Implications of the blueprint are wide as it would be affecting both the financial and non-financial sectors, especially enterprises and businesses doing business in or with the country.

BNM identified four megatrends shaping the economic landscape:

The blueprint identified three broad themes influencing desired outcomes and targets for 2026 — finance for all, finance for transformation, and finance for sustainability.

Importantly, it proposes five strategic thrusts for 2022 – 2026. They include:

1. Funding Malaysia’s economic transformation
2. Elevating the financial well-being of households and businesses
3. Advancing digitalization of the financial sector
4. Positioning the financial system to facilitate the transition to a greener economy 
5. Advancing value-based finance through Islamic Finance leadership

“As we walk along the path of economic recovery, larger threats are knocking on our door. Climate change, biodiversity loss, and demographic change are no longer hypothetical threats; they are real and urgent” warned the Malaysian Minister of Finance, Tengku Zafrul Aziz.  

“Make no mistake. These challenges should not be left to our children or grandchildren to solve. The solutions and the embracing of change begin today. And they begin with us, including the financial community.” 

Zafrul Aziz shared that between 2011 and 2020, the adult population in Malaysia with deposit accounts increased from 82% to nearly 96%. Furthermore, domestic credit to the private sector as a percentage of GDP increased from 108% to 134%. E-payment transactions per capita increased from 49% to 170%.  

The finance minister quipped that these increases were spurred by COVID-19 as well as technological advancements in the financial industry that have enabled consumers to “enjoy digital solutions throughout the financial value chain”. 

As compared to pre-pandemic levels, in 2020, merchant registrations for QR acceptance increased 164%, whereas online banking transaction volumes increased 49%.

The finance minister added that the Malaysian government is committed to supporting local businesses through the Program Semarak Niaga Keluarga Malaysia (SemarakNiaga), worth 40 billion ringgit;  strengthening public healthcare facilities in managing COVID-19; and continuing the sustainability agenda, including the issuance of ringgit-denominated Sustainability Sukuk later this year. 

“Our digital inclusivity aspirations will remain unrealized without the appropriate infrastructure to support it. To that end, various measures under Budget 2022 will also pave the way for the rakyat and businesses to embrace digitalization, and this policy is set to continue in future Budgets”, he added.

Under Budget 2022, measures include:  

• RM700 million ringgit allocation for our nationwide digital connectivity initiative, JENDELA;  
• RM1 billion ringgit under Bank Negara Malaysia’s SME Automation and Digitalisation Facility
• RM150 million ringgit for digital content creation for the creative industry
• RM200 million ringgit under the MSME Digitalisation Grant
  

Additionally, the MyDIGITAL Corporation has also been tasked to implement Malaysia’s Digital Blueprint with an emphasis on public sector digitalization efforts and nurturing digital talent.  

The minister urged the financial sector to continue the inclusivity agenda while supporting the nation’s aspirations. 

“The strategies laid out in the Blueprint will be critical for the financial sector to navigate the oncoming challenges and opportunities – in turn, complementing the Twelfth Malaysia Plan”.   

The key expected outcomes of the blueprint include:

• advancing digitalization of the financial sector;  
• providing meaningful choice and access for consumers; 
• increasing the vibrancy of the funding ecosystem to meet Malaysia’s economic needs; 
• wider adoption of green finance and sustainability practices. 

The minister also urges the financial sector to collaborate with the government. He anticipates the entry of digital banks, digital insurers, and takaful operators, sharing that their presence and impact through the use of tech and innovative financial solutions will “foster greater efficiency and contribute towards a more competitive financial landscape.”

Last year, Tech Wire Asia reported several movements in the financial and tech sector, viz a move to sustainability.

Malaysia’s financial blueprint strategy is in line with a number of other banks in the Asia Pacific that have prioritized climate change impact for risk management and adopted greener measures to reduce their carbon footprint.

The post Malaysia focuses on fintech, sustainability with new financial blueprint appeared first on Tech Wire Asia.

This was made possible by recent developments in small business technology, which have opened up a sizable portion of data to all users, from single-location boutiques to expanding franchises with several locations.

And yes, as with any other technology or digitalization initiative, there will be some financial cost involved, more often substantial than not.

So what about primarily brick and mortar businesses without much of an online presence? What about the cash-strapped or lean micro SMEs or mom and pop shops in emerging or developing regions struggling to survive amidst competition from the big players?

What if we told you that data analytics isn’t out of reach for this segment as well? 

In this interview with Kaushik Sriram, Partner at Kearney, Tech Wire Asia explores how this segment of retailers can find cost-effective ways to kickstart and/or improve business intelligence with data analytics.

The low down on data analytics 

There’s no shortage of content out there on how to “leverage data analytics” for “impactful insights” alongside scary and expensive-sounding “AI” or “Machine Learning”. That’s how it’s usually packaged, isn’t it?

But at its core, the principle behind data analytics is just simply to use data you’ve collected in a way that drives better decision-making at all points of the business chain. 

Different companies will require different kinds of data. Set an end goal for your business that data can help with. From there, you can figure out what kinds of data you will need and the kind of data analytics services that would be useful to you.

The key to unlocking the large number of potential answers hidden in (frequently) easily available raw data lies with data analysis.

Asking the appropriate questions and combining them with the proper technologies may pave the road for improved data insight and decision-making, hence gaining a competitive edge.

“For example, if a bigger company wants to scale up to capture a bigger market, they can use a data analytics service called location analytics (or location intelligence) to build a view of demographics, population, density, and profile of people in specific locations in an area, region, or country.

“It is a more convenient way to find out the profile of customers. Eventually, find out what use case works for you, and curate it.

“Actual model building would then be much easier”, shared Kaushik.

Data analytics — the cost-effective way

Kaushik mentioned that technology is not the only instrument to collect data — a cheaper method of collecting data would be conducting surveys at the desired location.

This can be carried out with “low tech” pen and paper, or with QR codes to an online survey plastered on the walls.

Data about customers such as age, food preferences, and financial capability can be collected and further analyzed to identify the traits and preferences of customers. A survey can be tailored according to the key data points that you need.

For example, a small food establishment in a university town might find that customers there tend to prefer bite-sized snacks over bigger meals, and expect food outlets to be open long beyond 10 pm on a weekday.

