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ASEAN’s 5 rules to attain economic growth in e-commerce

Association of Southeast Asian Nations (ASEAN) Economic Community set to come into effect by the end of 2015 is working to accelerate economic growth, social progress, and socio-cultural evolution among its members alongside protection of regional stability and opportunities for member countries.

ASEAN has motivated a thirst for economic development, and enabling e-commerce is a unique way to contribute to economic integration across Southeast Asia. With this, retail e-commerce offers a unique opportunity to connect millions of merchants and consumers across the region. But e-commerce is still underdeveloped in Southeast Asia. Compared to the rates in Europe, China, and the United States, Southeast Asia accounts to only 1 percent of total retail sales.

For igniting the growth of economy, some barriers had been lifted at the ASEAN Business Club Forum, held at Singapore in September 2014. The five guidelines that concludes to the rise of underdeveloped e-commerce in Southeast Asia includes Increase broadband access, Support the emergence of local players, Reinforce online security, Promote e-payment, Improve logistics and trade efficiency. With these the online retail in ASEAN market is expected to grow 25 percent per year.

How these can spur the growth?

Increase Broadband Access

Using state-aid funding where private investment is not sufficient and enhancing cross-border connectivity to raise online awareness among the users available online is a key area where focus needs to be there.

According to current scenario only half of the population in Thailand, Philippines and Indonesia accesses internet. The reasons behind this could be the limited network coverage, poor speed connections and more costly broadband packages.

The fixed broadband is expected to grow in the coming time more rapidly as the network coverage will increase. And consumers may be easy to convert through the mobile platform. Many telecom operators have tied up with banks to develop innovative payment method that offer ease to the Smartphone users.

Support the emergence of local companies

Though some local companies have emerged in the recent time but consumers are more like to go with a foreign brand without local presence. Amazon and ebay are US based Retail giants that have almost half of the e-commerce market in ASEAN countries.

Reason for leap of the local companies could be like lack of resources or financial support. Many SMEs are unable to gain that extra edge even after having a great start in the market.

To overcome these barriers access path to finance resources should be improved. Norms should be in favour of local companies as they have tough time when compete these giants from outside with latest technology and strong finances.

Reinforce online security

To secure future growth, securing the online transaction is equally important. It is mandatory to make the consumer believe that online transactions are safe. In ASEAN countries most of the consumers are hesitant in providing their credit card information. Almost 80 percent of the cyber attack threatened countries are among the ASEAN countries and this is why consumer in these countries are reluctant in sharing personal detail online.

Though ASEAN countries have developed and enforced numerous laws for the protection of electronic transaction and data available online but some more is required to be done to make the consumer trust the genuinity & safety of the transaction he wants to make.

Promote e-payment

E-commerce in ASEAN countries is increasing day by day but still the payment mode preferred to be as offline like COD. Again the reason behind this could be the trust on the security of the transaction or large share of the finances are unbanked.

This also concludes as a barrier in the ecommerce growth in these countries and to avoid this, laws could be made to enforce/promote non cash transactions.

Improve logistics and trade efficiency

In ASEAN countries, logistics and trade are not as efficient as it should be meet shoppers expectations. Delivery of the products is the main reason why consumer doesn’t go for online buying. Reason for the failure of logistics is the poor transport facility and warehouse management.

To improve this dedicated entity for online retail logistics should be there and integration of logistics system must accelerate to play their part in good e-commerce growth.

To secure future growth, however, further interventions are needed. A holistic approach that encompasses the five actions above would allow the region to unleash the full potential of e-commerce.

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