E-ASEAN

Connecting to grow

A wealth of opportunities awaits investors participating in ASEAN’s information and communication technology (ICT) initiatives as demand for more ICT-driven products exponentially increase and ASEAN leaders’ commitment to ICT strengthens.

Recognizing the role of ICT in transforming the 10 ASEAN economies into a single market and production base, ASEAN agreed on an e-ASEAN Framework Agreement to create digital opportunities and enhance competitiveness. It is working on the establishment of an ASEAN Broadband Corridor which focuses on developing the “next generation infrastructure” and set the minimum standards and quality of broadband connectivity in the region.

Overall, countries in the region continue to improve their internet infrastructure to meet the growing demand for fast and reliable internet access. Myanmar is connected to major international sea cables and has significant capacity at its land borders with Thailand and Laos. However, the country is not connected to SE-ME-WE4 and faces challenges in some areas due to conflict. Myanmar's international internet capacity has increased rapidly in recent years. Thailand is heavily focused on enhancing its undersea cables, with investments from both local and international players.

The Philippines' internet capacity is mostly connected through former US naval bases, but new cable systems like PLCN are starting to handle a significant portion of the capacity. Indonesia is building a domestic network to connect its islands and plans to enhance connectivity to the south. Laos has extensive land connections to China and Thailand, as well as connections across the Mekong River.¹

A digital and mobile region

ASEAN is becoming the fastest-growing region for digital device adoption, especially through smartphones. Nearly 90% of internet users will use smartphones by 2023. However, more than one-third of the population is still offline, indicating a digital divide that needs to be addressed.²

Many of the current mobile phone users form part of the ‘Mobile First’ or ‘Mobile Only’ users for whom mobiles become more accessible and serve as perfect substitutes for landlines and fixed line internet. Vietnam dominates the mobile experience in ASEAN based on population size, excelling in 5 categories and with download speeds 57.1% faster than the Philippines. Thailand also demonstrates good performance, while the Philippines lags behind in 5 categories. All three countries show progress, but Vietnam excels in providing the best experience for its users.³

The Southeast Asian smartphone market showed signs of recovery in Q4 2023 with a projected growth of 7% for the year 2024. TRANSSION, an ambitious newcomer, managed to take the second position for the first time, displacing OPPO. However, Samsung still maintains its dominance with an 18% market share.

The sub-US$299 price segment dominates sales, with TRANSSION leading in this category. Demand for 5G devices continues to rise, driven by more affordable prices and government initiatives to promote 5G adoption.⁴

‘Nowhere saturation level’

While ASEAN becomes increasingly wired through mobile phones, tablets, social media, and various gadgets. Mobile connectivity in Southeast Asia is rapidly developing, with an average of 103.7 mobile broadband subscriptions per 100 inhabitants in 2022. However, the progress is uneven. Countries like Laos only have 56.4 subscriptions per 100 inhabitants, whereas Singapore reaches 169.6, indicating over-subscription. Six out of ten countries, including Cambodia and Indonesia, exceeded 100 subscriptions per 100 inhabitants in 2022, affirming the dominance of mobile technology for broadband access in the region.⁵

Potentials for mobile commerce are only becoming greater. From 2016 to 2021, the total value of e-commerce sales grew fivefold, or 40 percent, annually. The share of e-commerce in total retail sales surged to 20 percent, up from 5 percent. The Southeast Asian e-commerce market soared, driven by the internet, smartphones, and platforms like Lazada and Shopee. This rapid growth is set to continue, reaching $230 billion by 2026.Among Southeast Asian countries, Indonesia and Singapore dominate the e-commerce market with a penetration rate of 30%. On the other hand, the Philippines, Thailand, and Vietnam lag behind with a penetration rate of 15%, indicating a significant gap in e-commerce adoption in the region.⁶

ICT for ASEAN

ASEAN is at its most interesting mobile and internet innovation phase. Foreign ventures from South and East Asia as well as resource-rich local companies scramble to maximize market opportunities and benefit from the region’s 600 million people, majority of whom are young and tech-savvy.

Communication service providers partner with non-traditional players to come up with new business models and innovate the way they do business. Bundling of services to help consumer maximize offerings is becoming a norm. Mobile apps continue to rise and product launches promising users convenience, entertainment, or increased connectivity seem endless.

With the tremendous innovation in mobiles and internet, ASEAN is confident that investors see the viability of the region as a market for ICT businesses.