Driven by the wave of digital economy, the Asia-Pacific region is undergoing unprecedented transformation and upgrading. According to the latest Asia-Pacific Economic Cooperation (APEC) digital economy report released in October 2024, the digital economy in the Asia-Pacific region has exceeded US$3.5 trillion, accounting for nearly 32% of regional GDP. It is expected to grow at an average annual rate of 15% by 2025. % rate continues to grow. As an important engine of global economic growth, Asia-Pacific countries are entering the fast lane of digital development at different speeds and paths. From the “Smart Nation 2025” strategy promoted by Singapore with an investment of S$50 billion, to Indonesia’s ambitious goal of achieving a digital economy scale of US$330 billion in 2024; from the comprehensive digital society construction of Society 5.0 in Japan, to Vietnam’s digital transformation from 2021 to 2025 With the accelerated implementation of the plan, we are witnessing a profound regional digital revolution. In the post-epidemic era, the reconstruction of the global industrial chain and the superposition of digital transformation have made the digital economy the only way for companies to go global and a key engine for regional economic recovery. This article will give you a comprehensive analysis of the development panorama of the Asia-Pacific digital economy, an in-depth analysis of the digital layout of each country, and provide practical strategic guidance for companies to go overseas. Whether you are an entrepreneur evaluating the market or a traditional enterprise seeking transformation, this in-depth analysis will help you seize the opportunity in the blue ocean of the Asia-Pacific digital economy.
Overview of Asia-Pacific digital economy development
In the third quarter of 2024, the digital economy in the Asia-Pacific region showed unprecedented growth. According to the latest “2024 Asia-Pacific Digital Economy Monitoring Report” released by the Asian Development Bank, as of October 2024, the total scale of the digital economy in the Asia-Pacific region has reached 3.5 trillion US dollars, and its proportion in regional GDP has climbed to 32%. Among them, East Asia leads the way with a share of 38%, followed by Southeast Asia at 28%, South Asia and Oceania at 22% and 35% respectively. It is worth noting that the annual growth rate of the digital economy in emerging markets such as Vietnam, Indonesia and the Philippines has exceeded 20%, showing strong development momentum.
From the perspective of regional digital economic development characteristics, the Asia-Pacific region presents three significant characteristics. First, the construction of digital infrastructure has been accelerated, and 5G network coverage has generally increased. The 5G penetration rate in Singapore and South Korea has exceeded 85%, and countries such as Vietnam and Indonesia have also achieved full 5G coverage in major cities by 2024. Secondly, the digital payment revolution continues to deepen. Cross-border payment interconnection projects represented by India’s UPI and Singapore’s PayNow have rapidly expanded, driving regional payment efficiency to increase by more than 65%. The third is the accelerated pace of industrial digital transformation. As of the third quarter of 2024, more than 75% of small and medium-sized enterprises in the region have carried out digital transformation, an increase of 18 percentage points from the same period in 2023.
In the post-epidemic era, the Asia-Pacific digital economy has shown five major new trends: First, the construction of the “Digital Silk Road” has accelerated. China and ASEAN, Japan and South Korea and other countries have deepened cooperation in digital infrastructure, cross-border e-commerce and other fields. In 2024, cross-border digital trade will The amount increased by 45% year-on-year. The second is to accelerate the layout of the Metaverse industry. The “Metaverse Industry Promotion Law” launched by the Korean government has been officially implemented in September 2024, and it plans to invest 1.7 trillion won to support the development of related industries by 2026. The third is the popularization of artificial intelligence applications. Singapore’s latest “AI Go Global” plan provides corporate AI application subsidies of up to S$2 million to promote the implementation of AI technology in manufacturing, finance, medical and other fields. Fourth, data security compliance requirements have been upgraded. Japan’s revised “Personal Information Protection Law” and Indonesia’s new “Data Protection Law” will be implemented in 2024, putting forward stricter requirements for cross-border data flow. Fifth, the green digital economy is developing collaboratively. More than 60% of data centers in the region use green energy, and the application scope of digital technology in environmental governance continues to expand.
Of particular concern is the fact that governments in Asia-Pacific countries are promoting the development of the digital economy through a series of new policies. For example, Malaysia recently launched the “Digital Investment Office” to provide one-stop services for digital economy projects; Thailand launched an upgraded version of the “Thailand 4.0+” strategy and plans to invest 200 billion baht in digital technology by 2025. Industrial development; Vietnam launched the “Digital Talent Training Plan” in the fourth quarter of 2024, with the goal of cultivating 1 million digital technology talents by 2025.
The Asia-Pacific digital economy will continue to grow. McKinsey’s latest forecast shows that by the end of 2025, the region’s digital economy is expected to exceed US$4.5 trillion, with an average annual compound growth rate of more than 15%. Among them, the digitalization of enterprise services, industrial Internet, and smart city construction will become the main driving forces for growth. For companies hoping to expand into the Asia-Pacific market, seizing digital transformation opportunities, connecting with the local digital ecosystem, and establishing a compliance operation system will be the key to success.
Benchmarking digital economy development in key countries
2.1 Digital economy leader
As a benchmark for the digital economy in the Asia-Pacific region, Singapore has achieved remarkable results in the past two years since its “Smart Nation 2025 Plan” was implemented. As of the third quarter of 2024, Singapore’s digital economy accounts for 47% of GDP, ranking first in the Asia-Pacific region. The government has recently added an additional S$15 billion in special funds for digital transformation, focusing on three major areas: artificial intelligence, quantum computing and network security. It is worth noting that Singapore’s “Digital Trust Ecosystem Plan” launched in October 2024 has established the world’s first national-level digital identity mutual recognition system, and more than 200 multinational companies have joined.