A small-scale home bakery providing home delivery might want to find customers that are close to the area of the bakery. 

Collecting data such as preferred bakery products and financial capability of the potential customers in that area help to determine what are the products the bakery should focus on and set an affordable price range.

“Retailers can also focus on point of service (POS) and stock-keeping unit (SKU) to capture their order value. It is also generally good to invest in customer relationship management (CRM) tools that track transactions and set targets for customers that you want to target.” 

“On a larger scale, the main issue would be data storage and building machine learning models or data platforms for data analysis,” he added.

For SMEs, there are local and global data analytics services with tiered levels which can help to scale up business data collection and analytics needs.

Additional strategies to consider

There are a lot of tools that can be difficult to figure out. So, one way to get more information would be to acquaint oneself with trade associations. Those, or, retailer associations, sharing, and forums can be useful to help individual retailers, he shared.

“For example, governments would have departments that have identified the direction of digitalization for SMEs.

One would be the Malaysia Digital Economy Corporation (MDEC), which launched a set of digitalization guides for SMEs last year.”, added Kaushik.

Taking advantage of these resources, as well as networking, would help SMEs get discovered by other larger companies. 

Other strategies such as customer retention and loyalty can be used to collect data. For B2B SMEs, allowing purchase on credit from smaller businesses or even is a good way to collect data too.   

“Offering credit could grow businesses well. The retail market during COVID times is a big differentiator — so this is where BNPL (buy now pay later) players do it on a big scale. The same concept is applicable for SMEs.

“Profiling customers serves two purposes — to get a better picture of your customer, as well as track their information and prevent fraud. All these do not require fancy tools, but organized and clear systemizing”, added Kaushik.

Small business data analytics are undeniably important and here to stay. Small businesses can alter how they market their products, interact with customers, and handle their finances by using data analytics. Along with actionable user behavior insights, it can also help with cost savings, revenue growth, and creating a one-of-a-kind customer experience that encourages people to stick by you.

The post How can smaller retailers leverage data analytics to fuel business growth? appeared first on Tech Wire Asia.

The kind of fintech services needed here, however, might be a little different from more developed nations yonder the oceans.

Firstly, APAC customers aren’t quite well-banked, meaning to say, there are high numbers of underbanked and unbanked customers in the region. 

It is estimated by the World Bank that around half of the adult APAC population does not own a bank account. 

As such, much traditional banking and financial services are out of reach of a large number of those in the market.

FINTECHS ARE SHATTERING FINANCIAL INCLUSION BARRIERS IN THE PHILIPPINES

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Despite that, there is a massive need for fintech services, especially in payments in APAC. This has grown considerably alongside the increase in online activity brought about by the COVID-19 pandemic.

Financial woes in APAC

Recently, Forrester Consulting released an Experian-commissioned study on credit decisioning and alternative data use. 

The report found that banks and lenders in APAC are increasingly aware of the critical need to better protect their customers from falling into financial hardship. 

The report highlighted the growing concern of financial woes by consumers, given how the pandemic has affected the economic stability of many in APAC. Not surprisingly, poor credit decisions negatively impact the financial situations of customers. 

Over half (54%) of APAC banks and lenders surveyed in three markets agree that putting customers in a hard situation (54%) is one of the top implications of a poor credit decision, just behind financial loss (60%). 

The study surveyed 164 banking, fintech, and non-banking lending decision-makers managing credit risk in Australia, Indonesia, and India.

FINTECH BUSINESS OPPORTUNITIES IN ASEAN

Jamilah Lim | 24 December, 2021

It found that while most are confident in their credit risk decisioning performance, the top underperforming area is the management of hardships and collections, with 54% agreeing there is room for improvement. 

Fortunately, the study also found 80% of organizations are focusing on developing monitoring and early-warning systems as a top risk management priority — and they have plans to continue investing in this area over the next one to three years. 

These statistics suggest that organizations in APAC are increasing investment in technology to predict and identify early signs of financial stress, including taking on higher-cost loans, a loss or drop in income, greater reliance on savings, and a shift in spending on high priority items. 

The takeaway from this is that this will enable personalized management plans to be rolled out to support affected individuals through these difficult times. 

Emerging trends shaping fintech use by banks and businesses

The rise of automation

Firstly, automation is a critical priority for credit risk management, and consumers are expecting more from organizations.

Increasing automation is ranked as a high or critical priority for credit risk assessment and management in the next 12 months by 73% of businesses. 

Over half (52%) say that this is to increase the speed of credit decisions and reduce manual errors in the risk decisioning and management process (50%). 

With that said, 33% say there are challenges in increasing the automation of credit decisioning and management, mainly with how current automation technologies have not matured yet. The other would be that they face challenges due to legacy technology and systems (26%). 

AUSTRALIA’S FINTECH SECTOR TO SEE MORE GOVERNMENT SUPPORT

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A higher speed of credit decisioning and quicker loan approval rates could provide a vital lifeline for consumers. 

In fact, 75% of Australian consumers believe home loan approvals should happen within three days, while 50% expect the approval to take place within 24 hours. 

Increased data sources needed

Secondly, a broad spectrum of data sources is needed for a holistic view of customers in order to improve financial inclusion

Improving the use of data and insights in business decision-making has emerged as a top priority for businesses (44%). 

However, organizations are not leveraging all the data sources available to them. In fact, 34% of respondents agree that their organization has declined applications from viable customers due to insufficient credit data. 

To improve risk assessment and management, lenders will continue to leverage more traditional forms of data such as banking or credit bureau data (41%) and tap on new data sources such as alternative credit data (40%) for credit risk and management over the next 12 months. 

Alternative data sources include telco data, consumer data, or e-commerce data, and provide a comprehensive credit profile of a potential customer. 

The use of alternative data means lenders can better assess their customers’ creditworthiness, providing them with critical access to credit which could transform their lives for the better. 

Today, Buy Now Pay Later platforms are gaining popularity for providing fast and easy credit to more people. While beneficial for the underbanked, if not carefully monitored, BNPL platforms could put consumers at risk of overextending themselves. 

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Therefore, alternative data is extremely critical in ensuring credit risk assessments are accurate in setting personalized spending limits so that customers spend sustainably and responsibly. 

Prioritizing long-term customer relationships

Banks and lenders are also now pushing for an elevated customer experience (CX) as part of strategies to prioritize long-term customer relationships.

