From follower to leader: Digital transformation and the road to 5G in southern Asia-Pacific

Over the past decade, Asia-Pacific has transitioned from being the world’s factory to a leading developer of next-generation technologies, such as artificial intelligence (AI) and automation, big data, blockchain, cloud computing, connected devices, robotics, and virtual/augmented reality. Robotics and advanced manufacturing, well established in East Asia, are fanning out into Singapore and Malaysia as R&D clusters and government innovation strategies help firms push deeper into AI, smart manufacturing, and IoT. In emerging markets like Indonesia and the Philippines, consumer apps are booming, thanks to widening access to the internet and the success of home-grown firms.

As the 5G era dawns, the promise of massive bandwidth, lower latency, and large connected device ecosystems is prompting an R&D flurry across the region as companies explore new use cases. From smarter cities to futuristic factories, immersive entertainment, and holographic conferences to autonomous vehicles, all technology categories will be upgraded by 5G. And, as with smartphones and streaming, which emerged in the 3G to 4G shift, new use cases will surely emerge.

This report combines a survey of six countries, Malaysia, Singapore, Philippines, Indonesia, Australia, and New Zealand, which we will call “southern Asia- Pacific” or “the region”, with wide-ranging expert interviews, to chart the digital transformation to date and examine 5G as an opportunity to consolidate the region’s gains. The key findings of the report are as follows:

• Southern Asia-Pacific is a front-runner in the digital era. After decades as the world’s factory and industry follower, the region is today a competitor, and sometime leader, in the fusion of digital and physical systems. AI, autonomous vehicles, robotics, IoT, and connected devices are evident throughout these countries. Our survey shows that 40 percent of companies will roll out AI in the next 12 months, with 36 percent to deploy automation. The 5G transition provides an opportunity for southern Asia-Pacific to compete for the leadership podium for the first time.
• Homegrown companies are solving unique regional challenges. Across each of the countries, next-generation technologies are being deployed to solve unique challenges, from "care-bots" and service robots to deal with aging populations, to geoscience and environmental monitoring. Deep knowledge of local consumers and their needs helps home-grown companies excel and fight off overseas competitors.
• Asia-Pacific is already a test-bed for 5G. From early demonstrations at the Olympics and Commonwealth Games in South Korea and Australia, to innovation hubs exploring use cases like immersive entertainment and AI-based drones, Asian countries are already tinkering with 5G. Experts expect immediate impact in manufacturing first, and later in mass IoT, smart cities, and autonomous vehicles.
• Companies expect 5G within two to three years. The majority of companies (65 percent) across the six surveyed markets expect 5G to be launched by 2020, with 18 percent by 2021; fewer than 8 percent believe it will take as long as 2022. Some 47 percent believe 5G will boost efficiency, and 44 percent are discussing how their business will be affected. Fifty-one per cent are investing in technologies that can be deployed when 5G is launched.
• Regulatory reform, data security and organizational stasis are obstacles to digital transformation in the 5G era. The world over, the digital economy is outgrowing regulatory frameworks in areas like monopoly, tax, privacy, and security. Clear, robust rules are needed to put digital innovation on a sound footing as 5G intensifies challenges like data privacy. Companies also need to overcome internal hurdles; lack of organizational agility and slow pace of change is voted a top obstacle by 38 percent of firms.