Mizzima
Asia Forward recently held a podcast on the major growth in financial technology that is taking place in Southeast Asia.
The following is the transcript:
Southeast Asia has seen one of the world’s biggest growths in financial technology, or fintech, with digital payments such as GoPay, GrabPay, OVO, and QR systems like QRIS. Do you see U.S. players such as Visa, Mastercard, and PayPal being able to compete in those areas in the near future?
Well, they’ve all been in the market for quite a number of years, so I think they are well placed to compete. To your point, there is a very vibrant fintech ecosystem in several Southeast Asian countries, and you do see wide adoption. In many ways, it strikes me that they’re leapfrogging the United States and other Western countries.
Hi everybody, welcome to the Asia Forward podcast, where we discuss forward‑thinking ideas in U.S. and Southeast Asia business. My name is Ei Thant Sin, and I will be your host today. We are taking a closer look at the expanding digital economy in Southeast Asia and what it means for American businesses. To discuss this topic, we have John Goyer, Vice President for Southeast Asia and Oceania at the U.S. Chamber of Commerce here in Washington, D.C.
Hi John, thanks for joining our conversation today.
Thanks for having me.
First, could you briefly share with our viewers the role of the U.S. Chamber of Commerce and explain the difference between the U.S. Chamber of Commerce and the American Chambers of Commerce that exist in individual countries around the world? What is your role, and what services do you offer member companies?
Sure. Thank you for that. The U.S. Chamber of Commerce has been around for about 112 or 113 years. It’s the largest business federation in the United States – and in the world. We represent the interests of the American business community in the policy process: legislative, taxation, and all areas of public policy. My role, as you said, covers Southeast Asia and Oceania. The Chamber is primarily a policy advocacy organization. We work with member companies to identify issues of market access, investment restrictions, or regulatory challenges in those markets. We work with those governments, with our own government, with AmChams, and other groups to advance reforms that make the business climate more welcoming and competitive.
Regarding the AmChams: these are organizations that represent American business on the ground in overseas markets. There are about 125 of them worldwide, including all major Southeast Asian markets. We often have overlapping memberships – different individuals, but many of the same companies and policy objectives – so we work in partnership when it makes sense. We share information, exchange newsletters, and act as eyes and ears for each other.
The U.S. Chamber of Commerce has over 3 million companies you work with. How has the Chamber helped member companies navigate U.S. tariff policy, especially those operating or investing in Southeast Asia?
We are closely engaged with the administration and Congress. We spend a lot of time following tariff policy and understanding what it means. We work directly with members to hear how tariffs impact their business. We talk to lawyers and specialists when reviewing executive orders and decrees that lay out tariff policies. Ultimately, we try to get transparency on where tariff policy stands now and how it might change based on court rulings or other developments. It keeps us quite busy.
I should add that this is the international side of the Chamber. The organization is large, and a much bigger part focuses on domestic issues. In recent years, there has been a lot of focus on tax reform, which we’ve generally seen as positive. We also focus on permitting issues – helping the U.S. become more energy independent. Many barriers are homegrown: permitting delays, years to get approvals for pipelines, grid, or new power capacity. We spend a lot of time on those issues. We also have teams specializing in supply chains, IP, healthcare, digital economy, and more. We cover many issues that impact the business community.
Southeast Asia’s digital economy is projected to grow over $300 billion. When we say “digital economy in Southeast Asia,” what comes to mind for you, and where are the growth opportunities?
It was actually forecast to hit the $300 billion mark last year. Google, Temasek, and Bain do an annual assessment of Southeast Asia’s digital economy, and by their reckoning, the region crossed that threshold last year. It encompasses a range of digital services: e‑commerce, delivery apps, streamed entertainment, and more. That report does a good job breaking it down.
Let’s start with Indonesia. Recently, President Prabowo visited Washington, D.C., and Indonesia joined Malaysia and Cambodia in signing agreements on reciprocal trade (ART) with the United States. The Chamber was one of the organizations that hosted the president for high‑level engagements with the American business community. Can you give us an overview of those engagements and what ART means for U.S.–Indonesia trade?
