cross-border data flows

Making Payments Easier in Asia

Making Payments Easier in Asia

Digital payments are at the centre of digital trade expansion and serve as a key enabling factor for digital commerce. Firms will not provide goods or services if they cannot be paid. Payment services, therefore, are a critical component of the online services ecosystem that allows consumers to conveniently make purchases for goods and services from merchants globally and for firms to sell around the world far more easily and cheaply than ever before. Cross-border digital payments, in particular, are instrumental for the development of the regional economy and the growth and resilience of micro, small and medium sized enterprises (MSMEs) looking to thrive in a post-Covid pandemic environment. New innovations within the e-payments space, like e-wallets and blockchain, and initiatives by governments aimed at fostering increased use of digital payments, will likely improve access and lower the costs of cross-border transactions, especially for MSMEs. However, most of this innovation has taken place in the domestic space, where payments are experiencing improvements in terms of speed and convenience. Conversely, cross-border e-payments remain slow, costly and opaque, and difficult to manage. A lack of access as well as regulatory and payment network interoperability means that payments remain one of the most challenging issues for MSMEs hoping to engage in cross-border e-commerce in the region. As governments in the region continue to promote initiatives that improve access and use of digital payments, the challenges of managing cross-border transactions are often under-appreciated by policymakers. MSME merchants and financial service providers continue to struggle to develop and sell their products and services across borders.

The Siren Call of Data Nationalism

The Siren Call of Data Nationalism

The notion that building a larger stockpile of “data” and denying it to other countries will give one a relative advantage is misguided. Countries implementing data nationalism in Asia are some of the most populous countries in the region/world, i.e. they already produce a large amount of data. What would be more helpful is for them to maximize their existing supply of reusable data by getting more firms to use ICT to generate, collect, and analyze data. Having a large cache of raw, unprocessed data is itself not helpful. What is important is how that data is leveraged to generate insights and unlock value. To this end, countries should focus on how to assist local firms, MSMEs in particular, to understand how they can generate and create value from data, including information they create and collect themselves. This should be complemented by efforts to increase data literacy among workers and improve digital infrastructure. As more firms use ICT services, more data can be generated, collected, and analyzed. This will lead to the sort of virtuous cycle of growth that countries need to propel their data aspirations.

Unpacking the Digital Economy Partnership Agreement (DEPA)

Unpacking the Digital Economy Partnership Agreement (DEPA)

The DEPA sits in the middle.  It sets out a series of modules covering a range of topics of relevance to firms that trade digital services, ship goods across borders via e-commerce, or are otherwise involved in the digital and technology space.  These modules are meant to be building blocks.  Countries could opt to dock directly onto the DEPA, expanding the agreement with new members.  Or governments could decide to pick up and use modules, in whole or in part, in various settings.  These include slotting them directly into other trade agreements or opting to align domestic policies to DEPA. The significance of DEPA does not sit with the current three members, who have largely already agreed to uphold the same commitments and principles in the agreement under their Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) membership.  Instead, DEPA matters if and when more governments agree to use the modules or align domestic policy with its framework and structure.  The spread of DEPA is key—if non-members who are considering problematic rules on the digital economy could be encouraged to join, the agreement will be seen as a critical turning point for policy on digital issues.

Making E-Commerce and Digital Trade Work for Smaller Firms

Making E-Commerce and Digital Trade Work for Smaller Firms

The list of obstacles could go on.  The point is that the promise of selling globally comes with increasing challenges.  Hence the very good news that the World Trade Organization (WTO) has launched talks in Geneva to begin to create some global rules to sort out some of these issues.  For smaller firms, global rules can at least ensure that added expense and time becomes a necessary part of doing business, rather than an irritating element of doing business with some countries. The size of the “prize” is huge.  Estimates are all over the place on the current size of the digital economy, but Asia tends to lead the way.  An extremely useful series of reports just released by the Hinrich Foundation on eight economies in the region (five out now: Vietnam, China, Indonesia, Malaysia and Australia) shows how much additional trade might be gained from eliminating barriers to digital trade. 

Why Policy Matters to Me: The Example of Cross-Border Data Flows

In another APRU presentation, presidents noted the increasing integration of the cyber and physical worlds.  Using artificial intelligence to innovate for the future sounds nice, but if not communicated to policymakers, it will not work as anticipated.  Why not? Governments can shut down data flows.  They can do so and they will do so. Government can do so by a variety of regulations that will make it difficult, complicated, expensive or even impossible to move information.  Government will do so in many markets because many officials do not understand the needs of academics or companies. They do not understand the issues because the stakeholders in the system do not see that policy matters. Until and unless these exchanges take place better, we will not get the policies that make sense for everyone.  Policy frameworks are not just the province of someone else—created by governments and driven by ideas drafted from somewhere else.  Policy is supposed to be created for the benefit of stakeholders.  But it requires that stakeholders actually participate in crafting policy.