As countries in the region grapple with new variants, and second and third waves of infections, the task at hand for governments is to balance the urgent need to confront and contain one of the most serious public health crisis in history, whilst maintaining an adequate level of economic activity.  

For many countries, the only option has been to accelerate their digital transformation and as we gradually come together to consider our recovery in a post-pandemic environment, digitalization will continue to be at the core of the most effective strategies to open up opportunities for growth.

Southeast Asia has long been at the forefront of the global digital economy, with the rapid adoption of mobile technologies, conducive government regulation and young, tech-savvy populations. It has produced some of the most successful companies in the global digital economy, and as a result of COVID-19, it is these companies that will further accelerate economies across the region, helping them recover and develop even faster. 

Take Indonesia for example. From an economic perspective, while its gross domestic product (GDP) dwarfs any other country in the region, critics would argue that it is far from reaching its full potential as businesses struggle to capitalize on the population base outside of major cities due to little connectivity across the archipelago. However, digitalization has the ability to turn this around.  

Government ministers believe Indonesia’s digital economy is poised to grow to the size of about US$133 billion within the next five years. Realizing its full potential has become a priority for both the government and businesses as they see it as a key driver to unlock the nation’s economic development and recovery.

A great example of this new focus is the transformational merger of Indonesia’s hugely successful ride-hailing and payments firm, Go-Jek, and local e-commerce giant, Tokopedia. This deal marked the largest merger in Indonesia’s history with the newly formed GoTo Group currently already accounting for 2 percent of Indonesia’s GDP. This impressive contribution is only likely to grow as the newly merged venture announced ambitious plans to expand their reach and services across the region.

Digital-first firms such as Lazada, Shopee, Go-Jek and Tokopedia have been proof of the incredible economic potential e-commerce can unlock in emerging markets and they are now also showing that they can deliver other lasting benefits for their communities. The new GoTo group is set to rapidly advance financial inclusion in Indonesia by providing payments and related services to the underbanked and unbanked – a significant proportion of the population so often overlooked, and yet, one that is most vulnerable to crises such as COVID-19.

South Asia is a region that can take many lessons from the growth that we are now seeing being unlocked in Indonesia and across Southeast Asia. Although the region is lagging behind Southeast Asia in development, I believe it is at an inflection point where digitalization presents a huge opportunity for businesses. To illustrate my point – Daraz is the largest e-commerce platform in South Asia (outside of India), and we are operating in an underserved market made up of over 500 million people. Although almost half of the population has access to the internet, which is still comparatively lower than the rest of the world, e-commerce only accounts for 1 to 2 percent of retail sales. 

But how can both governments and business better capture these untapped opportunities to recover and further their economies? To me, there are three key areas that need to be looked at.

We must first and foremost improve digital literacy. Only by doing so will both buyers and sellers be able to confidently navigate the complex digital environment. Today we are investing heavily on educating sellers and MSMEs on how they can transition to a digital business. Each month, over 10,000 new sellers participate in courses that we run through our digital Daraz University platform, providing them with the necessary training and information to bring their businesses online.

Another foundational component is logistics infrastructure. Logistics plays a critical role in the success of the digitalization of services, but the ability to achieve a connected supply chain varies across markets and it is no surprise that early-stage economies lack adequate resources to build up their infrastructure. This has hampered growth and, in many ways, impacted consumer trust towards the ability of online platforms to deliver.

We are helping to tackle this through our very own digitalized logistics company, DEX. In addition to supporting over half of our deliveries, it is also helping to raise industry standards so other online businesses across these markets are in a better position to flourish.

The final piece is financial inclusion. Across Southeast Asia and South Asia, a large proportion of the population remains unbanked or only have limited access to a range of financial products. By digitizing the payment system and shifting to a more cashless society, we can rapidly change this trajectory, which is a crucial element to accelerating economic development. As we grow our customer base across South Asia, more and more people will have access to our digital wallet and other e-payment systems, which will play a critical role in creating financial inclusion in the region.

Ultimately through digitalization, businesses can not only help accelerate recovery but also ensure that one of the pandemic’s lasting impacts will be the creation of digitally enabled countries that are well-placed to reap the many benefits it can bring from an economic, societal, and educational perspective.

Those that embrace this transformation most effectively and comprehensively are likely to be at the forefront of global growth for years to come.

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The writer is CEO and founder of Daraz.

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