Will Asia-Pacific Economies Seize the Opportunity to Incentivize Foreign Investment?
The growing prominence of the Asia-Pacific in the global economy presents a significant opportunity for the technology industry. ITI members have built dynamic supply chains over decades. The technology they develop and assemble in multiple countries services consumers in the global market, all levels of government, and a full range of industry sectors.
In Singapore, Indonesia, Vietnam, South Korea, and Japan, I saw firsthand how governments are approaching information and communications technology (ICT) manufacturing and investment, and how the private sector continues longstanding efforts to diversify supply chains and make them more resilient. Asian economies are not only interested in a more prominent role in the technology supply chain, but they are also intensely focused on building a globally-competitive workforce to support these important goals.
Asia-Pacific countries have become increasingly attractive as manufacturing and investment hubs for companies seeking to diversify – but not decouple – from China. Southeast Asian nations, such as Indonesia and Vietnam, have endeavored to capitalize on this trend recruiting new ICT manufacturing, telecommunications, and e-commerce. Many are pursuing national digital transformation initiatives, such as the Golden Indonesia 2045 Vision and Vietnam’s National Digital Transformation Program and setting ambitious goals for increasing exports and foreign investment.
To actualize these goals, Asia-Pacific governments must clear regulatory hurdles and remove barriers to investment, manufacturing, and innovation. Numerous markets – including Vietnam, Indonesia, and South Korea – have implemented rigid data localization requirements that limit their ability to attract investment in important and emerging technologies like semiconductors, AI, and quantum computing. And, despite its size and attractiveness as a potential regional manufacturing hub, Indonesia maintains significant import policy restrictions and tariffs on technology products and services.
Policymakers in the region frequently draft laws and regulations that do not align with international standards, making it difficult to sell products or components across global markets. Governments should harmonize standards and certification regimes globally – or at least across the region – to facilitate trade and supply chain adjustments. Where an international standard or certification and testing regime already exists, there is simply no reason to reinvent the wheel, as it only adds roadblocks to market entry and costs for consumers should products and services require market-specific modifications or assessments. International standards development organizations and conformity assessment bodies, like INCITS (s’ouvre dans un nouvel onglet) – a division of ITI – attract global experts to develop specifications and testing regimes appropriate for the current technology and consumer needs. ITI encourages all countries to participate actively in these organizations, so that their experts also have a hand in developing these important tools.
These policy changes will require political will on behalf of governments, but they are by no means insurmountable challenges. And the effort will pay dividends in new investments, manufacturing, and innovation that will add to domestic economies, provide opportunities for local companies and citizens, and strengthen Asia-Pacific economies globally. Just as China can no longer rely on its sheer size to attract investment, Asia-Pacific economies will only attract so much foreign investment by promoting themselves as the alternative to China. The Chinese government has already begun taking steps to reduce data flows restrictions, align with international standards, and offer additional incentives to lure back foreign investment.
Asia-Pacific economies are in a real position to compete with China. As these dynamic countries continue to evolve, ITI will continue to propose sound policy solutions that support further growth and innovation in the region.
Author
