Innovation and Digital Transformation

ASEAN governments are investing heavily to capitalise on the benefits of digital transformation. Creating a digitally-enabled region that's secure, sustainable and transformative is the goal of ASEAN's ICT Master Plan 2020.

An accessible, inclusive and affordable digital economy — Information and Communications Technology (ICT) will be used to support digital inclusion of communities across the region.

Deployment of next-generation ICT as an enabler of growth.

Sustainable development through smart city technologies.

ICT supporting a single regional market to facilitate integration and lower business costs.

Secure digital marketplaces and safe online communities to facilitate and promote regional digital trade.

ASEAN citizens have seized the digital opportunity thanks to cheaper and more accessible devices and improved connectivity. The region has demonstrated a 'leapfrogging' ability. A number of ASEAN countries have skipped landline telephones, driven by the proliferation of mobile phones. The arrival of international mobile network operators to Myanmar in 2014 helped drive the fastest rollout of mobile phones in history, with approximately 30 million SIM cards in use by mid-2015.

By 2020, Indonesia, the Philippines and Vietnam are expected to be among the world's top 15 smartphone markets9

Joint venture unlocking Indonesia's market potential for Telstra

Telstra

With more than 30 years' experience in Southeast Asia, Telstra is building a formidable portfolio of acquisitions, joint ventures and accelerators in the region.

Telstra's services to business and government clients in ASEAN range from voice and data to network management, security and unified communications.

Indonesia is a priority market for the Australian telecommunications company. When considering how to access the Indonesian market, Telstra devised a two-pronged strategy: work with a local partner and focus on enterprise solutions for Indonesian corporate accounts.

In 2014, Telkom Indonesia and Telstra agreed to create the PT Teltranet Aplikasi Solusi (telkomtelstra) joint venture. By early September 2017, telkomtelstra had employed 134 team members – including 15 from Telkom Indonesia and 10 from Telstra and the remainder local hires by the joint venture.

Erik Meijer, telkomtelstra President Director and Telstra Country Managing Director, Indonesia, describes Indonesia's enterprise services market as 'very big and untapped'.

Austrade has provided considerable support to the venture, including introducing telkomtelstra executives to clients and companies who may assist its progress. This has proven particularly useful in winning business from Australian companies operating in Indonesia.

telkomtelstra is also taking a keen interest in discussions between Indonesia and Australia on cyber security cooperation, as well as market opportunities greater coordination between the two countries could present.

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Smartphones are becoming more important as a platform to deliver education, government and healthcare services to consumers, including in remote and rural communities. In the banking sector, there's demand for mobile banking and payments, online purchases and other mobile-enabled transactions. In some of ASEAN's developing economies, where most of the population has never had a bank account, people have jumped straight into using mobile money transfers and other modern banking solutions.

Southeast Asia is currently the world's fourth largest internet market, with 260 million internet users10

Google estimates that around 3.8 million new Southeast Asian users come online every month, making it the fastest-growing internet market in the world, and forecasts there will be 480 million internet users by 2020.

E-commerce is another emerging channel for Australian products to capture market share in ASEAN.

Although e-commerce use in the region remains relatively low, it presents huge prospects for growth

E-commerce in ASEAN is expected to grow at 14 per cent compound annual growth rate over the next five years, equalled only by India. By contrast China, the world's largest e-commerce market, is predicted to grow at four per cent.

With a young population, and as internet access, payments systems and transport logistics improve, online platforms will facilitate transactions in second and third-tier cities that have limited access to large bricks and mortar stores. Amazon, Lazada and eBay are established e-commerce platforms in ASEAN for servicing middle class consumers. Australia's FTAs with ASEAN countries have dedicated chapters that help to facilitate e-commerce, promote cross-border digital trade and build confidence in the online environment.

Despite this significant digital uptake, ASEAN countries remain at different levels of digital development. Challenges in some areas include scarce internet infrastructure, low penetration rates and slow internet speeds.11

Forecast Internet and e-commerce growth in six ASEAN countries

Forecast Internet and e-commerce growth in six ASEAN countries

Source: Google and Temasek, 'e-conomy SEA: Unlocking the $200 billion digital opportunity in Southeast Asia', May 201612

Demand for healthcare services is expected to surge in ASEAN, due to factors such as population ageing, income growth, growing prevalence of chronic diseases, urbanisation, and government initiatives such as universal healthcare coverage for citizens. Numbers of private hospitals and clinics are projected to grow to meet the rising demand for healthcare services and shrink the gaps in healthcare delivery.

