ADB and World Economic Forum call for improved collaboration among ASEAN nations to deal with challenges of the Fourth Industrial Revolution

The Asian Development Bank (ADB) and the World Economic Forum have released a report calling for the member states of the Association of Southeast Asian Nations (ASEAN) to improve their collaboration in order to successfully deal with the challenges of the Fourth Industrial Revolution.

The report, ‘ASEAN 4.0: What Does the Fourth Industrial Revolution Mean for Regional Economic Integration?’, was commissioned by the World Economic Forum’s ASEAN–RSG made up of 26 ASEAN chief executive officers, government ministers and academics – and written by ADB and the World Economic Forum. The RSG presented the study to the 10 ASEAN heads of state during the 31st ASEAN Summit in Manila.

The report analyses how emerging technologies will reshape Southeast Asia, and identifies actions for ASEAN leaders to prepare for the deep transformations that lie ahead. The report acknowledges the many existing national strategies for the Fourth Industrial Revolution, such as Thailand 4.0 or Singapore’s Smart Nation initiative. But it argues that ASEAN must think at the regional level, not the national level.

Key opportunities of the Fourth Industrial Revolution are noted. Disruptive technologies could enable much more inclusive forms of economic growth and empower SMEs, connecting them to giant regional markets rather than just local customers. They could provide opportunities for leapfrogging, connect the unconnected in archipelagic nations such as Philippines and Indonesia, improve environmental management, facilitate customised healthcare and upgrade disaster preparedness.

However, there are challenges also, such as job loss, reduced competitiveness of low-cost and low-skilled labour, concentration of market power by global giants and increased vulnerability to cyberattacks.

The treatment of cross-border data flows, is one of the pressing issues highlighted by the report. If data is prevented from flowing seamlessly across borders, as happens currently, new technologies such as telemedicine or the Internet-of-Things (IoT) will be limited in their potential.

The report offers seven recommendations for ASEAN leaders to rethink their approach to regional interaction under the ASEAN Secretariat to deal with the coming challenges:

  1. The ASEAN Secretariat has to become a “platform organisation” that allows for the integration of input from multistakeholder groups of experts. The Secretariat would design and run the “operating system for regional integration”. Third parties – multistakeholder groups of experts – would do the work of designing and formulating new standards, policies and regulations for integration. The role of the Secretariat would be to ensure that all the various integration projects running on its “operating system” were well governed and were conducted in the right manner.
  2. The secretariat should delegate more activities to affiliated functional third-party groups. This would allow ASEAN to maintain oversight while also benefiting from a larger ecosystem of institutions, which will be critical in managing the sheer scale of engagement and implementation that will be required.
  3. Long-term blueprints should be replaced with 3-year rolling plans. In view of the speed of the Fourth Industrial Revolution, most forecasts will quickly be outdated. ASEAN must be agile and allow for course correction.
  4. Ask the people: Democratise and decentralise policy formulation. As internet and smartphone penetration deepens across ASEAN, there is substantial opportunity to make ASEAN policy formulation more inclusive This will make the ASEAN policy-making process more inclusive, and make ASEAN an organisation truly owned and managed by the people for their benefit.
  5. The report recommends the establishment of pan-ASEAN test beds for new approaches to regulation as a way to nurture multi-country experiments in shaping new technologies.
  6. Hire staff capable of running a platform model effectively. The staff must be well versed in managing the new Fourth Industrial Revolution tools and have a strong record in this regard. The report says that ASEAN leaders could consider a new approach to the recruitment of staff, with workers hired for their skills on a permanent basis, rather than through “appointment”, based on rotation among ASEAN nations.
  7. Adopt a new funding model to provide more funding for the ASEAN Secretariat’s operation. ADB estimates that, by 2030, the ASEAN Secretariat will need an annual budget of $220 million (current annual funding is around $20 million) to manage the ASEAN Community effectively. One possible model might be that used by the United Nations, with contributions linked to the economic size of countries.

“Today, the technologies of the Fourth Industrial Revolution appear to be contributing to rising inequality around the world. But this need not be the case,” said ADB Vice-President Stephen Groff. “With prudent fiscal management and appropriate policy, opportunities for lifelong learning and incentives for skills training can be created. And this is especially true for ASEAN. ADB considers the potential impact of Fourth Industrial Revolution technologies on jobs in ASEAN a critical area for exploration to support inclusive growth in years ahead.”

“The Fourth Industrial Revolution is unfolding at tremendous speed. Indeed, the pace of change is accelerating. All over the world, governments are struggling to keep up. The traditional ways of shaping policy, writing regulations and setting standards are too slow, too top-down and too backward-looking. What is needed is an approach that is much faster, more agile, more experimental, and more iterative,” said Justin Wood, Head of Asia Pacific and Member of the Executive Committee at the World Economic Forum.

Nazir Razak, Chairman, CIMB Group Holdings, Malaysia, and Chair of the ASEAN Regional Strategy Group (RSG) said,“This revolution will transform everything, from economic structures to social systems. Many aspects of our lives will improve. But there will also be many worrying challenges, such as how automation and artificial intelligence are replacing jobs. We have to understand these issues and have appropriate policies to address them.”

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