unctad.org | IER - Digital Economy Evolving At Different Speeds In Asia-Pacific, Says UCTAD
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IER - Digital Economy Evolving At Different Speeds In Asia-Pacific, Says UCTAD

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02 October 2017, 19:00
Geneva Time

UNCRAD/PRESS/IN/2017/019
Geneva, Switzerland, (02 October 2017)

​Asia-Pacific economies play a central role in the evolving digital economy, as producers as well as consumers. At the same time, many Asian and Pacific Island States remain relatively unprepared for the new digital era. In its Information Economy Report 2017: Digitalization, Trade and Development, released today, UNCTAD calls for concerted effort to ensure that no-one is left behind as a result of digitalization.

Underlining the region's important place in the digital economy is the fact that 42 of the 135 largest digital economy corporations by market capitalization are based in Asia.

“The Asia-Pacific region accounts for about 74 %of world exports of information and communications technology (ICT) goods, led by China, which exported such products to a value of more than US$600 billion in 2015”, says Shamika Sirimanne, Director of the Division on Technology and Logistics at UNCTAD

Meanwhile, India is a giant in terms of computer software service exports, which amounted to US$53 billion in 2016, three times higher than those of the United States.

E-commerce is also growing fast in Asia. Three of the four largest national e-commerce markets in the world are in this region: Japan, China and the Republic of Korea, and China boasts the world’s largest market for business-to-consumer e-commerce. The region has witnessed the emergence of some major e-commerce platforms (box 1). Data from the Universal Postal Union (UPU) on the volume of international postal traffic furthermore show that developing countries, especially in the Asia and the Pacific are becoming increasingly important participants in cross-border trade. Their share in global postal deliveries sent abroad rose from 26%to 43% between 2011 and 2016. During this period, global deliveries of small packets, parcels and packages more than doubled, likely due to e-commerce.

Developing economies accounted for nearly 90%of the 750 million people that went online for the first time in 2012-2015, led by India (177 million) and China (122 million), according to International Telecommunication Union (ITU) data. In some Asian developing countries, nearly half or more of the Internet users went online for the first time in the last three years, such as in Bangladesh, India, the Islamic Republic of Iran and Pakistan. However, for many economies, the degree of digitalization still remains limited. This applies especially to broadband connectivity. Among least developed countries (LDCs) in the region, the top three performers in terms of active mobile broadband subscriptions per 100 people in 2015 were Bhutan (56), Cambodia (43) and Vanuatu (41). By comparison, it was below 15 in Afghanistan, Bangladesh, Lao PDR and Samoa.

Increased use of the technologies underpinning the digital economy, such as advanced robotics, artificial intelligence, the Internet of Things, cloud computing, big data analytics and 3D printing, will have transformative effects on production and trade activities.

“The Information Economy Report 2017 underlines the importance of leveraging new digital technologies in support of sustainable development. Digitalization may enable small firms and entrepreneurs in developing countries to connect with global markets, and open new ways for small businesses and people to generate incomes”, said Ms. Sirimanne,

An important example is related to the empowerment of women (Sustainable Development Goal 5). In Central Asia, an Asian Development Bank study found that half of the women-led companies reported using the Internet, and many gave priority to market expansion as well as better integration of ICT in order to increase production efficiency (51% in Uzbekistan, 42%in Kyrgyzstan and 36%in Kazakhstan).

New technologies can also make productive activities more efficient and spur innovation. In Myanmar, some farmers now use a 3D printer to create parts for a sprinkler system and the internal mechanics for a solar pump. The expansion of ICT use is also increasing the demand for new goods and services. For example, some 29,000 people are now involved the production of mobile applications in Viet Nam.

But there are also risks and challenges of digitalization. This is especially true for countries that are inadequately prepared for the digital economy. Digitalization may lead to increased polarization and widening income inequalities. Productivity gains may accrue mainly to a few, already wealthy and skilled individuals. Another concern is related to the growing use of data flows and Internet of Things, which raises worries over data privacy and security. Furthermore, there is a risk of jobs becoming obsolete as a result of digitalization. Studies of economies in Southeast Asia found that 80-90%of jobs in business process outsourcing, retail and textiles and clothing are at risk due to automation and other disruptive technologies.