As more customers are reached online, there is a lower focus on reducing costs (23%) and more investment in improving online customer engagement to build better relationships.

The study found that businesses thought that improving CX is one of the most important business priorities (43%), alongside growing revenue (42%). 

Organizations appear to understand that nurturing strong relationships with customers is essential to building strong brand loyalty.

A 2021 Global Decisioning Report by Experian also showed that 59% of consumers would give a company more business if they felt that they were treated fairly.

It’s clear from the trends we see in fintech that the demand for digital and online banking and financial services will not reduce in the coming years.

Aside from banks, it’s also great to see businesses in APAC ensuring that vulnerable markets are protected enough through sound business decision-making powered by data and analytics.

The post How banks and businesses use fintech to support vulnerable markets appeared first on Tech Wire Asia.

However, it’s a whole new different ballgame when it comes to data leaks from official databases, such as government institutions or commercial entities such as credit agencies. 

The 2021 Malaysian government data leak 

In late September last year, a Twitter post by Malaysian Cyber Intelligence Specialist Adnan Shukor broke disturbing news that the personal identities and information of approximately four million Malaysian citizens were on sale on a popular leak site.

In that incident, it was claimed by the seller on the site that these are “fresh” data obtained by the Malaysian National Registration Department (NRD), or, Jabatan Pendaftaran Negara (JPN). 

Tech Wire Asia spotted the original source originating from the online seller, who wanted 0.2 BTC (US$8,480, or, RM 35,459) for the entire list comprising information on four million Malaysians.

Screenshot of sale post of Malaysian citizen data on an internet forum [Source: Tech Wire Asia]

The information peddled was extremely comprehensive, including details such as the citizen’s full name, date of birth, email, gender, contact number, and residential and mailing addresses.

This information was contained in a JSON file and also uploaded as evidence of the goods:

More concerningly, a related leak of data from 4 million taxpayers from the country’s Inland Revenue Board (LHDN), was also being sold by a different user, in a similar file format. 

Unlike the NRD database, this contained information such as the individual’s name and personal details, as well as household incomes, and similar information on their spouses.

Attitudes towards data protection

Globally, users who utilize online platforms or sites and share and post personal information of themselves are getting increasingly aware of the importance of keeping such data secure. 

Half a decade back, most people wouldn’t give much of a thought to data security, although the Cambridge Analytica scandal did rock the world and bring the issue to the fore.

However, it seems Facebook — sorry, Meta — has not learned its lesson.

Over in Southeast Asia, tech giants have been taken to task for data privacy breaches, with a prominent one being Grab.

However, over in Malaysia, there’s only a handful of players championing the cause for stronger data protection and its associated policies. 

One is Sinar Project, a civic tech initiative using open technology, open data, and policy analysis to promote accessibility of information to the Malaysian people. In recent times, they’ve also explored digital rights, but with a lesser focus less on the tech, and more on policymaking.

Conversely, the IO Foundation (TIOF) sees the problem of digital rights as a tech issue more than a policy or political issue. TIOF is an international non-profit based in Malaysia that envisions a world where the digital rights of users are protected — by design. 

TIOF’s Spanish-French founder, Jean F Queralt, is no stranger to Southeast Asia and has been contending with this issue for the last twenty years. TIOF also advocates that the digital rights of users be on par with human rights, especially since we are fast hurtling into an age of excessive data and digital identities. 

Both The IO Foundation and Sinar Project regularly conduct training workshops and seminars to educate the public as well as private sector players and civil servants.

Evangelizing data protection and the PDPA

Tech Wire Asia reached out to some cybersecurity experts and had the opportunity to speak to Fong Choong Fook (or CF Fong), Director of LE Global Services, an IT security MSP, on the data breaches, as well as data security and data privacy.

Data security and privacy laws in Southeast Asia generally still leave much to be desired. Both Singapore and Malaysia have laws concerning these, called the Personal Data Protection Act, commonly referred to as PDPA. 

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Both these acts regulate the processing of personal data by companies or within commercial transactions in Singapore and Malaysia, so as to safeguard the personal data of users and customers from misuse.

Alas, it’s not that we don’t have laws and regulations here for data protection and data privacy. The issue is that, despite the existence of these laws, data breaches and leaks still happen.

It is especially worrying in Malaysia, where highly sensitive information of over four million citizens can be brazenly sold online for as little as RM 35,495 (US$8400).

It’s a double whammy, in that this alone shows just how insultingly little our data is valued, and how easy it is to access these data, which can expose the victim to a litany of digital, financial, and even physical risks. 

Importance of data protection and the PDPA

Fong shared that the public sector, i.e. both the Federal and State governments themselves, as well as their related bodies, are not bound by the PDPA. 

It is interesting to note the irony of the Malaysian government imposing the PDPA on companies (or those engaging in commercial transactions) to safeguard personal data — yet are themselves allegedly incapable of protecting highly confidential citizen data. 

Whether these data leaks are through digital or physical means is irrelevant. 

The fact of the matter is that these leaks have happened, and the damage has been done — the personal, highly sensitive, and powerful data of citizens are now on the world wide web.

Fong is no stranger to cybersecurity and data leaks, having been in the industry for decades. He is a PDPA evangelist, if you may, and emphasized multiple times in our chat, the importance of the act. 

He opines that both the private and public sectors need to know what the PDPA is, be aware of its importance, and enact them in practice. 

“The private sector needs to have policies established, and be very aware that the management personnel are actually liable for prosecution, should the company fail to adhere by the PDPA.”

“The penalties that come with a breach of the PDPA aren’t to be taken lightly, and organizations should be alert to these”.

Malaysia’s problematic attitude towards data protection

Fong segued a little into the cultural aspects of the Asian Malaysian society — and agreed that we are steeped in a culture that fails to respect privacy. 

This is possibly one reason why adherence to data protection and data privacy values or even policies are incredibly lax in the nation. 

It’s not just the large companies that need to abide by data protection and privacy policies — a huge amount of SMEs here also collect sensitive personal data. 

And when one actually examines their practices, one would find that there is little to no regard for proper practices to safeguard data.

One clear example of this lack of care can be seen in how Malaysian companies collect and process employee information. 

