approaching asean’s markets asean’s digital building

company confidential

Anuar Fariz Fadzil

Axiata Group Berhad

17 June 2019

Approaching ASEAN’s Markets-

ASEAN’S DIGITAL BUILDING

BLOCKS

INDIA

PAKISTAN

NEPAL

BANGLADESH

MYANMAR

THAILAND

MALAYSIA

INDONESIA

CAMBODIA

SRI LANKA REVENUE RM 23.9 billion

PATAMI (normalized) RM 1.0 billion

EBITDA RM 8.3 billion

EMPLOYEES ~27,000

COUNTRIES 10

One of the largest

telco group in

ASEAN &

South Asia

Infrastructure

Digital

Telco

Digital

Businesses

2018 RESULTS

2

Together, ASEAN countries are the world’s fifth largest market but are still in early stages of digitalisation and progress towards the 4th Industrial Revolution (4th IR)

3

1) Based on GDP per capita of the EU

2) Based on 2016 data

Source: Bain & Company, Huawei and Oxford Economics, World Bank, GSMA Intelligence

2017 GDP per capita

Digital economy

share of 2017 GDP

Unique mobile

broadband

penetration

Legend:2017 GDP (current

USD)

The USA

USD59

500

35%

76%

USD19.4

bn

Europe

USD33 7001

27%

72%

USD17.3bn

ASEAN

USD4 300

7%

47%

USD2.9bn

China

USD8 800

16%

58%

USD12.2bn

Japan

USD38 400

~8%2

67%

USD4.9bn

Axiata is bullish on ASEAN

At USD2.9 trillion in combined GDP, ASEAN is the world’s fifth largest

Young population of over 40% below 30-years old, high literacy of 94%, majority are digitally connected

Average smartphone use in South-east Asia averages 3.9 hours/day vs 2.2 hours/day (US)

Huge digital economy potential - 7% of total GDP today vs >15% in leading digital economies.

Axiata has commissioned reports describing how Governments and private sector can work hand-in-hand

to solve some of the issues today for a Digital ASEAN

4

Policy Building Blocks

for ASEAN 4th

Industrial Revolution

Feb 2019

ASEAN Digital

Revolution

Feb 2016

ASEAN is bullish on Digital Economy and the 4th Industrial

Revolution

5

Harnessing ASEAN’s potential and building towards the 4th IR requires effective policies across the full breadth of the digital economy

6

Digital services

Data

Infrastructure

• Foundational digital services

• Digital payments

• Creative content industry

• Digital start-ups

• Cross-border data flows

• Cybersecurity

• Data privacy

• Connectivity

• Digital education

• Business digitalisation

Three layers of the digital economy

The three layers are interdependent on one another in creating a truly digital economy:

Infrastructure is necessary to bring new users online; digital services creates demand; data flows

allow the digital services to maximise the use of the infrastructure

Source:

Analysys Mason (2019) Building Towards ASEAN’s Fourth Industrial Revolution: Digital Policy Building Blocks for the 2020s

Investments in connectivity infrastructure over the past

decades has increased coverage and affordability of

broadband

7

0% 50% 100%

Philippines

Lao PDR

Myanmar

Vietnam

Brunei

Thailand

Singapore

Malaysia

Indonesia

Cambodia

0% 2%

Mobile broadband coverage 1GB as a % of GNI per capita Mobile broadband penetration

0% 50% 100% 150%

Unique subscriber penetration

Mobile internet penetration

South-East Asia mobile

broadband coverage: 93%

UN broadband

affordability target: 2%Total mobile broadband

penetration: 102%

Unique mobile broadband

penetration: 47%

Source:


GSMA, EIU, operator websites, Analysys Mason analysis

a a a

For ASEAN to fully participate in the 4th IR, 10 digital policy

building blocks that combine best practices from around the

world

8

Continue to support measures to improve coverage, capacity, speed and quality of service of Internet

connectivity in ASEAN

Support digital education in schools and the workforce

Promote MSME and industrial digitalisation through adoption of IR 4.0 solutions

Reduce or remove data localisation measures to facilitate cross-border data flows within ASEAN, and with

key trading partners

Update regional privacy framework to APEC CBPR or similar standards

Develop enabling foundational services and simplify policies for digital financial services