Japan continues to deepen its digital transformation through the Society 5.0 strategy. In the fiscal year 2024 budget, spending in the digital field reached 1.2 trillion yen, a year-on-year increase of 35%. Key projects include the upgrade of the national digital government platform, the industrial digital transformation subsidy plan and the construction of a digital talent cultivation system. Especially in terms of manufacturing digitalization, Japan has proposed the concept of “Industry 6.0” and plans to achieve 70% of manufacturing companies introducing AI and IoT technologies by 2025.
South Korea’s Digital New Deal 2.0 plan will usher in an important breakthrough in 2024. The government has invested 89 trillion won in building national digital infrastructure, including 6G research and development, quantum communication networks and the Metaverse platform. South Korea has become the first country in the world to achieve nationwide 5G coverage, with the average mobile network speed reaching 789Mbps. The annual output value of its digital content industry has exceeded US$100 billion, and the growth rate of digital service exports has remained above 30% for three consecutive years.
2.2 Rapidly developing emerging markets
Indonesia’s digital economy has achieved leapfrog development, reaching US$150 billion in 2024, and is expected to exceed US$200 billion in 2025. The “Digital Indonesia 2024-2030 Roadmap” released by the government proposes five pillar industries: e-commerce, financial technology, online media, online travel and online education. It is worth noting that Indonesia has launched a “digital special zone” plan to set up exclusive digital economy parks in five major cities including Jakarta and Surabaya to provide tax incentives and implementation support.
Vietnam’s digital economy ranks first in Southeast Asia, with a year-on-year growth of 28% in 2024 to reach US$38 billion. The “Digital Economy Development Master Plan 2025” implemented by the government has achieved remarkable results, with the penetration rate of electronic payment increasing from 62% in 2023 to 85% in 2024. The number of digital industrial parks in Vietnam has reached 23, attracting many technology giants including Google and Microsoft to set up R&D centers. The “Digital Economy Investment Incentive Policy” introduced in the fourth quarter of 2024 will provide foreign-funded enterprises with up to 50% of R&D expense subsidies.
Malaysia’s MyDIGITAL plan has entered a deepening stage, with the digital economy contribution rate reaching 22.6% in 2024 and the digital industry creating more than 500,000 jobs. The government has established a 10 billion ringgit digital transformation fund to focus on supporting the digital upgrading of small and medium-sized enterprises. Especially in the field of digital finance, 5 digital bank licenses have been issued, and the scale of digital payments is expected to exceed 200 billion ringgit in 2025.
2.3 Potential market
The Philippine digital economy is ushering in a period of accelerated development, reaching US$32 billion in 2024, with an annual growth rate of more than 25%. The “Digital Philippines 2028” plan launched by the government plans to invest 250 billion pesos in the next four years to build digital infrastructure. E-commerce and financial technology have performed well, with the annual growth rate of mobile payment users reaching 55%.
The upgraded version of Thailand 4.0 strategy will be implemented in 2024, proposing the goal of building an “ASEAN Digital Center”. The government has established a 100 billion baht digital innovation fund to focus on the development of smart cities, digital healthcare and smart manufacturing. It is expected that by 2025, the proportion of the digital economy in GDP will increase from the current 20% to 25%. Of particular concern is the “Digital Talent Visa” policy launched by Thailand, which provides high-skilled digital talents with up to 4 years of work residency.
Although Cambodia’s digital transformation started late, it has strong momentum of development. The scale of the digital economy will reach US$3.8 billion in 2024, an increase of 32% compared with 2023. The “Digital Cambodia Framework 2024-2028” implemented by the government focuses on promoting the popularization of electronic payments and the digitization of small and medium-sized enterprises. With the support of China’s “Digital Silk Road” initiative, Cambodia’s digital infrastructure construction has accelerated, and three digital economy demonstration zones have been built.
The leading market has formed a mature digital ecosystem, providing enterprises with a high-quality business environment and innovation platform. Emerging markets have huge growth potential and strong policy support, making them suitable for rapid deployment and large-scale development. Although the potential market has a weak foundation, it has fast growth, low costs and less competition, making it suitable for early entrants.
When companies choose markets, it is recommended that they formulate differentiated market entry strategies based on their own development stages and business characteristics. At the same time, we need to pay close attention to changes in digital economy policies in various countries and seize the development opportunities brought by the policy dividend period.
Digital Infrastructure Assessment
In terms of 5G network construction, the Asia-Pacific region has entered the full commercial stage. As of the third quarter of 2024, the total number of 5G base stations in the region has exceeded 3.8 million, and the user penetration rate has reached 45%. South Korea continues to lead the way with a 5G penetration rate of 92%, followed by Japan (78%) and Singapore (85%). It is noteworthy that 5G construction in emerging markets in Southeast Asia has accelerated significantly. Indonesia has achieved full 5G coverage in six major cities including Jakarta, and Vietnam plans to invest US$5 billion in building a national 5G network by 2025. According to the latest GSMA forecast, the number of 5G connections in the Asia-Pacific region will reach 1.4 billion by the end of 2025, accounting for 42% of the global share. What is particularly noteworthy is that starting in the fourth quarter of 2024, Japan and South Korea have launched 6G technology research and development, and are expected to conduct the first commercial test in 2028.