Many SMEs who haven’t quite digitalized still fully rely on physical folders and files to hold data on employees — or even jobseekers! 

All it takes is for an unauthorized person to enter these offices and rifle through the folders to get sensitive data on individuals. 

It can be quite mindboggling to contend with the fact that, in 2022, there are still employers here who require prospective employees to divulge highly sensitive information. 

These include data such as their date of birth, identity card number, tax file number, address, details of family members, or even health history.

It is also common for commercial entities such as pharmacies or F&B establishments to collect personal data such as names and identity card numbers presumably to register as a member, even though there is absolutely no reason why such sensitive personal data should be given up.

Worse still — these companies would never declare nor reassure job seekers or customers about how their data is processed and stored. It might be even harder to request that they be destroyed. 

The previously jovial air during our interview changed, as Fong’s voice took on a more somber tone. 

“The data that we’re collecting is accumulating, and it will get increasingly harder for us to protect them, and our people, if we do not have best practices or guidelines in place. 

Fixing the problem 

Throw a stone at a random company in Malaysia that handles personal data, and you’d quickly find that a lot of them have no idea what the PDPA is. Even if they have heard of it, frequently, they’d have no idea how to implement them.

Ensuring adequate and effective processes and guidelines, as well as enforcement, seem to be a recurring plague within the various strata of Malaysian society — and, as many a Malaysian would enthusiastically agree, — governance. 

When asked how companies can go about establishing these guidelines and practices to ensure better data protection, Fong opined that the process isn’t as complicated as most think.

“Firstly, to implement a policy, you’d need procedures. These procedures would then need to be supplemented by clear guidelines and skills training.

“A good place to start would be to visit the website and download a copy of the Personal Data Protection Act 2010. Read through it to understand, in principle, what it is about, and what you ought to look out for.”

“Of course, it would be much easier for companies to engage a lawyer to draft a PDPA policy too. Saves you the hassle, too”, he added, with a laugh.

Is more legislation better?

In 2017, the entire country was affected by a massive data breach where details of owners of mobile numbers by telcos were leaked. Hackers attempted to sell off the data of 46 million mobile phone owners in Malaysia, making it Asia’s largest data breach to date.

Mind you, the PDPA was enacted in 2010 and amended in 2013. Even so, these holders of our data could not secure our data properly.

In reaction to the 2021 government-related data leaks, certain quarters have called for stricter legislation. 

There is an argument to be made that instituting new laws to handle data leaks or breaches, whether sold on the dark web or otherwise, may not be particularly helpful. 

A reactive approach to (cyber)crime isn’t ideal for two reasons; firstly, the principle of deterrence through punishment is only effective when enforcement is consistently and equally enforced (e.g. without the baggage of corruption). 

Secondly, like other crimes, the damage, often irreversible, would already be done to victims. The only recourse or compensation available is often monetary, and the legal process to obtain the monies back may be long and arduous.

Instead, focusing on developing a holistic and preventative approach would be ideal, and this doesn’t just mean introducing more legislation. 

Malaysia already has the PDPA, which, for the most part, may be described as decent. Unfortunately, it suffers from a lack of enforcement (as do many other important things in the country). 

Secondly, there is a dearth of data protection and data privacy literacy in Malaysia. A lack of coordinated educational campaigns have made us all ignore the importance of securing our data, or holding companies and governments accountable for the misuse or manhandling of our data.

There is a lack of transparency and accountability; data privacy literacy; adherence to and enforcement of protocols, and enactment of established procedures for collection and use of personal data in Malaysia. 

These are the core kinks in the system that need to be ironed out — it is not a problem that can be easily solved by slapping a legislative band-aid and hoping it resolves itself. 

This would be especially more urgent as Southeast Asia heads into the golden age of e-Commerce and soon, the metaverse.  

Ensuring data protection and privacy requires an overhaul of attitudes — there needs to be a drastic shift of mindsets and especially urgency to recognize these as priorities. 

The views expressed here belong to the author and does not represent Tech Wire Asia.

The post Malaysia’s chronic indisposition to prioritize data protection will ruin us all appeared first on Tech Wire Asia.

Coupled with the effects of globalization, Vietnam was pushed straight into a middle-income economy in just one generation, and has been on track to higher economic development since.

Cross-border e-commerce in ASEAN

ASEAN is a growing digital economy behemoth — Google, Temasek, and Bain predicted, in their yearly e-Conomy SEA report, that the region would reach a US$1 trillion digital economy by 2030. 

This prediction grows even stronger as the Regional Comprehensive Economic Partnership (RCEP) kicked in on Jan. 1 this year, which would remove up to 90% of cross-border trade tariffs on exports and imports within 20 years for member nations. 

The speed with which ASEAN is digitalizing cannot be understated. The Covid-19 pandemic, whilst a horrifying blight on the world, played a part to accelerate digitalization globally, especially in ASEAN. 

Lockdowns around the region had pushed consumers to obtain their goods and services through online means. This drove more people online, not just for work, but also for entertainment, shopping, food, groceries, and more. 

Google, Temasek, and Bain’s report highlighted that SEA’s tenacious growth is primarily driven by e-commerce and food delivery, and both verticals are expected to propel the region’s internet economy forward in the next decade.

A report by Deloitte last December tracked the growth and state of cross-border digital trade within the Asia Pacific.

It broke markets down into three segments: Mature, developing, and emerging.

Generally, mature markets see rapid growth in Europe, America, and Southeast Asia. Developing markets mainly expand sales into the Asian markets.

Over 80% of cross-border e-commerce businesses in Indonesia, Malaysia, the Philippines, and Vietnam believe that the Southeast Asian market has the fastest growth.

These are the top three sales fields in cross-border e-commerce amongst APAC countries:

Vietnam: A manufacturing hub

Vietnam is well known for being a hub for manufacturing operations, especially by higher-income nations who are adopting the “China plus one” strategy.

Also known as ‘Plus one’, it is a business strategy where companies diversify investment into countries other than China in order to reduce reliance on China.

Costs of doing business in Vietnam, especially for manufacturing, are low, due to affordable overheads such as for buildings, land, and labor. 

It also comes with progressive taxation policies for foreign companies, as well as benefits for companies who utilize green energy or have plans for incorporating it. 

Vietnam has proper policies to support FDI promotion, and a greater focus on establishing a liberal neutral environment.

