Reviewing the state of Southeast Asia’s digital transformation and opportunities for the region moving forward

December 2, 2022

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Kenddrick Chan, Portulans Institute Fellow

Southeast Asia’s digital economy is expected to grow to a whopping 1 trillion by the end of the decade. The region has also seen the rise of its own multi-service tech unicorns that provide a wide range of services ranging from food delivery to ride-hailing to online learning to digital banking – in addition to boasting the second fastest growing region in the world in terms of internet users. In the 2022 Network Readiness Index, a composite index published by the Portulans Institute in partnership with Oxford’s Saïd Business School, a economy’s “network readiness” is comprised of four key pillars: prevalence and quality of technology, the population’s ability to utilize technology resources in productive ways , quality of governance, and the impact of participation in the network economy

Simply measuring the level of technology infrastructure (i.e., citizens with internet access) alone is insufficient for advancing our understanding of how ready countries are to take advantage of ICTs and the benefits they provide. We now live in the era where the proliferation of ubiquitous internet platforms and mobile apps means that governments need to enact the relevant regulatory frameworks to govern such technologies. There must also be sufficient development of a country’s human capital to ensure that citizens can take advantage of the benefits that the digital age offers. While having the appropriate levels of technology, infrastructure, and governance needed in key, the ability of the country’s population, businesses, and governments to access and productively utilise technology (i.e., the People pillar of the NRI) is equally important when considering that national digital transformation is ultimately a whole-of-society effort. So, how do Southeast Asian countries fare in this regard?

Singapore ranks second in the world and first in the Asia and the Pacific region. Malaysia (2nd among upper middle-income economies) and Indonesia (2nd among lower middle-income economies) also emerge as strong performers. Singapore climbed 5 spots to move from 7th to 2nd in the overall rankings –  the largest upward amongst the top 10 economies. Singapore’s 2nd place ranking reflects the government initiative to build a “Smart Nation” where digital government, digital economy and digital society initiatives work in tandem to transform the country. The scale and rate of growth of e-commerce in Southeast Asia is also massive, with sales expected to hit approximately 90 billion USD by the end of 2022. In light of this, governments across the region have also put into place various e-commerce legislation – the rankings of Indonesia, Malaysia, Vietnam, and Thailand reflect these efforts. Notably, such legislation is often made up of other digitalisation-related laws that span from personal data protection to business trade regulation. For example, Thailand’s initiatives in e-commerce are also part of wider strategies (e.g., Thailand 4.0, Investment Promotion Strategy 2023-2027) intended to bolster its economic and social development capacities via digital technology. Governments of Southeast Asian countries have also signalled their intent to partake in the digital revolution by launching various national-level initiatives. Such progress is reflected in the NRI where Vietnam (Digital Transformation Plan 2025, Digital Economy Development Strategy), Cambodia (Digital Government Policy 2022-2035, Digital Economy and Social Policy Framework 2021-2035) and the Philippines (Digital Transformation Strategy 2022, Digital Cities 2025) have also punched above their weight by exceeding their predicted performance based on their income level and scoring at least 10% above the trendline generated for all economies of the technology and impact pillars.

However, areas for improvement remain. An area in which most Southeast Asia countries can make progress is privacy protection. In the “Privacy protection by law content” indicator, regional countries rank relatively low. For example, Singapore, Malaysia, and Vietnam rank 94th, 113th, and 121st out of 131 countries present in the NRI. Privacy over personal information is important as it helps to foster trust in technology by ensuring that people retain some degree of control over their personal data and how it is being used. While the “privacy paradox” (where a user’s privacy concerns does not match up to how they behave online) admittedly exists, a step in the right direction would be to recognise that privacy protection is something that must be considered when thinking about technology governance.

 Overcoming various societal gaps – such as gender gaps in Internet usage and the urban-rural divide must also be addressed. When it comes to the gender gap in internet usage, Singapore ranks 65th – while its northern neighbour Malaysia comes in at 123rd. This deserves attention because, while digital transformation can provide huge economic benefits to countries of the region, allowing such pre-existing divides to remain unaddressed risks exacerbating existing inequalities. While technology can be a powerful tool of social change and provide opportunities for women (e.g., mobile platforms empower rural women entrepreneurs), governments will do well to put into place initiatives that reduce structural barriers, foster inclusion, and boost gender equality. Efforts that could be emulated across the region include Thailand’s active multi-ministry participation in the Girls in ICT Day event, an initiative by the International Telecommunications Union to lower barriers to ICT access for women. 

In summary, Southeast Asia has done relatively well as a region in terms of providing Internet access to its people and fostering the rapid growth of its digital economy. While governments should continue to support such growth, it will also do well to remember that technology is a force for change. By fostering their human capital and putting in place the appropriate governance frameworks, governments can play their part in helping shift the force for change in the right direction, empower their populations to take advantage of technology and its promised opportunities, and ensuring a more inclusive and sustainable world for all. 


Kenddrick Chan is a Senior Policy Analyst in the Technology and Public Policy team at the Tony Blair Institute for Global Change. He is also the Deputy Head of the Digital IR in the Information Age project at LSE IDEAS, the foreign policy think tank of the London School of Economics and Political Science (LSE). He works at the intersection of technology, development, and public policy. He has also authored/co- authored several reports and papers pertaining to technology adoption and tech- enabled development. He completed his MSc (with Distinction) in International Relations at the LSE. He also holds a BSc (with First Class Honours) in International Relations and a Diploma in Information Technology (specializing in computer networking).