The data center industry landscape is being reshaped. In 2024, there will be more than 200 large-scale data center projects under construction or planning in the Asia-Pacific region, with a total investment of US$48.5 billion. Although Singapore continues to maintain its status as a data center hub, due to energy consumption constraints, it has turned to the development of high-efficiency green data centers. Indonesia and Vietnam have become new hot markets, and the area of new data centers in 2024 will increase by more than 65% year-on-year. It is worth noting that the construction of green data centers in the region is accelerating. As of October 2024, more than 70% of new data centers will be powered by renewable energy, and the energy usage efficiency (PUE) is generally lower than 1.5. India’s latest “Data Center Incentive Policy” provides subsidies of up to 25% of project costs, promoting Mumbai and Bangalore to become new data center clusters.
Cloud computing infrastructure construction presents new characteristics. The Asia-Pacific cloud computing market will reach US$185 billion in 2024, with the annual growth rate remaining above 32%. Among public cloud services, AWS, Alibaba Cloud, and Microsoft Azure account for 75% of the market share. Especially in the field of hybrid cloud, enterprise adoption rate will increase from 45% in 2023 to 68% in 2024. Singapore’s “Cloud First Transformation Plan” provides small and medium-sized enterprises with cloud service subsidies of up to S$300,000, driving an increase in the overall cloud computing penetration rate. Japan’s “Cloud Computing Security Standards” revised in 2024 have strengthened data sovereignty requirements and promoted the rapid development of local cloud service providers. It is worth noting that the demand for edge computing is growing rapidly. It is expected that by the end of 2025, the proportion of edge computing in the cloud computing market will increase from the current 15% to 25%.
The development of the Internet of Things has entered the stage of large-scale application. In 2024, the number of IoT connected devices in Asia-Pacific will reach 12.5 billion, and IoT spending will reach US$436 billion. Industrial Internet of Things has become the largest application scenario, accounting for 42% of total spending. South Korea’s “Smart Manufacturing 2025 Plan” has promoted the penetration rate of IoT applications in the manufacturing industry to 78%, ranking first in the Asia-Pacific. Smart city construction has become a new engine for the development of the Internet of Things. The “Smart City Internet of Things Platform” launched by Singapore in 2024 has been connected to more than 100,000 sensors to achieve real-time monitoring of city-wide data. Of particular concern is the deep integration of 5G private networks with the Internet of Things, providing new momentum for the industrial Internet. Japan has deployed more than 100 5G private network projects in manufacturing, ports, mining and other fields.
Based on the current development trend of Asia-Pacific digital infrastructure, companies are advised to adopt a “core-radiation-extension” strategic layout model when planning regional digital infrastructure layout. Use mature markets such as Singapore, Tokyo, and Seoul as regional headquarters and core nodes to take advantage of their complete infrastructure, talent pool, and policy environment; at the same time, we will deploy localized data centers in emerging markets such as Jakarta, Ho Chi Minh City, and Manila to meet rapid growth data processing needs; and proactively reserve development space in potential markets such as Bangkok and Phnom Penh to prepare for future expansion.
In terms of technology route selection, hybrid cloud architecture is becoming the optimal solution for regional infrastructure deployment. Hybrid cloud can effectively balance efficiency and compliance requirements, while supporting the construction of edge computing nodes to improve local service capabilities. Especially in areas with intensive manufacturing industries, enterprises can create industry-specific solutions by deploying 5G private networks to achieve differentiated competitive advantages in digital transformation. In this process, strictly abiding by the data localization requirements of each country, establishing a multi-regional disaster recovery system, and obtaining necessary security certifications will provide a strong guarantee for the company’s continued operations.
In terms of investment cost optimization, it is recommended that enterprises make full use of preferential policies for digital infrastructure construction in various countries. For example, you can obtain subsidies by participating in government-supported green data center projects, adopt new generation energy-saving technologies to reduce operating expenses, and establish strategic partnerships with local operators to achieve co-construction and sharing of infrastructure, thereby effectively controlling the overall investment scale.
Asia-Pacific digital infrastructure construction will usher in a new round of upgrades. As 5G networks enter the deep coverage stage, 6G technology research and development accelerates, green data centers gradually become the industry standard, and distributed architectures become increasingly popular. Hybrid cloud and multi-cloud strategies will be further deepened, the scale of edge computing will continue to expand, and the deep integration of the Internet of Things and artificial intelligence will continue to create new application scenarios. In this context, enterprises need to establish a dynamic response mechanism, continue to pay attention to changes in digital infrastructure policies in various countries, seize the policy dividend period, and build a digital infrastructure system that is both efficient and resilient.
Digital skills and talent pool
Digital talent training policies in the Asia-Pacific region show differentiated development characteristics. Through the “SkillsFuture 2025” plan, Singapore has invested S$3 billion in digital talent training, focusing on the development of artificial intelligence, network security and data analysis. This program has benefited more than 120,000 employees, and company reports show that the average salary of trainees has increased by 25%. Japan adopts an industry-university-research linkage approach. The “Digital Talent Acceleration Program” launched in 2024 has established cooperation with 500 technology companies to provide practice-oriented training projects. The Korean government recently launched an upgraded version of “K-Digital Training” and plans to train 100,000 high-end digital talents by 2025, especially increasing investment in emerging fields such as the Metaverse and blockchain.
The IT education system in the region is undergoing profound changes. With its complete engineering education system, India produces more than 1 million graduates in IT-related majors every year, but according to the latest industry survey, only 35% can meet the immediate needs of enterprises. To this end, the Indian government has joined forces with technology giants to launch the “Digital India Skill Hub” to provide full-cycle education services from undergraduate to vocational training. Singapore’s “Smart Nation Academy” adopts a modular curriculum so that students can independently combine learning content according to their career development needs. In 2024, more than 80,000 people will participate in the training. It is worth noting that Vietnam is rapidly copying the Indian model. 15 new digital technology colleges will be established in 2024. It is expected that the number of graduates in IT-related majors will reach 150,000 in 2025.