The report stresses that preparing for the digital economy requires a concerted, holistic, cross-sectoral and multi-stakeholder approach to policy making. Key national policy areas include ICT infrastructure, education and skills development, competition, science, technology and innovation and fiscal issues, as well as trade and industrial policies.

National policy making also needs to be complemented by international support to prevent the evolving digital economy from leading to widening digital divides and greater income inequalities. It is important to ensure that more people and enterprises in developing countries have the capacity to participate effectively in the digital economy, meaning that the international community will need to expand its support on a massive scale.


Box 1. Selected e-commerce platforms in developing Asia

Alibaba, a Chinese company launched in 1999, has quickly grown to become the biggest e-retailer in the world (in terms of gross merchandise value, or GMV).a In addition to providing different platforms for C2C, B2C and B2B e-commerce, the Alibaba Group has developed various other services to facilitate e-commerce. For example, its Cainiao logistics service handles more than 70%of the country’s express packages, and features a huge network of vehicles, warehouses and distribution centres. By May 2015, it was delivering more than 30 million packages per day, offering same-day delivery in 7 cities and next-day delivery in another 90 cities (Stanford Graduate School of Business, 2016). Its Alipay payment solution was used by over 450 million people, corresponding to 75%of Alibaba’s GMV in 2016. The company’s growth has been facilitated partly by government restrictions on foreign investment in e-commerce, which were only recently lifted,b and the need for an appropriate Chinese language user interface, as well as for goods adapted to local demands.

Indian B2C retailer, Flipkart, was launched in 2007. It has raised over US$3 billion from venture capitalists in Hong Kong (China), South Africa and the United States, and is incorporated in Singapore to bypass Indian rules on foreign direct investment (FDI) in retail.c It claims 100 million users, 80 million products and 100,000 sellers, and it ships 8 million items a month through 21 warehouses. It is facing increasing competition from Amazon, which launched operations in India in 2013. Amazon is the fifth most popular website in India compared to Flipkart, which ranks ninth.d

Lazada, headquartered in Singapore, was launched in 2012 as an online retailer and marketplace. By June 2017, it was operating in 6 South-East Asian countries: Indonesia, Malaysia, the Philippines, Singapore, Thailand and Viet Nam. Originally backed by Rocket Internet (Germany), China’s e-commerce giant, Alibaba, acquired a controlling stake for $1 billion in 2016.e Lazada ranks first in e-commerce website visits in 5 of the 6 countries in which it operates. It has benefited from entering the ASEAN market before large global e-commerce companies, and its portals have been adapted to the region’s different languages and consumer preferences. Lazada has its own transportation fleet, which delivers around a third of its orders to more than 80 cities throughout the region. f  It is flexible with payments and accepts cash on delivery.

Source: UNCTAD.
a “Global 1000 spotlight: The top 10 e-retail players dominate,” Internet Retailer, 5 August 2016, (https://www.internetretailer.com/2016/08/05/global-1000-spotlight-top-10-e-retail-players-dominate).
b See http://www.usito.org/news/china-lifts-restrictions-e-commerce-foreign-investment .
c See https://www.crunchbase.com/organization/flipkart#/entity and http://www.myonlineca.in/startup-blog/flipkart-companies-financial-report.
d See http://www.alexa.com/topsites/countries/IN .
e See “eBay to sell a majority of its stake in MercadoLibre, Inc. - eBay Inc.,” Announcement, 12 October 2016 (https://www.ebayinc.com/stories/news/ebay-to-sell-a-majority-of-its-stake-in-mercadolibre-inc/).
f See http://www.economist.com/news/business/21645763-global-online-shopping-giants-may-not-find-it-easy-conquer-region-home-field.



For more information, please contact:
UNCTAD Communications and Information Unit, Catherine Huissoud
T: +41 22 917 5549
T: +41 79 502 43 11
E: unctadpress@unctad.org or catherine.huissoud@unctad.org
Web: unctad.org/press

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