It also provides necessary conditions for the effective decentralization of FDI management and promotes the support of other industries and closer consultation with existing and potential investors.

But perhaps the most compelling aspect of doing business in Vietnam lies in its geographical location and accessibility. Vietnam’s manufacturing and processing sector were the largest in terms of FDI, at 58.2% in 2020 — and for good reason.

The nation is very geographically strategic, and compared to most of its neighbors, is highly accessible to major trade and freight routes in and out of Southeast Asia and Asia. 

It has a multitude of international airports, seaports, and rail links — all of which facilitate production flow and its requisite logistics.

The Vietnam manufacturing advantage?

As compared to its regional peers, it is the highest on digitalization in production and manufacturing, in relation to cross-border e-commerce. 

(IMG/Deloitte)

In the previous figure, Vietnam seems to be steadily rising and doing decently in digitalization across most other facets of e-Commerce as well.

Generally, the APAC region finds high logistics costs the most challenging aspect of cross-border e-Commerce — except for Vietnam. As you can see in the table below, 61.8% of businesses in Vietnam find difficulty in customs clearance inspection the biggest challenge to cross-border e-Commerce. 

The generally low percentages across other e-commerce domains suggest that Vietnam has relatively little issue with logistics, marketing, and costs, which makes it easier to target the areas that can be further improved to facilitate cross-border trade. 

Whilst it is still a ways to go for Vietnam to breach into the more advanced digitalization aspects of e-Commerce such as in logistics and payments, just from its digitalization levels in production alone, Vietnam looks set to surpass stalwarts such as China and even Malaysia in certain manufacturing areas. 

No doubt Covid had thrown a wrench in the country’s plans in the past couple of years, with higher vaccination rates and a return to the factories, as well as the Regional Comprehensive Economic Partnership (RCEP), Vietnam looks set to continue leading the region in manufacturing and production — for the foreseeable near future, at least.

The post Vietnam and manufacturing: What’s driving its success? appeared first on Tech Wire Asia.

According to deputy central bank director Kasidit Tansanguan, the pilot project was originally planned for Q2 of 2022 and seeks to test the use of the CBDC in cash-like activities, albeit within a limited scale. 

Said ‘cash-like’ activities include transactions such as deposits, withdrawals, and fund transfers by around 10,000 customers as well as financial institutions. 

According to Kasidit, Thailand will “proceed slowly” after discussions with relevant parties and “careful consideration”.

“Thailand can still take a gradual step in the retail CBDC to ensure efficiency and prudence as it does have a problem with fund transfers or payments as some other countries,” added Kasidit, in a Reuters report.

Thailand began work on a CBDC from as early as 2018, starting with Project Inthanon.

From 2018 to 2020, BoT had been in collaboration with leading financial institutions, to create a proof-of-concept wholesale Central Bank Digital Currency (CBDC) prototype using distributed ledger technology in different use cases. It ranges from enabling automated regulatory compliance processes to tackling high fees in cross-border payments.

Not a CBDC vs crypto thing

Earlier this month, the country’s central bank said it does not want commercial banks to be directly involved in trading digital assets, citing the risks stemming from high price volatility, reported Reuters.

This came on the back of recent movements by commercial banks in the country that has invested in local digital asset exchanges. First was the US$537 million acquisition of Bitkub by Siam Commercial Bank Pcl (SCB), and then a US$41 million investment into Zipmex by Bank of Ayudhya Pcl .

“We don’t want banks to be directly involved in digital asset trading because banks are (responsible) for customer deposits and the public and there is a risk,” said Bank of Thailand (BOT) senior director Chayawadee Chai-Anant.

“The priority should be on technology that promotes financial innovation, enhances the efficiency and security of the payments system, and safeguards the economic and financial systems,” he added.

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Prior to that, the central bank also warned companies about accepting crypto payments. 

“If other currencies are widely used, it will impact the central bank’s ability to oversee the economy,” said BOT senior director Sakkapop Panyanukul.

He added that the bank is not exactly entirely afraid of all cryptocurrencies — just the ones that aren’t backed by assets, such as bitcoin.

Cryptocurrencies that are backed by assets are known as stablecoins. 

The central bank also added that it was working with other agencies on ways to regulate digital assets.

Early last month too, the Tourism Authority of Thailand was reportedly working on its own digital token, the TAT Coin, which will be accepted for travel.

A new unit will also be set up by next year to handle the issuance of Thailand’s own CBDC, produce a wallet, and build a new tourism ecosystem. The Tourism Authority’s governor believes that Thailand must be promoted as a crypto-positive society to welcome crypto millionaire tourists.

Trading and use of cryptocurrencies have gained momentum in Thailand in the last year with retailers and real estate developers accepting digital assets as payments.

Thailand, which has eight licensed cryptocurrency exchanges, saw about 205 billion baht ($6.09 billion) in digital asset transactions in November, data from the Securities and Exchange Commission showed.

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Kicked in on 1 January this year for 10 countries in the Asia Pacific, it was initiated in 2012 by the Association of Southeast Asian Nations (ASEAN) in order to strengthen ties with China and other APAC nations.

Asia and cross-border trade

The Asia Pacific, especially ASEAN, has long had a history of close and successful cross-border trading, primarily due to proximity and similarity of cultures, which facilitates logistics and market demand for goods. 

However, unlike the European Union (EU), the APAC region had been a little on the slower side to rectify existing bottlenecks in processes, laws, regulations, tariffs, and access to financing, especially in relation to global value chains. 

Furthermore, most trade agreements tend to be within these countries’ sub-regional parameters, i.e. Greater Asia, or Southeast Asia. 

Leading tech nations in Greater Asia — namely, Japan, South Korea, and China — have been embroiled in political tensions for decades, slowing inter-regional trade there.

This RCEP, interestingly, will mark the first time that China, Japan, and South Korea would be in a free trade agreement — certainly a movement that has gotten the world on the edges of their seats to see how it plays out.

Who are in the RCEP?

Ushered in four days ago, the RCEP agreement kicked into action for Brunei Darussalam, Cambodia, Laos, Singapore, Thailand, Vietnam, China, Japan, Australia, and New Zealand.

South Korea would join the bloc on 1 February 2022, 60 days after its ratification. Other signatory nations including Malaysia, Indonesia, Myanmar, and the Philippines are expected to ratify it soon. 