The digital skills certification system gradually achieves regional mutual recognition. Under Singapore’s initiative, the ten ASEAN countries will establish a “Digital Skills Mutual Recognition Framework” in 2024, with the first batch of 15 professional certifications covering the three fields of cloud computing, data analysis, and network security. Japan’s “Digital Skills Standard” (ITSS) has become a regional benchmark and has been adopted by South Korea and Taiwan. What is particularly noteworthy is that the participation of global technology giants has increased significantly. The number of Amazon AWS certification holders in the region has exceeded 500,000, and the Google digital skills certification program has covered more than 2 million people. Business surveys show that the average salary of certified IT practitioners is 38% higher than that of non-certified IT practitioners.
Cross-border talent flow presents new characteristics. Data in 2024 show that the total cross-border flow of digital talents in the region has increased by 42% year-on-year. With its competitive salary levels (average annual salary in the IT field is S$85,000) and livable environment, Singapore continues to become a talent gathering place. It is worth noting that Vietnam and Indonesia are becoming new talent destinations, with foreign digital talents increasing by 85% and 65% year-on-year. Multinational companies have begun to adopt a “talent sinking” strategy and relocate some R&D positions to lower-cost Southeast Asian countries. The salary survey in the fourth quarter of 2024 shows that the salary level of IT engineers in Ho Chi Minh City has reached 45% of that in Singapore, but the cost of living is only 30% of that in Singapore.
In terms of talent development trends, the demand for digital skills is undergoing profound changes. Traditional programming and development skills are still important, but artificial intelligence application capabilities, data analysis literacy, and digital security awareness are becoming core requirements for corporate recruitment. According to the latest talent demand forecast, by 2025, the Asia-Pacific region will create 2.8 million new jobs in digital transformation-related fields, of which more than 40% require interdisciplinary talents.
Faced with this trend, companies need to establish a long-term talent development mechanism. First of all, it is necessary to formulate a differentiated talent strategy based on business development planning, give priority to local recruitment in core technical positions, and adopt a global recruitment strategy in emerging technology fields. Secondly, establish a three-dimensional talent training system, combine internal training with external certification, and support employees to continuously improve their digital skills. At the same time, companies should make full use of the talent policy dividends of various countries, establish R&D centers in talent-intensive areas, and deploy delivery centers in emerging markets to form a gradient talent layout.
In addition, companies also need to innovate talent incentive mechanisms and adopt diversified solutions such as equity incentives and flexible work systems to attract and retain core talents. Especially in the post-epidemic era, the hybrid office model has been widely recognized, which provides new ideas for companies to break geographical restrictions and build global talent networks. By establishing a sound remote collaboration mechanism, companies can make full use of talent advantages in the region and build a competitive digital team.
Digital government construction
The development of e-government in the Asia-Pacific region shows significant echelon distribution characteristics. According to the United Nations’ 2024 e-Government Survey Report, South Korea, Singapore and Japan continue to rank among the top ten in the world. Among them, Singapore’s “Government Technology Stack” (SGTS) platform has achieved one-stop processing of 90% of government services, with average monthly visits exceeding 800 Thousands of people. The coverage rate of Taiwan’s “Personalized Digital Government Service Platform” reached 85%, and user satisfaction reached 96%. It is worth noting that Vietnam’s e-Government Development Index ranking has improved by 12 places compared with 2023. Its “Plan 175” promotes the online processing of 95% of government services, saving an average of approximately US$850 million in administrative costs annually. Especially in terms of mobile government affairs, India’s Unified Payment Interface (UPI) monthly transaction volume has exceeded US$2 trillion, driving the digital transformation of government services.
The openness of government data is entering the stage of deepening application. Japan’s “Data Open Regulations” revised in 2024 will expand the number of open data sets from the original 15,000 to 25,000, focusing on areas of people’s livelihood such as transportation, medical care, and the environment. South Korea’s “Public Data Open Portal” implements data as a service (DaaS) and supports more than 2,000 companies in data innovation applications. The “Data Trust Framework” launched by Singapore innovatively solves the issue of privacy protection for data sharing and has become a regional benchmark. Of particular note is the “Data Open Partnership Plan” launched by Thailand in 2024, which allows the private sector to participate in government data operations for the first time and is expected to drive an increase of 30 billion baht in the data economy.
The construction of smart cities has made breakthrough progress. As of the end of 2024, there are more than 500 smart city projects under construction in the Asia-Pacific region, with a total investment scale of US$285 billion. Singapore’s “Smart Nation 2025” plan achieves city-wide sensing network coverage, optimizes traffic flow through artificial intelligence technology, and reduces average commuting time by 23%. South Korea’s Songdo smart city pilot project successfully reduced carbon emissions by 35%, and the smart energy management system reduced residents’ electricity costs by 28%. Japan’s “Society 5.0” demonstration zone has been fully rolled out in six cities including Osaka and Fukuoka, and applications such as driverless buses and smart medical care have been accelerated. Malaysia’s newly planned “Forest City” project innovatively uses digital twin technology to achieve intelligent management of the city’s entire life cycle.
The construction of the digital identity authentication system has entered a new stage. Singapore’s “National Digital Identity” (NDI) system user coverage reaches 92%, supporting 350 high-frequency scenarios including bank account opening and medical services. India’s Aadhaar identity authentication system has an average monthly authentication volume of more than 4 billion times, effectively supporting the development of inclusive finance. In 2024, the ten ASEAN countries will launch the “Cross-border Digital Identity Mutual Recognition” project, with the first batch being piloted in Singapore, Malaysia, and Thailand, providing important support for regional integration development. Of particular concern is South Korea’s “decentralized digital identity” (DID) innovation based on blockchain technology, which has been piloted and promoted in five cities including Seoul.