Facilitate interoperability of digital payments systems in internal markets and across ASEAN

Simplify regulations to increase competitiveness of regional creative content industry in a global context

Support digital start-up ecosystem in internal markets and across the ASEAN region

Harmonise cyber-security regulations across ASEAN and put in place the necessary structures for

strategic and operational co-operation on law enforcement

Infr

astr

uctu

reD

ata

Dig

ital

serv

ices

1.

2.

3.

4.

6.

5.

7.

8.

9.

10.

Source:


For Axiata and the mobile industry, our job is to build

connectivity – faster, better, more affordable but we need

help

9

1 Continue to support measures to

improve coverage, capacity, speed and

quality of service of Internet connectivity

in ASEAN

Increase spectrum co-ordination to allow

more timely release of harmonised

spectrum

Develop new spectrum management

frameworks

Improve access to rights of way

Harmonise and expedite approval process

and liberalise market for international

backbone and network infrastructure

Infr

as

tru

ctu

re

• Facilitate sustainability of infrastructural investment

including option of facilitating more rational market

structures

• Increased spectrum co-ordination and resolve cross-

border bottlenecks and timely release of 700MHz,

2.6MHz and C-band for 5G

• Consider novel spectrum management frameworks

including spectrum sharing, spectrum leasing,

dynamic spectrum access

• Increased co-ordination between federal and

municipal authorities and utility agencies, quicker

authorizations for RoW for fiber and tower

deployments

• Harmonizing RoW of cross-border terrestrial cables

and open access landing station, encourage FDI on

international backbone and network infrastructure

Source:


Financial Services Regulators’ role in encouraging and allowing new fintech through interoperability and access to financial infrastructure

10

7 Develop enabling

foundational services and

simplify policies for

digital financial services

8 Facilitate

interoperability of digital

payments systems in

internal markets and

across ASEAN

Dig

ital serv

ices

Couple national ID

systems with a secure

and real-time identity

authentication and

legal recognition of

digital transactions

Simplify, modernise

and harmonise

regulations

surrounding KYC/AML

processesSet risk-based

regulatory

requirements

Develop central

technical blueprint for

interoperability of

retail payment

systems

Improve accessibility

of retail payment

infrastructures

Implement national

payment

infrastructures that

conform to regional

and global standards

• Link electronic National-ID systems with digital

systems for identity verification (e.g. mobile

biometrics)

• Risk-based and proportionate regulatory

requirements and permit sandboxes for

permissible fintech activities and innovations

• Encourage retail payment systems

interoperability (e.g. POS terminals)

• Allow and encourage innovative entrants and

smaller fintech to access payments

infrastructure for clearing and settlement

Meeting those objectives can transform ASEAN, growing both the digital economy and employment

11

2.5-4.0%

Indonesia 2.8-4.5%

Myanmar

Lao PDR

Vietnam

Philippines

Brunei

2.6-4.2%

Cambodia

Malaysia

Thailand

3.9-6.1%

2.0-3.3%

Singapore

3.4-5.3%

Incremental ASEAN GDP growth: 2.5-4.1%

2.6-4.2%

2.1-3.5%

2.7-4.4%

1.7-3.0%

Lao PDR

Incremental ASEAN employment growth: 1.9-3.9%

Vietnam

1.5-3.1%

Indonesia

Myanmar

Cambodia

Philippines

1.9-3.8%

Brunei

1.9-3.7%

Singapore 0.8-1.7%

Thailand

1.4-2.9%

3.2-6.4%

Malaysia 1.9-3.8%

2.1-4.2%

2.6-5.2%

1.2-2.3%

Incremental benefit of

facilitative polices to

ASEAN GDP in 2030

~USD125–205bn

Incremental benefit of

facilitative polices to

ASEAN employment in 2030

7–15million

Source:


Thank You

approaching asean’s markets asean’s digital building

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