This article first appeared in Forum, The Edge Malaysia Weekly on September 29, 2018 - October 5, 2018

At his previous job, Nadhir Ashafiq headed a small courier unit where he first experimented with lori sewa (lorry rentals) services and saw a potential to disrupt the competitive logistics industry. Today, TheLorry.com offers on-demand logistics in its home country of Malaysia as well as Singapore and Thailand.

He was doing what the merchants and businessmen of Southeast Asia have done for generations. The region’s entrepreneurs know that to compete with businesses from countries like China and India, they have to look beyond their local market. They understand instinctively that if you want to go big, you need to go regional.

The success of Southeast Asia’s entrepreneurs depends on the region’s continuing integration. Since its founding in 1967, Asean members have worked hard to eliminate tariffs and improve regional connectivity. Because of these efforts, Asean is the sixth largest economy in the world today.

For Asean to entrench its position among the world’s leading economies, it needs to take advantage of the Fourth Industrial Revolution. Digital and internet-based technology is creating new business models, making it cheaper and faster to come up with new products and ideas. If Southeast Asia rides this wave of technological empowerment, and if it does so together as a region, the opportunities for its small and medium enterprises and the region’s economy are unprecedented. According to research published recently by Bain & Company, Asean digital integration could stimulate a US$1 trillion GDP uplift by 2025.

Currently, Asean’s digital economy is 7% of its GDP, compared with China (16%), the EU-5 (27%) and the US (35%). This is clearly a massive digital opportunity for Asean. A single Asean digital community would enable Malaysian SMEs to sell their goods and services to the 330 million internet users in the region, rather than just the 26 million in Malaysia.

As local entities, SMEs may lack room to expand. But as regional enterprises, they have access to the world’s sixth largest economy, its third-largest population and a young, rapidly growing middle class. The region’s SMEs account for 50% of its GDP and employ more than 80% of its workforce. They need to contribute to growth if Asean’s digital economy is to benefit everyone.

There are three measures that are key to unlocking this opportunity for Southeast Asia’s SMEs. First, free flow of data. The free flow of data across borders is essential to support digital trade, drive innovation and lower costs of regional operations for businesses.

Second, an open and interoperable digital payments system. A connected network of national payment systems would help Southeast Asian consumers and corporations make financial transactions across borders seamlessly, enhancing trade and business activity.

Finally, harmonised and streamlined national regulations on trans-border commerce will enable Southeast Asian companies to spend less on navigating different jurisdictions and more on bringing their goods and services to other countries.

Industry also needs to support governments in building a more integrated digital community. Companies have a responsibility to invest in the communities we work in. At Google, we believe that SMEs are the backbone of local communities and the future of any economy. If SMEs in Asean do well, everyone in the region is uplifted as well. That’s why Google is committed to supporting SMEs in Asean. We aim to have the three million SME workers across all 10 Asean countries trained in digital skills by 2020.

Last month in Singapore, Asean economic ministers adopted a framework to advance Asean digital integration. This is an important first step towards empowering the region’s SMEs to drive a US$1 trillion increase in GDP by 2025. More remains to be done. It is time for us to work together in realising a brighter, digital future for everyone in Asean.

Caesar Sengupta is general manager of Next Billion Users and Payments, Google. Since joining Google in 2006, Caesar has led its efforts to engage the next billion users by building useful products and features, such as Datally and Files Go, that cater specifically for high-user-growth countries like India, Indonesia, Brazil and Nigeria, as well as payment solutions Google Pay and Tez.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.