Innovative practices in digital government construction are reshaping government service models. Intelligent customer service platforms based on artificial intelligence are put into use in many countries. Singapore’s “Ask Jamie” virtual assistant handles more than 150,000 inquiries per day, with an accuracy rate of 92%. Predictive government services have begun to take off. South Korea uses big data analysis to proactively provide school-related services to families of school-age children, improving service efficiency by 40%. The application scope of cloud native architecture in government affairs systems continues to expand, and Japan plans to migrate 80% of government affairs systems to the government affairs cloud by 2025.
The construction of digital government in the Asia-Pacific region will present four major trends : first, “zero-contact” government services will become standard, and full online processing will be achieved through biometrics, remote authentication and other technologies; second, the data-driven precision governance model will deepen, Realize the transformation from passive response to proactive service; third, cross-border government service interoperability will be accelerated, especially in areas such as trade and tourism; finally, government services will pay more attention to personalization and scenario-based services, providing customization that meets the needs of different groups Serve.
For companies involved in the construction of digital governments, they need to grasp three key points: first, to deeply understand the digital government strategic plans of various countries and accurately connect solutions with local development needs; second, to strengthen data security and privacy protection capabilities. This is The basic threshold for undertaking government projects; the third is to cultivate local service capabilities and carry out in-depth cooperation with local ecological partners through the establishment of joint innovation centers and other methods. Only in this way can we occupy an advantageous position in the increasingly competitive digital government market.
Digital economy regulatory environment
The data security regulatory system in the Asia-Pacific region is increasingly improving, showing more stringent and refined regulatory characteristics. Japan’s “Personal Information Protection Law” revised in 2024 will include biometric data in the scope of special protection for the first time, and companies that violate regulations can be fined up to 4% of annual turnover. South Korea’s new version of the “Data Industry Promotion Act” establishes a data classification system and puts forward higher security requirements for critical data. Singapore’s upgraded “Personal Data Protection Act” introduces the concept of “right to data portability” to give users greater data control. It is worth noting that Indonesia’s Personal Data Protection Law, which will take effect in 2024, requires all companies that handle the data of Indonesian citizens to set up a local data protection officer. This requirement has prompted more than 2,000 multinational companies to adjust their data governance structures.
Cross-border data circulation policies show a trend of “orderly openness”. Under the RCEP framework, regional data circulation rules are gradually unified, but each country still maintains greater autonomy. Singapore has established bilateral data circulation mechanisms with Japan, South Korea, and Australia through the “Trusted Data Channel” (TDC) project, serving more than 3,000 companies in total. The Hong Kong Special Administrative Region of China launched the “Data Interoperability Passport” program to simplify cross-border data compliance processes for enterprises. Of particular concern is the “Data Circulation Framework Agreement” reached at the ASEAN Digital Ministers’ Meeting, which will promote the free circulation of regional data in three phases starting from 2025. The latest data shows that compliant cross-border data circulation is driving a 35% annual growth in regional digital trade, with the total amount exceeding US$800 billion in 2024.
Cybersecurity regulatory requirements continue to increase, and the protection of critical information infrastructure has become a focus. Singapore’s revised Cybersecurity Law requires critical infrastructure operators to deploy a “zero trust architecture” and include 5G networks and cloud computing platforms in key protection areas. Japan has expanded the scope of application of the Cybersecurity Law to include digital service providers with an annual turnover of more than 1 billion yen under supervision. South Korea launched the “K-사이버방역” plan to invest 2.5 trillion won to build a national-level network security protection system. Cyber security incidents are on the rise in the region. Major security incidents reported in the first three quarters of 2024 increased by 45% year-on-year, with the average loss per incident reaching US$2.8 million.
The regulatory framework for digital payments has undergone major adjustments. The Monetary Authority of Singapore issued the “Payment Services Act 2.0”, which included cryptocurrency payments under supervision for the first time and required payment institutions to establish a real-time transaction monitoring system. Malaysia has launched an e-wallet license grading system and set differentiated regulatory requirements based on business scale. The Reserve Bank of India revised the payment system guidelines and increased the reserve ratio of third-party payment institutions to 25%. Especially in the field of cross-border payments, the “real-time payment interconnection” project launched by the five ASEAN countries has established unified compliance standards, and the average daily cross-border transaction volume has exceeded 1 million.
Facing the rapidly evolving regulatory environment, enterprises need to establish a dynamic compliance management system. First, a dedicated data compliance team should be set up to regularly assess the impact of regulatory changes in various countries on the business. Secondly, adopt the “Compliance as Code” solution to embed regulatory requirements into the system design. Third, establish a hierarchical data governance structure to ensure that data collection, storage, use, and transmission comply with local requirements.
When it comes to cybersecurity, businesses need to implement a “defense in depth” strategy. Statistics show that enterprises that adopt a zero-trust architecture reduce the incidence of security incidents by 65%. It is recommended that enterprises prioritize protecting core business systems, implement continuous security assessments, and conduct regular red team penetration tests. Especially after a security incident occurs, the reporting obligations of each country must be strictly implemented. Violation of reporting requirements may face severe penalties.
For digital payment businesses, companies must pay special attention to regulatory compliance. It is recommended to reduce compliance risks through localized operations and establish cooperative relationships with local licensed institutions. When developing innovative businesses, each country’s regulatory sandbox mechanism can be used for pilot testing to reduce compliance costs. It is worth noting that about 35% of fintech innovation projects in the region will be stopped due to compliance issues in 2024, prompting companies to find a balance between innovation and compliance.
