserved rural areas are availing

online consultations with professional

physicians – by opening payments

accounts and storing value securely

through a mobile payments bank.

Also, in regions that are sparse in local

educational institutions – a mobile

device is being used to access the

curriculum, coursework, and lectures

from other sources.

2

transactions have increased

substantially in volume and value. We

saw this particularly in the case of

Singapore, where the government’s

distribution of cash assistance was

done via digital platforms during the

COVID-19 pandemic.

Improved access tohealth care

Health care providers are now

providing quality health services

anytime, anywhere without payment

challenges. Health care in Singapore,

and Indonesia in particular, is extending

its reach significantly by riding on the

backbone of digital platforms.

Well-designed digital health

offerings are making it easier to

deliver patient-centric health care.

Cloud-based health databases (subject

to satisfying the security, privacy and

confidentiality parameters) are

facilitating mobile solutions for

clinicians. Digital platform solutions

carry substantial promise in making the

health service delivery more efficient

and inclusive, ultimately improving the

quality of health care received.

Growth in the onlineeducation market

The global online education market

has witnessed rapid growth,

powered by the onset of disruptive

digital technologies - in turn,

providing quality education for all.

The COVID-19 pandemic has also

provided an impetus for online

learning. With digital platforms

bridging the connectivity gap, the

unprecedented and sudden closure

of educational institutions caused a

dramatic shift to online learning.

This became the primary response to

the widespread disruptions in

schooling caused by the pandemic.

3

Data possiblystifling competition

The economies of scale and scope,

data-driven network effects, and

control of data, pose high entry

barriers for aspirants, effectively

rendering the platform as a

non-neutral intermediary. So, not only

are the dominant players becoming

bigger monopolies, but their growing

presence and hold over data is also

serving as a deterrent for others to

get in.

The enduringchallenges

Notwithstanding the several benefits that digital platforms offer, it is important

to recognize that there are attendant risks that need to be managed. For one,

the ‘winner-takes-all’ dynamics, typical in platform-based economies, leads to

significant market concentration. Likewise, concerns about security, privacy, and

movement and ownership of data, must be considered when formulating

policies. This is especially relevant since the growth of the digital economy is

fueled by the generation, storage, processing and transfer of data – both within

and across borders.

Presence of dominantdigital platforms

Southeast Asia is no different when it

comes to witnessing market

concentration and the dominant

presence of digital platforms. Grab,

for instance, has been enjoying a

virtual monopoly in car-hailing, and

has also been able to leverage its

market leadership in payments, food

delivery and parcel delivery.

4

Need for enhanced governance

With the emergence of new work

streams and models facilitating the

employment of millions of people,

the platforms and the regulations

around them point to the lack of

social protection due to their

exclusion from legal coverage. The

problem is further exacerbated on

account of low and inconsistent

earnings, and complicated

administrative processes. The

COVID-19 crisis has amplified these

consequences and stirred up

discussions around minimum pay,

health insurance and other

work-related benefits.

5

Need for consistent policies

A varying degree of economic strength,

taxation policies and FDI rules can lead

to fairly fragmented outcomes for

countries in the SEA region as they look

to develop and leverage digital

platforms. Policies that have significant

gaps in designing competitive tax

environments to international

investors, and the ones concerning

local taxation while offering or

consuming services through these

platforms, need to be revisited. Lack of

a coherent approach in the region can

impact the attainment of long-term

sustainable development goals.

Regulatory challenges

Unregulated data access and

vulnerabilities in privacy and security

carry substantial risk. Despite the

existing frameworks in place to

regulate digital data collection and its

usage, there is no binding regional or

international framework that provides

a single standard for legal data

transfers among various jurisdictions

in Asia. The exponential

developments in technologies cause a

huge regulatory challenge that

requires a fresh approach. On the flip

side, as technology evolves at a speed

faster than society and governments

can keep up, the lack of information

and expertise can prompt authorities

to immediately regulate a new

business model, and this may

discourage innovation and

experimentation.

Furthermore, the lack of

universal-level obligations for digital

platform providers can lead to

non-inclusive growth. The opportunity

to have access to digital platforms is

equally important to people as having

access to clean water, electricity, etc.

– which governments classify as

‘essential services’. While the

platforms are ‘for profit’, there

currently seems to be no real

obligation on them to ensure inclusive

growth and participation.

6

In the expanding ‘contactless’ world, countries and organizations need to

continue pushing the frontiers of digital platform development, and focus on

maximizing the opportunities while addressing the inherent challenges.

Balancing profitably with inclusive growth

The guiding principle around the

development, expansion and policy

framework surrounding digital

platforms must certainly be ‘inclusive

growth balanced with profit-making’.

Leveraging opportunities,conquering challenges

Customer-centricity, which may be

regarded as a cliché in the corporate

world, is of paramount importance

here. Considering that the focus is on

the citizens, workers and SMEs that

lack access to technology and its

benefits, this needs to be at the

center of the evolving economy and

ecosystem.

