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Mobile internet will grow GDP and generate jobs in Asean countries

Mobile internet penetration in Southeast Asia will boost the region’s gross domestic product and increase employment, a report says

Each percentage point that mobile internet penetration rises in Southeast Asia will add an extra $1.5bn to the region’s gross domestic product (GDP), with the potential to add a million jobs by 2020, according to a report by Oxford Economics.

The report found mobile internet penetration in Southeast Asia had more than trebled since 2010, reaching 38% in 2014. This is in line with the global average, despite lower incomes in many of the region’s countries.

Asia is a global leader in mobile, claiming five out of the world’s top 10 markets in terms of smartphone penetration.

But the study noted substantial disparities within the region, with Singapore currently having almost twice the rate of mobile adoption as other Association of Southeast Asian (Asean) countries.

Over the next five years, the study said, growth in mobile internet penetration and its associated economic impact is expected to be led by countries that have relatively underdeveloped but sizeable consumer markets, such as Indonesia and the Philippines. Regional governments’ efforts to promote this economic opportunity will also play a decisive role.

However, governments must also consider the impact of new regulation on investment and on the potential growth of the mobile economy.

“The fact that the market environment is so dynamic raises the risk of governments acting in haste and making policy errors, potentially stymying the growth potential of the mobile industry,” the report said.

“For example, research suggests that almost two-thirds of investors are uncomfortable investing in internet/mobile businesses where regulators are applying traditional telecom regulations to new mobile and ‘over the top’ [content and app] services.”

Read more about modern IT in the Asean region

However, Quah Mei Lee, industry principal, digital transformation Asia Pacific, at Frost & Sullivan, said the growth of mobile internet is not as significant as the growth of internet to the economies of Southeast Asia.

“Broadband internet or fibre to the home (FTTH) is a fast-growing market across Southeast Asia and is even being implemented in emerging countries such as Myanmar,” said Quah.

Mobile internet growth is most significant in developed countries such as Singapore and Brunei and less prominent in emerging countries such as Laos, Cambodia and Myanmar, she added.

This is because mobile internet has the biggest impact on a country’s working population to value add as an economic growth driver, and this is proportionally higher in developed countries, where the population has higher levels of education and affordability.

Key challenge

A key challenge that may affect the growth of mobile internet is the poverty level in Southeast Asian countries, said Quah.

She pointed to analysis by the World Bank and Frost & Sullivan that found most countries in Southeast Asia struggle with poverty, with about 30% of the population living on less than $3.10 a day.

In countries such as Indonesia and Myanmar, the cost of data needs to be reduced to meet local affordability levels, said Quah.

“Other challenges include the need for effective regulation, such as ensuring that mobile internet devices and data plans are priced to meet local affordability levels and are not subject to restrictive government taxes and fees,” she added. “Another challenge is the lack of mobile internet awareness, particularly in developing and emerging countries.”

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