In 2025, digital economy supervision will continue to deepen. It is expected that more special regulations will appear for emerging fields such as the Metaverse and Web3.0. Enterprises need to pay close attention to regulatory developments, proactively adapt to policy requirements, and build compliance capabilities into core competitiveness. It is recommended that enterprises adopt an “expectation management” strategy, lay out a compliance system that meets higher standards in advance, and win the development initiative in an environment of tightening supervision.
Industrial digital transformation
The e-commerce market is characterized by the rapid emergence of new business formats. The total e-commerce transaction volume in the Asia-Pacific region will reach US$3.8 trillion in 2024, a year-on-year increase of 28%. Social e-commerce accounted for more than 35% for the first time, and the annual transaction volume of live broadcast e-commerce exceeded US$800 billion. Indonesia’s e-commerce penetration rate will jump from 45% in 2023 to 68%. The growth of rural e-commerce is particularly significant, driving 3 million rural households to directly participate in the digital economy. It is worth noting that “Quick Commerce” is rapidly emerging in developed markets such as Japan, South Korea, and Singapore, and the 15-minute delivery circle covers 65% of the urban population. In terms of cross-border e-commerce, the ASEAN digital trade platform has achieved interconnection among the six countries, with annual cross-border orders increasing by 85%, providing new channels for small and medium-sized enterprises to explore international markets.
The transformation of intelligent manufacturing has entered a deepening stage. South Korea’s “Manufacturing Innovation 3.0” plan has driven 28,000 small and medium-sized enterprises to complete digital transformation, and the density of industrial robots has reached the world’s highest 1,000 units per 10,000 employees. Japan is promoting the construction of 5G private networks under the “Internet Industry” framework and has deployed it in 2,500 industrial parks, boosting manufacturing productivity by 32%. Singapore’s “Smart Factory Plan” supports companies in adopting artificial intelligence and digital twin technologies, and pilot companies have reduced production costs by an average of 25%. What is particularly noteworthy is that Vietnam has attracted the transfer of high-end manufacturing through the “Industry 4.0 Transformation Fund”. Investment in smart manufacturing will increase by 118% in 2024, becoming a regional emerging manufacturing center.
Financial technology innovation continues to deepen, and digital inclusive finance has made significant progress. Singapore has approved the issuance of 4 digital banking licenses, and the number of digital banking customers has exceeded 3 million, 60% of which are previously underserved groups. The average daily number of transactions in India’s Unified Payment Interface (UPI) has exceeded 800 million, driving the payment digitization rate in rural areas to 85%. South Korea’s digital securities trading platform based on blockchain technology is officially operational, achieving T+0 delivery and reducing transaction costs by 60%. It is worth noting that ASEAN countries have launched a “digital bank mutual recognition” pilot to promote the cross-border development of inclusive financial services. According to the latest survey, about 75% of consumers in the region have adopted digital payment as their preferred payment method.
Digital service trade has achieved leapfrog growth. The scale of digital services trade in the Asia-Pacific region will reach US$1.2 trillion in 2024, with digital content services, cloud computing services, and professional and technical services experiencing the most significant growth. India’s software service exports exceeded US$200 billion, and its global market share increased to 28%. The Philippines’ digital service exports increased by 52% annually, and digital talent services have become a new growth point. Singapore is building a “digital service trade corridor” and establishing a mutual recognition mechanism for digital service standards with Japan and Australia to promote service trade facilitation.
The digital transformation of industry presents five major trends: first, the application of artificial intelligence has moved from laboratories to production lines, and the level of intelligent decision-making in the manufacturing industry has significantly improved; second, the rapid development of industrial Internet platforms has led to an increase in the collaborative efficiency of the industrial chain; third, the concept of sustainable development Deeply rooted in the hearts of the people, green and intelligent manufacturing has become a new direction; fourth, digital transformation has moved from single-point breakthroughs to system reconstruction, and corporate organizational models have undergone profound changes; finally, digital capabilities have become the core competitiveness of enterprises, driving business model innovation.
For enterprises, to seize the opportunities of digital transformation, they need to pay attention to the following points:
In the field of e-commerce, companies need to establish omni-channel operation capabilities. The survey shows that enterprises with omni-channel layout have a 45% higher customer retention rate. It is recommended that enterprises focus on investing in private domain traffic construction and deepen user interaction through new models such as social e-commerce and live broadcast. At the same time, it is necessary to make full use of big data analysis to achieve precise marketing and personalized recommendations to improve marketing efficiency.
In terms of smart manufacturing, companies must adopt a progressive transformation strategy. It is recommended to pilot digital transformation in core production links first, and then gradually expand after proving the value. Special attention should be paid to the fact that technological transformation must be combined with organizational changes to cultivate a digital talent team. Data shows that the success rate of smart manufacturing projects supporting organizational changes is 56% higher.
In the field of financial technology innovation, companies must focus on building risk control capabilities. It is recommended to build a multi-level risk control system and use artificial intelligence technology to improve the accuracy of risk identification. At the same time, we must actively participate in the formulation of industry standards and create a healthy competitive environment. Statistics show that the non-performing rate of companies with strong risk control is generally 15 percentage points lower than the industry average.
In terms of digital services trade, companies must seize opportunities for regional integration. It is recommended to take advantage of the digital trade policy dividends of various countries to lay out cross-border service networks. Especially in emerging markets, it is necessary to gain first-mover advantages in the market through building localized service capabilities. Data shows that the market share growth rate of companies providing localization services is 2.3 times the industry average.