Their agreements will enter into force 60 days post ratification instrument deposit, acceptance, or approval to the Secretary-General of ASEAN. 

What will the RCEP bring for signatories?

The RCEP comprises a mix of low, medium, and high-income countries. Its key selling point is the elimination of tariffs for cross-border trade in goods. 

It is a big deal, as inter-Asia trade already is bigger than trade between Asia, North America and Europe put together. 

Once the RCEP came into effect, 65% of tariffs have gone down to zero — and this number is expected to rise to as much as 90% within 20 years. 

For RCEP exporters to enjoy these tariffs, they would need to abide by its common “rules of origin” framework, shared Ajay Sharma, HSBC’s regional head of global trade and receivables finance for the Asia Pacific, in a report by SCMP. 

This means sourcing at least 40% of inputs from within the RCEP bloc, in order for their end-products to enjoy the tariffs when they’re exported to other member nations. 

Sharma further opined that diversification of supply chains and FDI (foreign direct investment) will be accelerated as companies will find it easier to use ASEAN as a base of production, given lower associated business costs. 

He also added that it would “streamline existing FTAs in APAC and strengthen intra-regional trade linkages.”

Digitalization and cross-border trade in ASEAN

As previously mentioned, cross-border trade in ASEAN has been strong and will keep growing as regional cooperation between private and government players further harness the power of technology, given the pandemic’s movement restrictions.

According to Google, Temasek, and Bain, Southeast Asia is predicted to reach a US$1 trillion digital economy by 2030. 

Whilst trade was admittedly negatively impacted by the pandemic in the past two years, heavy damage was largely averted through several approaches. 

Digitalization in the form of enhanced digital connectivity, automation of operational services, and strong governmental policies prioritizing digitalization in cross-border trade played a huge role in dampening the effects of the pandemic in ASEAN.

Furthermore, the region is one that’s quick to recognize and take advantage of fintech. This is largely applied to foster better financial inclusion, in the region home to the world’s largest population of unbanked and underbanked consumers. 

The Asia Pacific has a huge appetite for fintech — reflecting the changing finance and banking landscape, as well as consumer demand, in these regions.

According to Findexable, five ASEAN nations — namely Singapore, Indonesia, Malaysia, Thailand, and Vietnam, are also in the top 20 Asian fintech nations. Findexable publishes the annual Global Fintech Rankings.

For example, the central banks of Malaysia and Thailand launched a cross-border QR payment system in June last year. The retail payment linkage enables consumers and merchants in both countries to make and receive instant cross-border QR code payments.

Both countries had recently undergone pivotal shifts in digitalizing payments. Malaysia promoted its real-time retail payment system and DuitNow, whereas Thailand charted an e-payment roadmap to bolster intra and inter-country retail e-payments.

Multiple countries in Asia have or are in the process of embarking on their own sovereign digital currencies, or, CBDCs (central bank digital currency). 

Singapore has taken the lead to develop retail CBDC through the Global CBDC Challenge, whereas Malaysia is still experimenting. 

In September last year, it was reported by Tech Wire Asia that central banks of Singapore, Australia, Malaysia, and South Africa will develop prototypes and test shared platforms to process cross-border digital currency transactions. 

China has successfully carried out multiple iterations of its digital yuan trials, and Japan is reportedly looking at starting its own too.

The RCEP and ASEAN’s digital economy dominance

Aside from fostering smoother payments, digitalization brings with it a host of other benefits for businesses and consumers alike, especially in the digital payments powerhouse that is Southeast Asia. 

E-Commerce has been identified as a key driving force of strong intra-regional trade between countries, and its potential is immense in developing nations such as the Philippines.

The role that technologies such as AI and analytics play, especially in e-Commerce, cannot be underestimated too. 

E-Commerce players are not just concerned with swimming with small fish — they have far bigger fish (markets) to fry.

Last year, China-based fashion mogul Shein overtook Amazon as the biggest fashion mobile e-Commerce platform in the US. Shein has quietly racked up a valuation that exceeds US$15 billion, too.

In Thailand, fashion e-commerce players such as Pomelo have developed their own machine learning system to boost their platform presence. 

Furthermore, emerging fintech such as BNPL also play a part in growing financial inclusion for not just consumers, but MSMEs (micro and SMEs) as well. 

A report by Deloitte predicts that digital trade will further accelerate, and leapfrog the region into the golden age of digital trade within the next three years.

The report also suggests that this pivotal shift will be largely facilitated by increased dynamic cross-border e-Commerce activities, which are further strengthened by regional cooperation through the RCEP, increased digitalized lifestyles, and the ongoing development of digital infrastructures.

It’s just a matter of when — not if.

The post APAC will dominate the digital economy with RCEP appeared first on Tech Wire Asia.

1. Prioritize cybersecurity 

A TrendMicro survey found that 90% of IT decision-makers claim their business would be willing to compromise on cybersecurity in favor of digital transformation, productivity, or other goals. 82% also felt that they have been pressured to downplay the severity of cyber risks to their board. 

Whilst a data breach might make organizations prioritize cybersecurity, the costs of handling one would be immense — we’re talking US$5 million per breach immense. 

Why would you buy umbrellas after the rain?

2. Don’t neglect data protection and privacy 

Customers say that safety and security are most important to them online. KPMG suggests that businesses adopt a transparent approach to how data is used, stored, and shared. This will not only assuage the worries of users but also help to build consumer trust in a brand.

Don’t betray their trust, ensure you have the right data protection and data privacy policies in place within your digital ecosystem.

3. Institute and maintain IT and cybersecurity hygiene policies

Ransomware will be the largest threat to businesses this year. Sophos recommends having proper IT hygiene policies across the company.

Ensure proactive countermeasures such as monitoring features, backups, and training in security skills to enable early detection. Ensure all staff has the latest security updates and patches installed on their devices.

4. Passwords are not enough

Eighty percent of hacking-related breaches can be attributed to weak or compromised passwords, according to Verizon’s 2019 Data Breach Investigations Report. 

So, passwords aren’t enough. Multi-factor authentication (MFA) should be the new norm.

5. Zero-trust is your friend 

Yes, we’ve said this ad nauseam. We’re saying it again. And again.