He talked a lot about his plans for the Indonesian economy. He’s focused on bringing the economy to the next level with greater value‑added production and higher technology. Nickel, copper, and other critical minerals are front and center in all conversations, including Indonesia. There was a lot of discussion around those issues. Indonesia is facing challenges in the financial sector – we’ve seen downgrades from Moody’s, Fitch, and earlier MSCI. He recognizes the need to shore up the financial sector. His government is focused on it, but the challenges are significant.
From those agreements, what concrete changes can U.S. businesses expect on the ground?
I’ve read the agreements, but we haven’t had a formal debrief with USTR or other officials. We do have questions about some aspects. But in general, the Indonesia agreement includes favorable elements. For example, all three agreements support a permanent moratorium on tariffs on electronic transmissions. This has been ongoing in the WTO for two decades, and memorializing it is positive for the business community. Other aspects – data flows, cybersecurity cooperation – are also potentially positive. Implementation is the question, as always.
The Supreme Court ruling on tariffs imposed by President Trump in April last year has created uncertainty. The legal basis for reciprocal tariffs was invalidated, replaced by a clause allowing more limited tariffs for a limited period. We think we know what the tariffs are now, but how long will they last? What happens after the current period ends? We don’t know.
You mentioned data flows. Indonesia has historically leaned toward data localization. Does this new agreement signal a shift toward more open data flows?
The ability to move data across borders is vital – not just for tech companies, but for any company doing international business. Whether in autos, mining, tech, or manufacturing, you need to move data. The ART signals greater latitude for companies to move data across borders under appropriate conditions. This is a positive move. It has been an issue in Indonesia and other markets.
Do the U.S. agreements with Malaysia, Cambodia, and Indonesia signal lower barriers to entry in the digital sector, or are there other risks? What non‑tariff barriers do U.S. businesses face day‑to‑day?
There are several, varying by market. In Indonesia, local content requirements – being required to produce part of a good in Indonesia to sell it there – have been challenging. Import licensing has also been difficult, with a lack of transparency. To the extent ART can address that, it’s positive. There are commitments around IP, which is always good – stronger protection and enforcement.
Thank you, John. Before we continue, I’d like to remind our viewers that if you enjoy our conversation, don’t forget to subscribe.
Now let’s talk about digital payments. Southeast Asia has seen major growth in fintech with digital payments such as GoPay, Grab, OVO, and QR systems like QRIS. Do you see U.S. players such as Visa, Mastercard, and PayPal being able to compete?
They’ve all been in the market for years, so I think they’re well placed to compete. There is a vibrant fintech ecosystem in Southeast Asia with wide adoption. In many ways, they’re leapfrogging the U.S. and other Western countries. People like myself think of fintech as using a credit card, but they’re going far beyond that. Younger, tech‑savvy populations are driving adoption. Anything that eases friction in transactions is welcome and contributes to higher economic growth.
ASEAN has DEFA, the Digital Economy Framework Agreement, expected to be finalized this year. How likely is Southeast Asia to move toward consistent digital regulations across the region? How are U.S. businesses positioned?
I can’t handicap the likelihood of DEFA moving forward, but Southeast Asian countries are making digital economy deals with others inside and outside Asia. Singapore, for example, just finalized talks on a Singapore‑EU digital agreement. Some of these agreements may go beyond internal ASEAN agreements, which could put upward pressure on ASEAN standards.
Beyond e‑commerce, how prepared is Southeast Asia in terms of digital infrastructure like data centers and cloud capacity, especially with AI?
Google reports every year how many tens of millions of people in Southeast Asia have just come online. The region already has a large and rapidly growing pool of internet users, which positions it well to adopt new technologies. They are building significant data center capacity across Indonesia, Malaysia, Vietnam, Thailand, and elsewhere. There is a belief that having these facilities will help jumpstart a broader high‑tech economy. Whether that’s true or not, the cloud capacity is needed.
One major challenge is energy. Data centers are energy‑intensive, especially those using AI‑powered chips. Countries must scale up power capacity as quickly as they scale up data centers. This is complicated by carbon‑reduction commitments and limited renewable energy. Countries are exploring non‑fossil‑fuel solutions, including small modular nuclear reactors. There has even been talk in the U.S. about nuclear‑powered data centers.
