Within this broader APAC region, Southeast Asia (SEA), also known as ASEAN, is poised to drive the rise and rise of IoT, driven by three key factors: urbanization (demand), technology and device proliferation (the delivery platform) and manufacturing growth (supply).
1. Rapid urbanization SEA is packed with population-dense cities, including Ho Chi Minh City (12.8 million), Jakarta (10.1 million), Bangkok (8.3 million), and Singapore (5.4 million). There are 26 cities in ASEAN with populations in excess of a million people. According to McKinsey, urbanized SEA accounts for over 65 percent of the region’s US$2.4 trillion GDP (2014), with more than 90 million people set to relocate to urban areas by 2030; a shift that will support the growth of the “consuming class”, set to double to 163 million households by 2030.
Growing urbanization and affluence will demand some US$7 trillion in infrastructure investment, including in IoT related technologies, a convergence of factors that makes SEA conducive for the internet of things to thrive.
2. Technology and device proliferation While Japan, China and South Korea have pioneered the adoption of IoT and machine to machine (M2M) technology in Asia-Pacific, and even globally, SEA arguably has the most potential for its application. The region has 744 million mobile connections, at 119% penetration, according to 2015 estimates by WeAreSocial. Meanwhile, PWC estimates Indonesia, Philippines and Vietnam have over 100 million mobile subscribers each, while the compound annual growth rate (CAGR) of 3G subscribers in Thailand is forecast to grow by 35% in the next five years, to 19 million. SEA’s countries are amongst the fastest growing in APAC based on tele-density and smartphone penetration – they are set to accelerate the demand for innovation.
3. Growth in manufacturing of ‘things’ Rising device proliferation, and the increasing ubiquity of technology has spurred consumer demand for ‘things’ – in turn creating a boom for manufacturers. Unlike the western world which has seen three industrial revolutions, SEA has leapfrogged on Industry 4.0 – driven by digitally connected manufacturing. While Industry 4.0 is a term coined in Germany, it has the potential for application and value creation within the economies of SEA.
The region is shifting from agriculture to manufacturing, particularly the manufacturing of technologies. Interestingly, according to the Economist Intelligence Unit, while cheap labour is stereotypical appeal of the region, manufacturers in SEA rate this tenth among reasons to produce locally; the top reason is the burgeoning opportunity to cater to SEA’s middle class. They are constructing an interconnected world for consumers and businesses, catering to its diverse technology needs.
All ‘things’ considered
With cloud technology, there is a shift from hardware services to system-enabled services. IoT-related projects are large in scale, infrastructure-driven and thus require financial and labour support to succeed.
The Malaysian Ministry of Science, Technology and Innovation (MIMOS) recently launched the National Internet of Things (IoT) Strategic Roadmap in July 2015, to drive the adoption of IoT. This is expected to contribute 9.5 billion ringgit (US$2.49 billion) to the country’s gross national income (GNI) by 2020, and 42.5 billion ringgit by 2025. Singapore’s “Smart Nation” initiative aims to use technology to improve lives and businesses, ranging from transport maps and apps to make travel easier, to connected homes to control lighting and air-conditioning from smart phones. There are similar on-going Smart City programmes in other SEA cities, including Bangkok and Jakarta – spearheaded by the public sector, with incentives for businesses to fit in to their overarching vision. The private sector, too, is taking note. SEA continues to enjoy a stream of foreign and domestic entrants bearing various forms of IoT/M2M technology, including Ooredoo and Ericsson which have recently launched on-ground initiatives in Indonesia, and Taiwanese ICT solutions provider Billion Electric Co Ltd., to name a few.
The exceptional convergence of these factors, coupled with the advent of the 2015 ASEAN Economic Community, makes SEA the place for individuals, industry innovators and pioneers, and government to come together and connect to its IoT future.
What do you think of the rapid growth that’s to come in the future regarding IoT?