6. Beware tech support scams 

Over 60% of consumers around the globe have fallen prey to tech support scams. Victims tend to be younger men, and also very overconfident of their IT literacy skills.

So what should businesses do? Consider AI chatbots instead for tech support.

7. Prioritize 5G security 

5G technology is gaining increased uptake in the Asia Pacific and will see more use in 2022. However, it does come with security concerns, especially as it may enable a wider threat surface area for attackers.

As such, it’s time to prioritize 5G security both MNO-side and business side.

8. Increase remote working security 

We thought remote working would be decreasing. Boy, were we wrong, especially given the rapidly spreading Omicron variant.

Companies should continuously implement and reinforce user-friendly cybersecurity tools and policies, and users should improve on their security standards at home.

9. Break IT team silos down 

Only a third of developers truly understand the security policies they work with. This disconnect between security teams and software developers hinders initiatives like Zero Trust implementation and securing the cloud. 

Companies should foster closer relationships between developers and the security team so all ICT members are on board and fully understand how policies and processes will be like.

10. … or outsource IT security 

Well, if your company is smaller and you can’t afford a security team, then cybersecurity MSPs (managed service providers) are a solution.

But make sure you get the advice of a skilled and experienced cybersecurity member to ensure you’re not overpaying for services you don’t need.

The Tech Wire Asia team wishes you and yours a Happy and Cyber-secure New Year!!

The post Ten cybersecurity resolutions for a safer 2022 appeared first on Tech Wire Asia.

Typhoon Odette in the Philippines had caused so much destruction and displacement that cities are still trying to clear the debris and cope with the hundreds of lives lost.

The 2021 flash floods of Malaysia have also displaced over 60,000 people and homes and disrupted supply chains and trade routes.

As I reflect on these events at the end of 2021, it pains me to know that life and financial losses could have been mitigated, or perhaps, even avoided, in these two natural disasters.

Climate change, COVID-19, and suffering

Rapid urbanization in a post-industrial world has accelerated demand for a litany of products, services, and amenities. All of which, over the decades, has increased in scope, depth, and resource use.

The buzzword half a decade ago was “smart cities”, and a couple of decades prior, “globalization”. 

Globalization was touted to be the bearer of prosperity for Asia, and it was, and still is. Almost two decades later, greater Asia has significantly caught up to the West — particularly North America and Europe.

Tech superpowers in Asia are locking heads with the US on future technologies such as quantum computing and 6G, even.

Worryingly, this is amid a backdrop of a pandemic-ravaged, economically wrecked world that’s still struggling to recover from the devastation of COVID-19 lockdowns that have affected trade and supply chains globally, on top of the mental stresses of attempting to protect ourselves from being infected.

As if that’s not enough, the entire globe has been grappling with the increasingly vicious effects of climate change such as flash floods, droughts, typhoons, tsunamis, and the like. 

Over in the developed, metropolitan capital city of Malaysia, Kuala Lumpur, Hybrid’s relatively privileged office contends with fear and concern over dark clouds and heavy rain that loom on the other side of our windowpanes, never knowing if we’d have to leave immediately or face the prospect of being stuck with flooding.

We are at the mercy of the whims of mercurial weathers that require care to navigate and understand — not unlike the kind you’d need being around emotionally fickle persons who make you feel like you’re treading on eggshells.

Smart, but also sustainable cities are key

These are dire times we live in. 

We may not be having many physical wars amongst nations, but the trickle-down effects of foreign policies, quests for world domination, and digital espionage, coupled with climate change and COVID-19 will and do severely affect the lives of the people down the chain. 

People such as you and I, and businesses, and economies.

Climate change is the most pressing issue that the world needs to contend with, because not only is it affecting us now, but it will affect us 10, 20, 30 years down the road. 

Lives will be lost, children will be growing up in a fractured globe with limited natural resources — survivability will be in hard mode for the future generation. 

Again, the buzzword then was ‘smart cities’. But it is not enough that cities chase ‘smartness’. 

For cities of the future to be liveable, they should also be designed according to principles of sustainability. 

This is especially true for regions or areas that are particularly susceptible to natural disasters and where there are marginalized or at-risk communities such as those with limited access to basic needs such as water, sanitation, or food. 

Their displacement will have a far greater negative impact on their lives, as opposed to those with access to better facilities.

For example, the December 2021 flash floods in Malaysia weren’t unavoidable. There were clear recommendations made to authorities in terms of city and infrastructure amendments and designs that would facilitate drainage. 

Members of Parliament for certain constituencies had brought up critical infrastructural faults that required immediate rectification in anticipation of increased rainfall at the end of the year.

Unfortunately,  these were not addressed in a thorough, timely, and effective manner. As a result, over 60,000 people were displaced, lives were lost, and properties and possessions were ruined beyond repair.

It is a week after the devastating floods and victims are literally still slowly picking up bits and pieces of their lives. In other states, the flooding has continued, and the prognosis is similarly not great for them either.

It is showing that it is exceedingly important that if cities want to be “smart”, sustainability should be embedded in the core of their design.

Defining “smart sustainable cities”

The UNECE (United Nations Economic Commission for Europe) defines a smart sustainable city as “an innovative city that uses ICTs and other means to improve quality of life, the efficiency of urban operation and services, and competitiveness while ensuring that it meets the needs of present and future generations with respect to economic, social, environmental as well as cultural aspects.” 

Whilst that was not exactly the epitome of clarity nor accuracy, it does give us some insight into the philosophy behind what smart, sustainable cities ought to be like. 

To that effect, the UNECE (and the UN) do have a set of standards and key performance indicators (KPIs) for smart sustainable cities, which were developed by both UNECE and ITU.

Briefly, the KPIs gauging standards of smart sustainable cities are grouped across three dimensions: Economy; Environment, and Society, and Culture. 

Smart cities ultimately aim to improve the lives of their inhabitants and push the nation’s economy to greater heights of development and liveability. 

It is clear that global policymakers understand and acknowledge the complex intertwining of People and the Environment.

We cannot expect that electric vehicles, renewable energy, smart streetlights, drones, or IoT toilets will alone solve the complexities of climate change and improve the liveability of cities. 

Sure, they have their uses, but their roles are arguably smaller in the grander scheme of things.

Sustainable cities, therefore, are now a crucial component of developing better cities.

