Integration and innovation key to ASEAN's next stage of growth

Special Feature brought to you by UOB

The concept of smart cities and Industry 4.0 took centre stage at the ASEAN Conference 2019, held earlier this month, even as participants grappled with concerns over rising trade tensions between the US and China.

While there are headwinds to global growth, ASEAN's potential remains intact, with more businesses expected to diversify their supply chains to Southeast Asia to tap the region's manufacturing capabilities, said Wee Ee Cheong, deputy chairman and CEO of United Overseas Bank (UOB), in his opening remarks.

"Across ASEAN, you see the region being transformed," he noted. There are more innovations and use of them at scale - such as robotics, artificial intelligence, cloud computing and the Internet of Things.

"With the application of these new technologies, manufacturing and industries can operate more seamlessly, smartly and efficiently. Through this trend, called Industry 4.0, greater regional connectivity and productivity gains can be generated." This will enhance ASEAN's position as a global manufacturing hub, Mr Wee added.

He also emphasised that for ASEAN to be more competitive and resilient, connectivity is critical. "A more connected ASEAN will help embed the region's integration into the global economy, create more economic opportunities, grow incomes and lift living standards."

Guest-of-honour, Minister for Trade and Industry, Chan Chun Sing, reiterated the importance of cohesion within the region during his keynote speech at the conference, which is in its fifth year.

In encouraging ASEAN businesses to work more actively with their respective governments on integration of the region, Mr Chan outlined three specific areas:

1. Make a strong call for the early conclusion of negotiations on the Regional Comprehensive Economic Partnership and for integration to extend to the elimination of non-trade barriers.

2. Embrace the opportunities provided by the digital economy, which will be the next blue ocean for ASEAN businesses. This can be done by harmonising digital standards and developing digital-related skills to level up digital talent in the region.

3. Ensure that workers and communities, especially the underprivileged, are not left behind as businesses keep pace with changes.

Industry 4.0 in ASEAN

The fourth industrial revolution will see greater integration of physical production with digital technologies, enabling ASEAN to capture productivity gains and to strengthen its position as a global manufacturing hub.

While speakers on the Future of Industries panel acknowledged that this was an exciting time, they also stressed the importance of having a strategy before embarking on Industry 4.0. This means identifying bottlenecks, acquiring required resources and drawing out a realistic roadmap.

Jimmy Koh, Managing Director and Head of Business Insights and Analytics, Group Wholesale Banking, UOB, provided insights into how ASEAN companies can embrace and integrate Industry 4.0 into their businesses.

He highlighted that with the increasing use of technology to communicate with and to provide services to consumers, companies have access to an unprecedented amount of data - most importantly behavioural data. This data will enable companies to make more accurate and timely predictions about their customers' needs and to tailor products and solutions to them.

"The aggregation of data has narrowed the distance between sellers and buyers, lenders and borrowers, and differentiation is now even more critical. Organisations have to keep asking themselves what it takes to stay in the game," Mr Koh said.

Mr Koh also noted that cooperation and integration between industries in ASEAN is necessary to ensure that the data gathered is holistic.

Bicky Bhangu, president of South East Asia, Pacific and South Korea at Rolls Royce, also talked about how companies should look at the whole manufacturing value chain when they think "digital".

He identified three challenges that ASEAN will need to address. The first is the region's huge infrastructure deficit which is of varying nature. Connectivity means different things to different countries; for certain countries this might mean 5G connectivity whereas for others it may be a rail network.

The second challenge is the definition of ASEAN identity and its relevance, he said. This encompasses how millennials view ASEAN in the next decade and also ensuring that ASEAN does not get stuck in the middle income trap.

The third challenge relates to energy consumption. As ASEAN continues to grow, its energy consumption is going to increase quite significantly. "We have to make sure we have the right energy mix for the different geographies and that it is sustainable", Dr Bhangu said.

Khoo Teng Chye, executive director, Centre for Liveable Cities, spoke about Singapore's Liveability Framework in a separate plenary on smart cities.

Beyond the use of technology, the idea of a smart city encompasses the provision of essential services in an efficient and effective manner. But it also needs to encompass aspects such as greenery and water in long-term development plans, said Mr Khoo.

He also highlighted the importance of the ASEAN Smart Cities Network as a collaborative platform for ASEAN cities to learn from one another's experiences in adopting smart technology, identifying solutions and engaging industry and global partners.

However, Mr Khoo stressed that the starting point for smart cities is not necessarily technology. Instead, planning needs to start from the point of what a city needs.

"Start with the basic issues that your city faces, whether in housing, water or transport. Then develop a governance framework to tackle those problems."

The ASEAN Conference 2019 was organised by UOB, Singapore Business Federation, Rajah & Tann and RSM Chio Lim, and was held at the Ritz Carlton, Millennia Singapore.