A shortage in skilled workers is proving to be a challenge across the region, with both public and private healthcare providers looking for ways to raise workforce skills and standards. Families are also embracing modern aged care services which offer greater choice and higher standards of care than traditional home-based care. These demographic and cultural changes are driving consumer demand for quality healthcare. Australian companies can partner on new infrastructure projects and provide the supporting services, skills and management needs of a growing health industry.

For further information on Australian capabilities across the digital sector please visit: austrade.gov.au/International/Buy/australian-industry-capabilities

Google estimates there are more than 7,000 digital startup companies in Southeast Asia, with 80 per cent located in Indonesia, Singapore and Vietnam.13

The ASEAN startup landscape is punctuated by some significant successes, including several 'unicorns' (firms valued at more than US$1 billion), such as Garena, Go-Jek, GrabTaxi, Lazada, Razer, Traveloka and Tokopedia.

Indonesia is a key emerging startup destination with an increasing number of companies with a value of more than $100 million, or what the sector calls 'centaurs'.14 Thailand also has a nascent startup scene in e-commerce and logistics. Malaysia has a successful startup sector, particularly in startup exits. Vietnam has carved out a niche of small scale startups (under $10 million) with a focus on e-commerce.

Singapore's startup landscape harnesses a large number of financial institutions, multinational companies, and globally significant research and development institutes. There are opportunities for Australia to access Singapore's growing infrastructure as a platform to develop and commercialise new business ideas, including across the ASEAN region.

The Australian Government established a Landing Pad for Australian startups in Singapore's vibrant startup ecosystem in early 2017. Australian startups are provided with a workspace for up to 90 days, during which they are mentored and benefit from a large network of contacts and tailored business development assistance. More information on the Landing Pad program is available at australiaunlimited.com/landingpads

CEC Systems collaborates on collapsible containers

CEC Systems

Australian industrial technology developer CEC Systems designed COLLAPSECON®, the world's first semi-automated collapsible shipping container.

COLLAPSECON enables four empty shipping container units to be collapsed and combined to form a single container to reduce handling, storage and transportation costs.

Following CEC Systems' acceptance into the Australian Government's Singapore Landing Pad, the company announced an exciting new collaboration with the Singapore Institute of Manufacturing Technology (SIMTech), a research institute of the Singapore Government's Agency for Science, Technology and Research.

CEC Systems' collaboration with SIMTech will seek to optimise the COLLAPSECON design and investigate alternative manufacturing processes such as environmentally friendly, cost-effective and lightweight materials.

The collaboration highlights the value of the Landing Pad in creating commercialisation prospects for Australian innovation. Encouraging Australian startups to exchange ideas with high-calibre Singaporean entities is an example of what can be achieved with the help of the Landing Pad.

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To ASEAN and beyond: medtech scaleup goes global

Zed Technologies

Zed Technologies was founded in 2012 by Ross Wright and Ronald Li. The medtech scaleup develops software, apps and workflow systems for storing, managing and evaluating patients' medical images, including X-rays, MRIs, ultrasounds and other scans.

When the Melbourne-based scaleup began planning its expansion into Southeast Asia, it looked for a way to enter ASEAN markets.

'That was when Austrade and the Landing Pads program came to our attention,' says Wright.

In early 2017, Zed Technologies arrived in Singapore.

According to Wright, Zed Technologies benefited from expert guidance on growing its customer base, introductions to local contacts and entry into key decision-making networks, not to mention a fully paid office space for 90 days.

'We could ask the Landing Pad Manager anything,' says Wright. 'From questions about accommodation right through to him opening his black book and helping us connect with investors and customers. Obviously a warm introduction is a lot better than a cold one.'

'The Landing Pad provided us with a stepping stone into Southeast Asia and the credibility that comes from working with an Australian Government organisation,' Wright adds. 'If we achieve success, we can certainly say the Landing Pad was part of it.'

Since their time at the Landing Pad, Zed Technologies have also visited Indonesia, Malaysia and Vietnam, helping build a promising pipeline for the future.

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