Member states of the Association of Southeast Asian Nations (Asean) need to improve their collaboration to successfully deal with the profound challenges of the Fourth Industrial Revolution, a new joint report launched today by the World Economic Forum and the Asian Development Bank (ADB) said.
The report, Asean 4.0: What Does the Fourth Industrial Revolution Mean for Regional Economic Integration?, analyses how emerging technologies will reshape South-East 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.
The paper focused on the impact of the so-called Fourth Industrial Revolution on the Asean.
It said the Fourth Industrial Revolution refers to a set of highly disruptive technologies, such as artificial intelligence (AI), robotics, blockchain and 3D printing, that are transforming social, economic and political systems and putting huge pressure on leaders and policy-makers to respond.
“Over the past 50 years, Asean has notched up many notable achievements. But the era of the Fourth Industrial Revolution is changing the landscape in significant ways,” it said.
It added that it is increasingly apparent that the Asean organization should consider a new approach to regional policy and governance.
“The current model, loosely described as ‘the Asean Way’, has proven itself to be highly effective. The core principles of this approach to regional relations must remain. But, alongside the Asean Way, the region needs a new operating system,” it added.
The paper also discussed at length the impact of the Fourth Industrial Revolution on Asean in which it will bring huge benefits, such as empowering SMEs and creating new ways to connect citizens to healthcare.
Equally, it will bring tremendous challenges, such as deep disruption to jobs as AI and advanced robotics undermine both manufacturing and services jobs.
The paper also explains why Asean must adopt a regional approach to navigating the Fourth Industrial Revolution.
Yes, national-level policies are critical, and Asean nations are pursuing these diligently, such as Thailand 4.0 and
Singapore’s Smart Nation initiative.
But the technologies of the Fourth Industrial Revolution do not recognize national borders. If Asean leaders do not think regionally, they will miss out on opportunities and fail to address growing challenges.
The Fourth Industrial Revolution also calls for a new way of formulating policy and regulation. The speed of change under the revolution is accelerating, and the old ways of crafting policy, especially cross-border policy, are too slow, too backward-looking and too rigid.
Instead, governance and regulation need to become more agile, faster, more iterative and experimental.
In its current form, the Asean organization may struggle in this new world. Indeed, it is already facing challenges in achieving many of its current goals, such as those for creation of the Asean Economic Community.
The paper concluded with some concrete suggestions for how Asean leaders could rethink their approach to regional interaction under the Asean Secretariat.
The treatment of cross-border data flows was one of the pressing issues highlighted by the report. As data currently are prevented from flowing seamlessly across borders, new technologies such as telemedicine or the internet of things will be limited in their potential.
The report offers seven recommendations for Asean leaders to prepare their institutions for the coming challenges associated with the Fourth Industrial Revolution:
■ The Asean Secretariat has to become a “platform organization” that allows for the integration of input from multistakeholder groups of experts;
■ The secretariat should delegate more activities to affiliated functional bodies;
■ Long-term blueprints should be replaced with three-year rolling plans. Considering the speed of the Fourth Industrial Revolution most forecasts will quickly be outdated. Asean must be agile and allow for course correction;
■ Ask the people: Democratize and decentralize policy formulation. This will make the Asean policy-making process more inclusive, and make Asean an organization truly owned and managed by the people for their benefit;
■ Establish pan-Asean test-beds for new approaches to regulation as a way to nurture multi-country experiments in shaping new technologies;
■ 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; and
■ Adopt a new funding model to provide more funding for the Asean Secretariat’s operation.
“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,” said Justin Wood, Head of Asia Pacific and Member of the Executive Committee at the World Economic Forum.
“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,” he said.
The report was commissioned by the World Economic Forum’s Asean Regional Strategy Group (RSG) – made up of 26 Asean chief executive officers, government ministers and academics – and written by the Forum and ADB. The RSG presented the study to the 10 Asean heads of state during the 31st Asean Summit in Manila.
“While there is a lot to celebrate on the 50th anniversary of Asean, we mustn’t rest on past achievements,” said Nazir Razak, Chairman, CIMB Group Holdings, Malaysia, and chair of the Asean RSG.
“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.”
“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 Stephen Groff, Vice-President of the ADB.
“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,” he added.