APAC 2018: Major global player status will ramp up

Asia is beginning to outpace Europe but security is a serious concern

Asia continues to be a significant player in the global ICT industry, constantly making gains against its US counterparts. In November, China’s Tencent reached a valuation of $500 billion (more than Facebook) while Alibaba is hot in its tails at $474 billion.

South Korea’s tech sector was rocked by controversy this year over the corruption conviction of Samsung heir-apparent Jay Y Lee but neighbour Japan continued to make news this year too. Softbank has minted its $100 billion Vision Fund to invest in technology companies while the group is pumping money into Uber and other ride-hailing apps in Asia Pacific.

These eye watering sums of money show that Asia is not slowing down any time soon but there is plenty of activity around the continent outside the obvious hubs of China, Japan, and South Korea. These ecosystems made significant moves in 2017 and expect to see more of that in 2018.

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Asia now outpacing Europe

According to IT consultancy Capgemini, Asia is now outpacing Europe when it comes to innovation centres. Singapore is one of the most active nations in this regard and regularly grabs headlines when it comes to ICT investment. The city-state has invested a staggering amount of money, time, and resources into its technological development, namely in its Smart Nation initiative, from smart city tech to digital IDs to fintech.

The Monetary Authority of Singapore (MAS) recently announced that it will pump $20 million into artificial intelligence and data analytics projects for the finance sector. Fintech is a major focus area for the government and the city has already attracted more than 400 fintech startups that are registered there. Regulation is a little more favourable and the presence of big name finance firms running fintech programs like corporate accelerator FinLab mean the country is definitely leading the fintech pack in Southeast Asia.

Meanwhile many of its neighbours in the regions are making slow but gradual strides to get connected.

Indonesia, a nation of 260 million, has a small but promising fintech scene. However the fintech space in the country has struggled to gain traction and 2017 has been a year where many of its players have sought to prepare a better landscape for the coming year, whether it’s supporting the local ecosystem or lobbying for changes to regulation.

It’s not the only country that has struggled as others are trailing behind. The Philippines is making efforts to invest in more ICT services and broadband infrastructure but a whole host of red tape and bureaucracy – especially when it comes to foreign investment – is hindering widespread change. 

Perhaps the most interesting case is Myanmar. While the political state of the nation and the Rohingya controversy has held people’s attention, the business community has struggled to gain a foothold after the country became a democracy. Often referred to as Asia’s last frontier for technological development, the nascent democracy is both fertile ground for tech investment and ridden with potholes. As Burmese tech investor Justin Sway explained to IDG Connect earlier this year, some investors and startups have made assumptions about the opportunity afoot in Myanmar but it’s a country that is adjusting to the new tech economy and will be some time before it’s a formidable market. However it’s still one to watch.


Hackers are taking notice

Cybersecurity and privacy is an ever-present theme regardless of region. For Asia, it’s become a massive issue.

Research suggests that businesses across APAC are less equipped to stay secure than elsewhere. Why are organisations in APAC less secure?

The WannaCry ransomware hit targets worldwide this summer with many businesses in Asia suffering in the damage. Certain sectors, like healthcare and automotive, felt the plague of ransomware more so than others but a South Korea web host paid a staggering $1 million ransom to retrieve its systems and data. 

More and more money is at stake. The $81 million cyber heist on Bangladesh’s central bank is still ringing in people’s ears. That attack targeted the SWIFT messaging system and there was a sense of déjà vu when Nepal’s NIC Asia Bank was similarly hit this year, stealing $4.4 million. For many this has been a wake-up call. The Reserve Bank of India, the country’s top financial regulator, made significant moves this year to improve its cybersecurity posture.

Most recently, the mobile phone data of more than 46 million Malaysians was leaked in November. The hack is believed to have happened months ago with the data being traded on black markets long before the breach was discovered. It has served as yet another reminder of the ever-present cybersecurity risk, one that Asia is not immune to even if most of the major hacks we hear about are west centric.


New technology is making an impact

At the same time, Asia has sent mixed signals on some technologies, from acceptance of facial recognition to apprehension towards cryptocurrencies.

China’s tight grip on the ICT sector is well documented but 2017 saw an explosion in activity for cryptocurrencies and initial coin offerings, the funding method where Ethereum-based tokens are issued to backers. While ICOs have come under regulatory scrutiny in many countries, China outright banned them, while South Korea is adopting a similar strategy.

Cryptocurrency is in another buzz period. Bitcoin hit an overwhelming $11,000 in November while more than $2.8 billion has been raised globally through initial coin offerings (ICOs). If 2017 was the year where cryptocurrency boomed then 2018 may be a turning point, both in terms of user adoption and regulatory attention. Asia remains a big part of that conversation.

On the other hand, Daniel Levine, trends expert at consultancy The Avant-Guide Institute, points out that facial recognition and cashless payments have the most momentum in China and that will start to be felt elsewhere in Asia and around the world more and more. “Face scan passwords is a big thing to keep an eye out,” he says, claiming that the practice is much more common in China among everyday users than anywhere else.

The release of the iPhone X with its facial recognition component is one of the first major shifts towards normalising facial recognition among every day consumers – though of course it brings with it a whole other debate around privacy and Asian banks have been some of the first to push back.