And more importantly, the presence of capitalization in these sectors has to be tempered with education, policy reforms, and control of corporations.

Electric vehicles, for starters, still have negative environmental impacts on the production line. Blockchain requires high amounts of electricity to function. 

The time has come to do away with self-aggrandizing, ego-stroking “technological achievements” in smart city development when these do not have sustainability embedded in their design.

We need effective, progressive, and decisive policies and policy changes. We need better implementation, monitoring, and enforcement from the authorities.

We need city planners, architects and engineers of the future to design and build with sustainability in mind.

We need to foster collaboration between the public and private sectors to ensure that cities abide by sustainability standards and that the interests of the people and environment trump the greed of corporations. 

We need governments across the world to ratify and work on their pledges in the Paris Agreement to bring global temperatures back down to pre-industrial levels.

We need to stop thinking that it will be business as usual today, tomorrow and later.

We can no longer work in silos — this affects us all. 

Will you be part of a force of change?

Or will business go on as usual?

The post Stop killing people: Smart cities must be sustainable cities appeared first on Tech Wire Asia.

Ransomware, everywhere

Tech trends in cybersecurity have generally edged towards targeting remote working victims.

The spike toward record ransomware attacks and data leaks in 2021 looks likely to spill over into the coming year.

Cyber-extortion heists break into a victim’s network to encrypt data, then demand a ransom, typically paid via cryptocurrency in exchange to unlock it.

A swathe of factors has fueled the trend, including the booming value of cryptocurrencies, victims’ willingness to pay and the difficulty authorities have in catching attackers.

Businesses and the most-at-risk retail sector should start now, rather than later, to prepare for the incoming onslaught.

James Forbes May, vice president for the Asia Pacific at Barracuda believes that there will be a renewed focus on governments prioritizing cybersecurity initiatives, building alliances with vendors, and sharing data with other countries.

More electric vehicles

We’ve seen how the devastating impacts of climate change exacerbated by the COVID-19 pandemic have wreaked havoc on lives in the Asia Pacific. 

One way nations here are looking to ameliorate climate change is to promote the replacement or at least, increase of zero-emissions vehicles on the roads. 

This picture taken on September 9, 2021 shows a Nissan Motor autonomous vehicle during a press preview for a field operation test of Easy Ride, a driverless mobility service, at the Minato Mirai business district in Yokohama, Kanagawa Prefecture. (Photo by Kazuhiro NOGI / AFP)

Tech trends in the Asian automotive industry are definitely moving towards increased EV design, manufacture, but uptake may be fragmented, depending on the country.

Some nations with growing EV markets include India and Japan.

But the spotlight will be on China, a huge player in the Asian EV industry, whose government has pushed for more EVs to curb carbon emissions.

More Chinese automakers and players are collaborating, whereas home-grown Chinese stalwarts like Nio are targeting richer overseas markets.

As of now, a plethora of companies, even those traditionally in consumer tech, have put one leg into the proverbial electric boat to start production and sales of EVs. They include Huawei and  Xiaomi. Smaller countries such as Malaysia have made some semblance of headway into promoting EVs too, with taxation policies.

However, the biggest issue impeding its adoption in Asia is simply, the cost required to acquire EVs, which is especially true for the economically developing SEA.

Global leading automakers have, however, expressed interest in smaller markets such as Malaysia, though.

The semiconductor complexity will go on

Experts say the global chip shortage is like to continue until 2023 at least. 

Key chip supply chain player Malaysia may see increased competition from manufacturing leaders such as Vietnam, although more investments are coming in, such as from Bosch and Intel. 

Malaysia’s semiconductor industry may need time to recover, though, given the impact of not just COVID-19 lockdowns, but the recent flash flooding which has displaced tens of thousands of people and wrecked chip plants there.

China is trying to reduce its reliance on Taiwan’s TSMC to grow its home-grown SMIC. China is the largest buyer of 5G smartphones and also supplies a majority of consumer tech to the world.

Chinese big tech brands are moving to in-house design and manufacture of their own chips, one of the tech trends seen in the West too. They include Oppo and Alibaba.

More Big Tech regulation in China

In China, the big tech crackdown has been going full steam, as regulators have slapped fines and withheld licenses for a litany of charges that Chinese big tech have flouted.

At the same time, the state authorities have come up with draft after draft of legislation to govern the movements and operations of big tech in the country.

Even foreign firms aren’t spared, prompting some to even leave China. Some of these laws include anti-monopoly, data privacy, foreign IPOs, and more. 

Trade sanctions on China-sourced goods to the US have resulted in a trade war that has affected Chinese and global supply chains. This dynamic arguably underlies these recent actions by Beijing, particularly where it concerns the movement of citizen information or data across borders.

As a result, China has been expanding its influence into SEA, where some nations have a more favorable disposition towards Chinese tech.

Part of China’s strategy to avoid the US and move to trade in other markets has resulted in their interest in being a part of regional trade agreements. China is now part of the Regional Comprehensive Economic Partnership (RCEP), which starts January 1.

They also aim to rejoin the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in a post-Trump administration.

Meatless meat

Meat alternatives have become common in an increasing number of western households, thanks in part to Beyond Meat and Impossible Food plant-based products. They have improved taste-wise, and are cheaper now, partly because of increased awareness of the impact of meat production on the environment. 

In Southeast Asia, however, real meat still trumps plant-based or lab-grown meats — simply because it’s too expensive. 

Ironically, plant-based mock meat has been very popular in the region for decades, owing to a large number of vegetarians. Asia, is, after all, a region home to two of the world’s largest religions that eschew meat, namely, Buddhism, and Hinduism. 

However, most mock meat products suffer from sub-par texture, flavor, and closeness to real meat, which makes them unattractive to the mass market of meat-eaters. 

However, the demand is there — just not enough for manufacturers and developers to reach a critical mass production point where the prices match or even go lower than real meat products.

Producers are, however, taking stock of this trend as some Asian nations are already working on commercializing or at least, exploring these efforts, including Singapore, Thailand, and Vietnam.

Singapore-based Growthwell is one, and they aim to produce completely plant-based, nutritionally complete meat alternatives. 

With additional reporting by Joshua Melvin with Julie Jammot for Agence France-Presse

The post 2022: Five tech trends in the Asia Pacific appeared first on Tech Wire Asia.