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E-commerce an area where US, Singapore and Asean can work together for mutual benefit

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20 Oct E-commerce an area where US, Singapore and Asean can work together for mutual benefit

By Chen Chen Lee and Shangari Kiruppalini

Prime Minister Lee Hsien Loong is scheduled to meet United States President Donald Trump during his visit to America from Oct 21-26.

This will be Mr Lee’s second visit to Washington DC in just over a year. It was only in August last year when PM Lee emphasised to Barack Obama at the White House that the Trans-Pacific Partnership (TPP) would send a “clear and vital signal” of American leadership and engagement in the region.

Some 14 months later, with the US having pulled out of the TPP, Singapore’s expectations for a more engaged America in the region will no doubt be more moderated, but no less urgent.

Both leaders are expected to discuss US-Singapore bilateral relations as well as strategic challenges and opportunities in the Asia-Pacific.

North Korea is likely to feature in talks, along with strategic issues such as China’s Belt and Road Initiative and possibly the recent Rohingya crisis.

Although these are important issues, it would be a missed opportunity for both sides not to offer candour on economic issues that matter to the Association of South-east Asian Nations (Asean) and could potentially benefit American people and companies.

This is especially critical as Singapore prepares to chair Asean in 2018.

One area that merits discussion is e-commerce. Simply put, e-commerce refers to the buying and selling of goods and services over the Internet.

Singapore has already made clear that a key agenda during its chairmanship of the grouping is to promote e-commerce transactions within the region.

In a speech at the 10th Asean and Asia forum organised by the Singapore Institute of International Affairs, Singapore’s Minister of Trade and Industry (Industry) S Iswaran emphasised that “Singapore will work closely with Asean Member States to strengthen digital connectivity and promote e-Commerce flows within Asean.’’

Efforts to streamline regional trade rules governing e-commerce can lower barriers to entry for Asean small and medium-sized enterprises (SMEs) allowing them to gain greater market access.

Given the US’ expertise and knowledge in the sector, the Trump administration is well placed to work alongside Singapore to draft and create the rules for the region’s future digital economy.

Singapore’s goal of putting e-commerce on the regional agenda and improving the regulatory framework in Asean to support innovation will find resonance with the US for the following reasons.

First, the US is experiencing significant growth in its digital economy with more than 60 of the world’s top 100 digital Multinational Enterprises (MNEs) being US-based.

America’s digital MNEs are expanding dramatically and are impacting global patterns of investment. Asean’s growing middle class offers a lucrative market for US e-commerce platforms. However as American companies look east, they require a robust e-commerce framework between the US and Asean to encourage exports from the US to South-east Asia and vice versa.

Second, a well-regulated e-commerce space will have positive spill over effects on the rest of the American economy. It can spur the creation of jobs in other sectors including digital services, manufacturing, and logistics.

Third, e-commerce offers new solutions for inclusive and sustainable development. This is important when considering the importance the Trump administration has placed on helping American businesses grow.

American SMEs that are online are more accessible to a larger base of consumers, gaining access to new and traditionally untapped markets. E-commerce enables these companies to punch above their weight, test out new markets without incurring overhead costs and ultimately compete more effectively against larger companies.

The US has a clear strategic and business interest to support Asean’s e-commerce efforts. Already, the US has been playing an active role in developing Asean’s Single Window. This provides a secure IT architecture and legal framework for the digitisation of trade and customs clearance in Asean.

The US-ASEAN Connectivity project through Trade and Investment initiative has committed approximately US$14.4 million (S$19.6 million) to advance the Asean Single Window initiative.

This is a core aspect of Asean’s effort to mature into a cohesive economic bloc.

Other cooperation programmes such as the US-Asean Connect is targetted at developing an open and integrated digital economy that can spur innovation and inclusive economic growth in Asean.

However, Mr Trump’s America can do more for Asean. While e-commerce might seem like a very narrow topic of discussion between the two heads of states, the twin effects of e-commerce, i.e. connectivity and inclusivity of the SMEs are significant and should be discussed.

During PM Lee’s visit last year, Singapore and the US signed a Memorandum of Understanding to strengthen their commitment to work together as partners to build a safe and secure cyberspace through cyberbersecurity cooperation and conducting regional cyber capacity building exercises.

The signing of this MOU signals the willingness of both countries to cooperate on transboundary issues and therefore working together on e-commerce should not be viewed differently.

Singapore’s push for e-commerce within Asean might not define its bilateral relationship with Washington DC. Yet as a digital economy takes hold within Asean, it provides an opportunity for the US to help write the new trade rules that will govern the region’s future economy.

This is critical, especially in light of the world moving ahead without America with TPP 11 and other initiatives.

With or without America, Asean is coming together on its own. As the world economy integrates more closely without America through trade and China’s Belt and Road Initiative, it is US-based SMEs that stand to lose out the most.

PM Lee’s visit to Washington DC comes at an opportune time with President Trump preparing for his first trip to Asia next month.

This visit can help lay the groundwork for President Trump’s participation in the upcoming Asean Summit in November and can set the tone for US’ engagement with Asean in 2018.

ABOUT THE AUTHORS:

Chen Chen Lee and Shangari Kiruppalini are, respectively, Director of Policy Programmes and Policy Research Analyst at the Singapore Institute of International Affairs (SIIA). The SIIA annual flagship 10th ASEAN and Asia Forum on October 5 offered insights on how ASEAN can use e-commerce to promote inclusive growth strategies. This commentary was published in TODAY on Friday 20 Oct 2017.

Photo Credit: PM Lee meets President Trump at G20 Summit, US Embassy in Singapore