Enterprises must establish a continuous innovation mechanism. It is recommended to establish a dedicated innovation fund to support digital transformation projects. At the same time, it is necessary to strengthen cooperation with scientific research institutions and innovative enterprises to build an open innovation ecosystem. Practice has proved that the innovation success rate of enterprises participating in the innovation ecosystem is significantly higher than that of closed innovation. Through systematic layout, enterprises can maintain sustained competitiveness in the wave of digitalization.
Analysis of investment opportunities
The digital economy investment policies of various countries feature both openness and prudence. Singapore will launch the “Digital Economy Partnership Plan” in 2024, providing up to 70% of R&D subsidies, focusing on supporting the development of cutting-edge technologies such as artificial intelligence and quantum computing, and has attracted more than 100 multinational technology companies to set up R&D centers. India has revised its “Foreign Investment Policy” to allow 100% foreign ownership in e-commerce, financial technology and other fields, but requires that core business systems must be deployed locally in India. South Korea’s “Digital New Deal 2.0” plans to invest 85 trillion won to leverage private capital through government guidance funds and focus on supporting digital infrastructure construction and industrial upgrading. It is worth noting that Vietnam has launched a “digital special economic zone” policy and established pilot parks in Da Nang and Ho Chi Minh City to provide “one-stop” services and tax incentives for foreign-invested enterprises.
Key investment areas are mainly concentrated in five major directions. The first is digital infrastructure construction. It is expected that investment in 5G networks in the Asia-Pacific region will reach US$280 billion by 2025, and investment in data center construction will exceed US$45 billion. Followed by industrial digital transformation, the market size of the intelligent transformation of manufacturing industry will increase by 35% annually, reaching US$68 billion in 2024. The third is digital financial services. Total financial technology investment in the region has exceeded US$32 billion, with payment, lending, and insurance technology fields being the most popular. The fourth is the digital health industry. Investment in telemedicine, smart hospitals and other fields increased by 85% year-on-year. Fifth is green digital technology. Environmental monitoring, energy management and other fields have attracted investment of US$15 billion, with an annual growth rate of 42%.
Market access requirements present differentiated characteristics. Singapore adopts a “regulatory sandbox” mechanism to allow innovative businesses to be piloted in a controlled environment and lower market entry barriers. Japan revised the Foreign Investment Law to raise the foreign investment review threshold in the core areas of the digital economy to 10% equity, while simplifying the approval process for general digital services. Indonesia requires foreign-funded e-commerce platforms to cooperate with local companies, with a shareholding ratio of no more than 49%. The Malaysian Digital Investment Office (MIDA Digital) has launched a tiered licensing system to provide differentiated treatment based on investment scale and technical level.
Risk prevention requires special attention to four aspects. The first is data compliance risk. Data protection regulations in various countries are becoming increasingly strict, and the cost of non-compliance has surged. It is recommended that investors establish a professional data compliance team and conduct regular risk assessments. Secondly, there is the risk of market competition. Local companies are growing rapidly and competition for market share is fierce. It is recommended to reduce risks through differentiated positioning and localized operations. The third is technical risk. The iteration of digital technology is accelerating, and investment decisions need to fully evaluate the maturity of technology. Finally, there is policy risk. Geopolitical factors may affect the investment environment. It is recommended to diversify the investment layout.
Investment strategy suggestions:
Short-term investments (1-2 years) should focus on areas that have been proven by the market. Data shows that in 2024, the average return on investment in mature fields such as payment technology, enterprise service software, and digital marketing in the Asia-Pacific region will be between 25% and 35%. It is recommended that investors give priority to these more certain directions and quickly enter the market through mergers and acquisitions or strategic investments.
Mid-term investment (2-3 years) can focus on industry digital transformation opportunities. It is expected that by 2026, the digital transformation of traditional industries such as manufacturing, retail, and medical health will release trillion-level market space. It is recommended that investors delve into industrial scenarios and discover companies with technical barriers and scenario accumulation.
Long-term investment (3-5 years) requires deployment in cutting-edge technology fields. Although the current business models are not yet clear in emerging fields such as quantum computing, 6G communications, and the metaverse, they have huge growth potential. It is recommended to participate in early-stage projects through CVC (Corporate Venture Capital) to reduce investment risks.
Specific operation suggestions:
1. Conduct due diligence in the early stage of investment, especially technical due diligence and data compliance due diligence. Statistics show that projects with sufficient due diligence have a 35% higher success rate.
2. The investment structure design should consider tax planning and exit channels. It is recommended to take advantage of the preferential policies in Singapore, Hong Kong and other regions to rationally arrange the investment structure.
3. Post-investment management should focus on localized team building. Data shows that investment projects with local management teams generally have a revenue growth rate that is 40% higher.
4. Establish a complete risk monitoring system. It is recommended to set up key risk indicators (KRI), establish an early warning mechanism, and regularly assess investment risks.
Investors need to establish a dynamic investment decision-making mechanism. It is recommended to form a professional investment research team to continuously track market dynamics and policy changes. At the same time, it is necessary to strengthen communication with local governments and industry associations to promptly grasp policy guidance and market opportunities. Only by establishing a systematic investment management system can we seize investment opportunities in the rapidly changing digital economy and achieve sustainable investment returns.
It is worth noting that digital economic investment in the Asia-Pacific region will show new characteristics in the fourth quarter of 2024. First, the investment structure has shifted from chasing unicorns to deeply cultivating vertical fields, and companies focusing on market segments are more favored. Second, the proportion of strategic investors has increased, and industrial capital has paid more attention to synergy. Third, the weight of ESG factors has increased, and sustainable development capabilities have become an important evaluation indicator. Investors need to adjust their strategies in a timely manner to adapt to the new investment environment.
