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Digital economy to make up 60% of APAC’s GDP by 2021
The surge in GDP contribution will come as more organisations shift from digital transformation initiatives aimed at shoring up productivity towards digital product development
The digital economy in Asia-Pacific (APAC) is expected to be worth $1.16tn by 2021, accounting for 60% of the region’s gross domestic product (GDP) – up from about 6% last year, an IDC study has found.
Commissioned by software giant Microsoft, the study, which polled 1,560 business decision makers across 15 APAC economies, also found that digital products and services enabled by mobility, cloud, the internet of things (IoT) and artificial intelligence (AI) would grow the region’s GDP by 0.8% each year.
Speaking at a briefing in Singapore today, Daniel-Zoe Jimenez, IDC’s research director for digital transformation and big data analytics, said this “big jump” will occur as more companies shift from embracing technology to become more productive towards developing more digital products and services.
“Most digital transformation initiatives for the past three to four years were aimed at productivity improvements,” said Jimenez, noting that such initiatives typically do not have a direct impact on GDP figures.
Ralph Haupter, president of Microsoft Asia, attributed the growth of the digital economy to the rising adoption of AI.
“Our customers are already demonstrating a strong sense of urgency to integrate AI into their business as part of their digital transformation initiatives,” he said.
According to IDC, 40% of digital transformation initiatives will be supported by AI capabilities that will provide timely, critical insights for new operating and monetisation models in APAC, excluding Japan.
Take Singapore’s Keppel Urban Solutions (KUS), a new business unit under marine, property and infrastructure giant Keppel Corporation, for example.
Formed in October 2017, the master developer of smart precincts in APAC is planning to use data and AI to fine-tune and deliver municipal and facility management services at Saigon Sports City, a 64-hectare residential and sports-oriented development in Ho Chi Minh City, Vietnam.
These services include security and access control, remote monitoring and control of energy and utilities infrastructure.
“Beyond the physical infrastructure, we want to deliver value-added services to residents, businesses and shoppers at the mall, create new revenue streams by leveraging digital technology and drive down the cost of delivering services,” said Cindy Lim, managing director of KUS.
Doing so, however, would require KUS to team up with partners and technology experts such as Microsoft, which it is working with to roll out a technology platform from which digital services will be created and delivered.
Read more about digital transformation in APAC
- The internet of things is gaining momentum around the world, with 92% of large organisations putting the technology as the top priority in their digital transformation efforts.
- CIOs will need to consider new performance indicators, adopt an embedded digital business model and build up an enterprise-wide digital platform to avoid digital deadlock.
- The biggest challenge in digital transformation in the APAC region is driving change across organisations rather than the technology, say business leaders.
- Businesses in Singapore are fine-tuning their digital transformation efforts, with a third of them moving public cloud workloads to on-premise systems.
Asked how KUS would measure the success and value of its digital initiatives, Lim cited several areas including commercial rentals, real-estate prices, new revenues for digital services, as well as intangible indicators such as impact on liveability and sustainability.
“Our vision is to make sure that for all the master development projects we undertake, we want to not only convert land into physical facilities, but also turn them into communities where people work, play, learn and generate economic benefits,” she said.