What are the main Southeast Asian economies you’re paying attention to?
We don’t prioritize one over another; we follow our members’ priorities. Naturally, we spend more time on larger economies because that’s where member demand is.
As Southeast Asia’s digital economy grows, how is it impacting the geopolitical balance, especially with U.S.–China tech competition?
It can put countries in a difficult spot. For example, using Huawei for communications infrastructure may not be well received in Washington. The State Department recently announced a program to fund entrepreneurs developing “trusted smartphones” – devices running on operating systems more common in the U.S. This is one example of the competition we’ll see more of. There will be continued tussles over standards in AI and other areas.
Where do critical minerals fit into this?
Critical minerals are embedded in much of this – not just AI chips, but alternative energy, high‑tech communications, and defense systems. The U.S. is a major consumer but not a major producer. We lack many of these minerals in our soil and lack refining and processing capacity. China has a huge lead in both mining and processing.
John, I’d be remiss not to ask about Myanmar. The U.S. Chamber played a significant role in normalizing business relationships between the U.S. and Myanmar in 2011. Times have changed, and the situation is complex. How are American businesses viewing the Myanmar market? Is it written off, or is there potential?
When I first started at the Chamber around that time, the first thing in my inbox was Myanmar. My boss said: internal change is happening, and we need to do something. So we pulled together a coalition of member companies interested in the market and mapped out the extensive sanctions in place – trade, investment, aid restrictions, and more. We worked to get policy changes, arguing that we should support a government trying to open up and reform. The White House and Congress were aligned at the time. The “pivot to Asia” was active, and Myanmar’s transition was seen as part of that.
Over a couple of years, we were successful in getting trade sanctions lifted: the import ban, investment restrictions, and some changes to the SDN list. There was excitement – business delegations were going constantly. I led several myself. But it never resulted in a lot of U.S. investment. Some investment came, but not as much as Myanmar authorities hoped or as I expected. Ultimately, companies decided that despite reforms, the risk level was too high relative to expected returns.
How is it different this time? Are U.S. companies looking at specific sectors?
The small number of U.S. companies there span different sectors: tech, fast‑moving consumer goods, auto dealerships, machinery, construction equipment. There is a small but active AmCham in Myanmar that does terrific work despite challenges. But it’s very hard right now. The country has been in civil conflict for decades, and since the 2021 coup, the risks have become even more apparent. Many companies see extremely high risk without sufficient potential return, making it impossible to commit long‑term capital at this point.
As we are Asia Forward, let’s do some forward thinking. Looking ahead 5–10 years, where do you see Southeast Asia’s digital economy?
When Google first started those reports, they predicted it would take much longer than 2025 to reach $300 billion. They reached it 1.5 times faster than forecast. One lesson is that growth may continue faster than expected. The region has young, tech‑savvy populations – an essential ingredient. Governments are spending time looking at governance models for the internet. Vietnam is the first in the region to pass an AI law. Malaysia is considering AI legislation this year. Indonesia is exploring frameworks. There are ongoing conversations around data flows, cybersecurity, and privacy. The Chamber is engaged with governments globally on these issues. I would be optimistic about Southeast Asia’s digital economy over the next decade.
Do you see integrated, rule‑based digital regulations across the region, or will it remain competitive but fragmented? How should American businesses position themselves?
So far, policy development has been fragmented. In AI, for example, countries are in different places and looking at different models. It may take a long time before we see harmonized rules across the region. It would be good – it would make the region more competitive and attractive to investors operating across ASEAN – but they’re not there yet.
John, thank you so much for your insight on how American businesses should navigate Southeast Asia’s fast‑growing digital economy.
Thank you for having me.
And to our audience, thank you for tuning in. You can find the full episode on YouTube and Spotify. Don’t forget to subscribe for more conversations on forward‑thinking ideas on U.S. and Southeast Asia business. You can also follow us on LinkedIn, Instagram, and visit our website at asiaforward.org. We look forward to your comments. My name is Ei Thant Sin, and I’ll see you next time.
Please find the Youtube link: https://youtu.be/BqLqdLMzyUw?si=3kpyEiC00SNUfkvd
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