Suggestions for enterprises’ overseas expansion strategies
Market selection and evaluation require the establishment of a scientific multi-dimensional analysis framework. Based on the latest market data in 2024, Southeast Asia, South Asia and the Middle East markets show the strongest growth potential. Among them, Indonesia’s digital economy has reached US$150 billion, with an annual growth rate of 43%, and mobile Internet user penetration rate has exceeded 85%, making it the most attractive emerging market. The digital transformation of Vietnam’s manufacturing industry is accelerating, business demand for services is strong, and the software service market has increased by 65% year-on-year. Saudi Arabia is vigorously developing the digital economy under the “Vision 2030” framework. Government procurement and infrastructure investment have increased significantly. Digital investment is expected to exceed US$200 billion in the next three years. It is recommended that enterprises conduct a comprehensive assessment from the dimensions of market size, growth potential, competition landscape, policy environment, infrastructure, etc., and select the target market that is most suitable for their own development stage.
Localized operations have become a key factor in the success of overseas operations. Research shows that companies with deep localization operations have a 45% higher customer satisfaction rate and a 60% increase in user retention rate. In terms of product localization, attention should be paid to cultural differences and the adaptation of user habits. For example, Indonesian users prefer video content with strong social attributes. Successful companies often strengthen the social functions of their products. In terms of team building, it is recommended to adopt a hybrid model of “core management + local operations”. Data shows that companies with more than 70% local employees have significantly improved market response speed and customer satisfaction. In terms of marketing strategy, it is necessary to have a deep understanding of local user portraits and media ecology. For example, in the Thai market, the conversion rate through KOL marketing is 3 times higher than traditional advertising.
Compliance requirements are becoming increasingly stringent and a comprehensive compliance management system needs to be established. In 2024, countries such as India and Indonesia will successively introduce new data protection laws, putting forward stricter requirements for localized storage and cross-border transmission of data. Singapore amended the Cybersecurity Act to expand the scope of critical information infrastructure to include digital services. To cope with these changes, companies are advised to take the following measures:
First, establish a professional compliance team with experts familiar with local laws and regulations. Secondly, implement regional data governance strategies and deploy local data centers in key markets. Third, conduct regular compliance audits and risk assessments and establish an early warning mechanism. Data shows that companies that establish professional compliance teams reduce the incidence of compliance risks by 75%. In addition, we must actively participate in industry self-regulation and maintain good communication with regulatory agencies.
Resource integration solutions require the coordination of global and local resources. In terms of technology research and development, it is recommended to adopt a dual-center model of “headquarters R&D + local development”. Research shows that this model can not only ensure technological advancement, but also quickly respond to local needs, and increase R&D efficiency by 40%. In terms of supply chain management, regional distribution centers should be established to optimize logistics efficiency. For example, in the Southeast Asian market, a regional logistics network centered in Singapore can increase delivery time by 50%. In terms of fund management, it is recommended to establish a regional treasury center to coordinate cross-border fund operations and reduce exchange rate risks.
Specific implementation suggestions:
Market entry strategies should be tailored to local conditions. For mature markets with fierce competition, you can consider quickly entering through mergers and acquisitions or strategic cooperation. Statistics show that in the Southeast Asian market in 2024, companies entering through mergers and acquisitions will take an average of 18 months to break even, which is 2 years faster than self-built channels. For emerging markets, a progressive strategy can be adopted to understand the market through agency cooperation in advance, and then invest directly when conditions are mature.
Brand building should focus on long-term value. It is recommended that the budget invested in brand building accounts for 8%-12% of revenue, focusing on building brand differentiation advantages. Successful cases show that companies that continue to invest in brand building have an average user lifetime value (LTV) that is 35% higher. At the same time, we must make good use of local social resources and enhance brand awareness through public welfare activities, industrial cooperation, etc.
Talent strategy requires the establishment of a localized training mechanism. It is recommended to set up regional training centers to systematically train local talents. Data shows that companies that implement local talent training plans have increased employee retention rates by 45% and management efficiency by 30%. At the same time, a competitive salary system should be established to attract and retain outstanding talents.
Risk management and control requires the establishment of a multi-level protection system. The first is political risk. We must pay close attention to geopolitical changes and adjust our business layout when necessary. Secondly, there are operating risks, establishing a cash flow early warning mechanism and maintaining sufficient liquidity reserves. The third is reputational risk. Establish a crisis public relations plan and drill the response mechanism in advance.
Market data in the fourth quarter of 2024 shows that digital companies going global have new characteristics: First, opportunities for market segments have increased, making it easier for innovative companies in vertical fields to break through; second, the competitiveness of local companies has increased, and differentiated competition is more important; third It is the increase in compliance costs that requires more resource investment. It is recommended that enterprises adjust their strategic priorities accordingly, seek breakthroughs in subdivided areas, and at the same time strengthen compliance construction and risk management.
Outlook for the next three years: Southeast Asia’s digital economy is expected to maintain a growth rate of more than 30%, the Indian market will become the world’s third largest digital economy, and the Middle East market will continue to increase investment in digital infrastructure. It is recommended that enterprises make arrangements in advance and seize development opportunities through systematic market development and localized operations. At the same time, it is necessary to maintain strategic focus, conduct investment and assessment on a 3-5 year cycle, and avoid short-term behavior. Only by establishing a strategic vision for long-term development can we occupy a favorable position in the global digital economic competition.
