The list of obstacles could go on. The point is that the promise of selling globally comes with increasing challenges. Hence the very good news that the World Trade Organization (WTO) has launched talks in Geneva to begin to create some global rules to sort out some of these issues. For smaller firms, global rules can at least ensure that added expense and time becomes a necessary part of doing business, rather than an irritating element of doing business with some countries. The size of the “prize” is huge. Estimates are all over the place on the current size of the digital economy, but Asia tends to lead the way. An extremely useful series of reports just released by the Hinrich Foundation on eight economies in the region (five out now: Vietnam, China, Indonesia, Malaysia and Australia) shows how much additional trade might be gained from eliminating barriers to digital trade.
E-commerce and digital trade are certainly upending retail patterns globally. It is important to note that these changes are not a random act handed down from the heavens. Instead, these changes flow from millions or even billions of companies and consumers increasingly demanding goods and services to be delivered digitally. The plan in India is to stop firms like Flipkart from selling goods in the market. This—it must be assumed—will help keep small, largely inefficient shops in business for longer and keep consumers spending more on products than they clearly would like. After all, if consumers did not want e-commerce goods, they would not be buying off Flipkart in the first place and would not be driving demand for more goods. Customers have clearly expressed their preferences. They are unlikely to completely abandon the corner shop, but their purchases are becoming increasingly diversified and digital orders play a key role. While India represents the more extreme end of regulations on e-commerce, other governments are starting to take actions to increasingly constrain the actions of players. Most are still aimed at large firms with limited understanding of the collateral damage to small firms and consumers.
Digital technologies have the potential to transform business in ASEAN. McKinsey Global Institute has estimated the total impact of technologies such as mobile internet, big data, cloud technology, and the Internet of Things, could unleash up to US$625 billion in annual economic impact in ASEAN by 2030. Micro, small and medium-sized enterprises (MSMEs) have the greatest potential to benefit from digital adoption given the ability of these technologies to overcome many of the typical barriers faced by MSMEs to exporting and growth, such as building a global business network and promoting their products overseas. However, a new report by the Asia Pacific MSME Trade Coalition (AMTC) warns that if certain key trade-related regulatory issues are not addressed, many MSMEs will not be able to capture this opportunity
Overall, the review of policy at the domestic level shows that governments have not yet figured out the best approach for creating supportive and enabling frameworks for digital trade and e-commerce. To date, much of the official response has been fragmented between ministries and agencies, with little coordination. Digital trade is unlike many other sectors—it cuts across an increasingly wide swath of the economy and regulatory policies in one area often has knock-on or unintended consequences in other areas. It is also rapidly evolving, which is making it difficult for government officials to address. If governments are too far out in front, too prescriptive or too forward leaning, they risk cutting off new sources of innovation and growth. They may unintentionally box in specific technologies or platforms. Yet it can be very difficult to think about regulating for outcomes, since it requires bureaucrats to have a visionary sense of the future that few individuals are likely to have. Creating digital economy policies at the domestic level, in any case, is probably not the best or most effective way to create sensible regulations. The digital economy does not recognize national boundaries. It does not logically stop at a customs border. Hence, the more efficient and effective way to manage digital policies is at the regional or international level.