Improving theregulatory system

Existing policies and processes for

data protection are often fragmented

across platforms and borders, and

national data policy and legislation is

still in its nascent stage of

development in many countries.

Policymakers need to come forth to

ensure that a level playing field exists

for incumbents and new entrants – to

strike a balance between collecting &

analyzing the personal data of

consumers, and innovating – while

also addressing the concerns related

to ownership of data. Efforts to adopt

and replicate the best practices across

regions can help broaden the access

to safe and secure digital financial

services and payment options. This

will help build a smarter, transparent

and robust regulatory system for

digital platforms – by protecting

personal data and strengthening

cybersecurity.

Continued investments

The success of digital platforms

depends on continued attention and

investments in adjacent

infrastructure. This includes

enhancing mobile and broadband

services, as well as expanding internet

access and coverage – so different

segments of the population can tap

into the power of digital platforms

with greater ease and accessibility.

Towards this, the SEA region needs an

estimated $900+ billion in additional

investments to deliver affordable

mobile and broadband services.

Facilitating the movementof goods

Improving the trade and logistics

processes to address the existing

barriers to the delivery of goods is yet

another vital step towards maximizing

the opportunities in the SEA region.

Currently, the gap in logistics

performance between the ‘most’ and

‘least’ connected economies remains

wide. It’s also important to leverage

the technologies needed to make

customs clearance and border

procedures seamless.

Improving privacy anddata security

As digital platforms depend

increasingly on the creation,

processing, storage and transfer of

data during various transactions, the

upholding of data access and security

are becoming strategically important.

Harnessing data flows while

addressing concerns related to

privacy and security on these digital

platforms should be prioritized in

7

order to reap the wide range of

opportunities.

In the absence of supporting policies, economies that are unable to produce

goods competitively and market them effectively through the e-commerce

channel, may simply burden their local players with challenges related to

distribution and cross border supply chain. For this reason, interventions need to

go beyond merely supporting local players and provide a robust digital

infrastructure. It is imperative for countries to have a clear road map with respect

to the kind of enterprises they intend to nurture in the e-commerce space, and

the manner in which they will be supported.

Strengtheningcommunication linkages

Adequate trade initiatives and

agreements can streamline the

information exchange among all

parties involved in e-commerce

transactions. Furthermore, linkages

Policy reforms and Public-PrivatePartnerships lead the way

8

need to be strengthened between

various customs offices and also

between producers / sellers, postal

authorities, customs offices,

and buyers.

9

Collaboratingwith policy-makers

Technology and digital platforms

tend to evolve at a pace faster than

the ability of policymakers to

perceive the impact and frame

supporting policies. In such a

scenario, platform providers can take

the initiative of apprising the

governments and policymakers on

how the changes bear an influence on

societies and countries.

While a lot can be achieved, the

private sector is limited in its

capacity to bring about a systemic

transition. Partnerships among

stakeholders such as the

governments, the private sector and

civil society can prove to be useful in

searching for novel and

‘experiential’ regulatory models.

Such collaboration and co-creation

of regulatory models or initiatives

can unleash opportunities to

Policy alignment

Framing local policies that help build

intergovernmental mechanisms to

assist cross-border transfer of data

may be a smarter way to overcome

roadblocks than lobbying for a

general and comprehensive

international data protection

regime. This can include promoting

cooperation among enforcement

authorities, instituting mechanisms

that allow data subjects to enforce

data protection rights in all relevant

jurisdictions, and pushing for

uniform certification standards for

controllers. All these can improve

the objectivity and predictability of

data transfer standards.

leapfrog to higher levels of

sustainable development –

bypassing resource-intensive

development paths. The transition

can create new employment

opportunities, through increased

innovation and entrepreneurship on

digital platforms and beyond.

As we continue to witness the

exponential growth and strength of

the digital platform economy

worldwide, we need to sustain our

excitement and interest in the

opportunities that digital platforms

bring, and follow them as they go

about transforming the

socioeconomic development as well

as our everyday lives like never

before. I also urge organizations to

be forward-looking as they search

for novel ways to stay competitive

and take their business to the next

level – while also keeping a keen eye

on consumers tapping into and

enjoying the plentiful options these

platforms provide.

10

Authors

Olaf PietschnerCEO CapgeminiAPAC & Middle East

Gaurav ModiMD South East AsiaCapgemini

Deepak SarikaConsultantCapgemini

Vivianne TanSenior AnalystCapgemini

About Capgemini

Capgemini is a global leader in partnering with companies to transform and manage their business by harnessing the power of technology. The Group is guided everyday by its purpose of unleashing human energy through technology for an inclusive and sustainable future. It is a responsible and diverse organization of 270,000 team members in nearly 50 countries. With its strong 50 year heritage and deep industry expertise, Capgemini is trusted by its clients to address the entire breadth of their business needs, from strategy and design to operations, fuelled by the fast evolving and innovative world of cloud, data, AI, connectivity, software, digital engineering and platforms. The Group reported in 2020 global revenues of €16 billion.

Get the Future You Want | www.capgemini.com

Copyright © 2021 Capgemini. All rights reserved.