By H.E Dr. Kong Marry, Undersecretary of State, Ministry of Economy and Finance
What is Digital Economy?
In a broad sense, the digital economy refers to economic, social, and cultural communication systems that rely on the use of ICT and digital systems. In a narrow sense, the digital economy is a market that relies on digital technology to facilitate the exchange of goods and services through E-commerce, or in other words, the use of digital technologies based on the Internet in the production process and the exchange of goods and services. There are three components of digital economy – E-business, E-business infrastructure, and E-commerce. The transformational impact of digitalization becomes most evident when considering the growing importance of a few large technology companies and digital platforms over the past decade.
Facts and Figures of Digital Economy
The transformational impact of digitalization becomes most evident when considering the growing importance of a few large technology companies and digital platforms over the past decade. Figure shows the percentage changes of the global business landscape between 2009 and 2018, in which technology and consumer services rose from 16 percent in 2009 to 56 percent in 2018, while oil and gas has shrinks (Figure1).
Figure 1: The Rise of Technology Companies in the Global Business Landscape
Figure 2 shows the increasing trend of the internet economy across merchandise value in South East Asia. In 2019, the internet economy across merchandise value were just 99 billion dollars, and it rose to 174 billion dollars in 2021. It is estimated the value will rose to 363 billion dollars in 2025. This translate to the percentage increase by 49 percent from 2020 to 2021 and by more that 200 percent from 2021 to 2025, in which E-ecommerce constitutes the largest part of the economy.
Figure 2: Internet Economy Across Merchandise Value ($B)
The internet users in South East Asia from 2019 to 2021. The number of internet users has jumped from 360 million in 2019 to 440 million in 2021.
Digital Economy in Cambodia
Figure 3 provides an overview of Cambodia digital economy. In 2020, there were 10.8 million Facebook users. Cambodia’s mobile penetration rate stood at 124 percent of the total population, accounting for 20.8 million mobile connection. The number of debit cards rose to 2.65 million, double the amount of 5 years ago. The 4G coverage was 80 percent of the population. The number of payment service institutions was 21 and 2.22 million of e-wallet accounts by 2019. There were more than 6 venture capital firms, more than 300 active tech startups and more that 30 startup investment. These figures show that Cambodia digital economy is promising.
Figure 3: Overview of Cambodia Digital Economy
Source: Mekong Strategic Partner 2020
Base on the Ministry of Economy and Finance (2018), e-commerce contributes to 0.51 percent of the GDP, accounting for about 200 million dollars in value. About 6 percent of the value comes from domestic e-commerce and the rest is from cross-border e-Commerce. However, the challenges to achieve digital transformation in Cambodia, include: (1) gaps in supporting infrastructure, (2) weak governance and institutional capacity to implement the digital transformation, and (3) limited awareness and knowledge and human capacity for digital economy.
Policies Related to Digital Economy in Cambodia
With 2030 vision, the government aims to make ICT-driven middle-income country. Cambodia has developed several ICT-related policies such as the ICT Master Plan (2020), the Industrial Development Policy 2-15 – 2025, the Law on e-Commerce (2019), and Consumer Protection Law (2019).
Cambodia adopted “Cambodia Digital Economy and Society Policy Framework 2021 – 2035” in order to build a digital economy to become both a new growth driver, as well as an ecosystem to contribute to increasing economic productivity and efficiency, and improve the welfare of the people of Cambodia’s digital society. The framework consists of digital government, digital citizen, digital society, smart city, industry 4.0, and digital business and fintech. Cambodia Digital Economy and Society refers to the digital transformation on every socio-economic sector through the utilization of and take a maximum advantage on the advancement of ICT and digital technology to boost the economic growth and efficiency towards building a civilized society founded on the digital citizen who adopt the digital services with inclusion, trust, safety, and still maintaining our national identity and culture. The achievement of technology utilization to modernize every socio-economic sector to move Cambodia towards Industrial Revolution 4.0.
Figure 4: Digital Transformation on Socio-Economic Sectors
Strategic Framework to Recover and Boost Cambodia Economic Growth in the New Normal
Cambodia issued the framework to reduce the negative impact of Covid-19 on society and to recover the economic growth in short-term and mid-term by enhancing the competitiveness and promoting economic diversification. The framework consists of: (1) economic growth recovery which targets agriculture and agro-industry, tourism, garment and manufacturing; (2) reform for growth, diversification and competitiveness that focus on free trade agreement, reinforcement and implementation of investment law, electricity, improvement of business environment and transportation and logistics; and (3) resilience with sustainability and inclusiveness, which focus on digitalization, SME development, skill development, education development, health care, climate change adaptation and green development.
Post-COVID-19 “Digital Decade”
South-East Asia is entering the digital decade and seismic shifts in consumer and merchant behavior means its internet economy could reach $1T GMV by 2030. Therefore, talent remains critical to success, along with new enablers around data regulation, infrastructure, and equitable development of the internet economy.
Conclusion
In conclusion, we are on the verge of digital era, while digital technology continues to transform every socio-economic activity. Digital innovations are remaking our industries, economy, and society just as steam, electricity, and internal combustion did before them. Progress with hardware, software, and networks is improving our lives in countless ways and creating immense value.
The RGC embraces the digital technology and creates the said policy framework. Some activities related to digital economy are implementing and there will be more to come. Everyone counts in the building block of the digital economy Digital skills at different level are vital to boost the digital economy implementation.
For universities, they play an important role in building workforces for digital economy. University is also a playground for digital startups through applied research and in-house incubator. Like other businesses, university is also being disrupted by technology. So, it is suggested to embrace new challenges by updating curriculum and enhancing capacity of faculty members.