Fourth Industrial Revolution a challenge to ASEAN integration—study

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Member states of the Association of Southeast Asian Nations (ASEAN) need to improve their collaboration if they are to deal successfully with the profound challenges of the Fourth Industrial Revolution, according to a new joint report launched November 14 by the Asian Development Bank (ADB) and the World Economic Forum.

The report, ASEAN 4.0: What Does the Fourth Industrial Revolution Mean for Regional Economic Integration?, analyzes how emerging technologies will reshape Southeast Asia, and identifies actions for ASEAN leaders to prepare for the deep transformations that lie ahead.

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 placing pressure on leaders and policymakers to respond.

While the report acknowledges the many existing national strategies for the Fourth Industrial Revolution, such as Thailand 4.0 or Singapore’s Smart Nation initiative, it argues that ASEAN must think at the regional level, not the national level.

The treatment of cross-border data flows, for example, is 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.

“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,” 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.”

Said Nazir Razak, chairman, CIMB Group Holdings, Malaysia, and chair of the ASEAN Regional Strategy Group, “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.”

The report recommends that ASEAN leaders prepare their institutions for the coming associated challenges by making the ASEAN Secretariat a “platform organization” for the integration of input from multistakeholder groups of experts, making the secretariat delegate more activities to affiliated functional bodies, and adopting a new funding model to provide more funding for the secretariat’s operation.

It also suggests replacing long-term blueprints 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,” said the report.

Another recommendation is to democratize and decentralize policy formulation to “make the ASEAN policy-making process more inclusive, and make ASEAN an organization truly owned and managed by the people for their benefit.”

The report also calls for establishing pan-ASEAN test beds for new approaches to regulation as a way to nurture multi-country experiments in shaping new technologies.

Photo: Jack Moreh