How Will Online Platforms Shape Asia’s Growth Story?
March 22, 2017
Sahib Anandsongvit had a problem: his family, who ran a boutique hotel business in Bangkok, constantly needed to find skilled workers to repair rooms, clean facilities, or perform other services on short notice. Traditionally, Thai small business owners looking for service providers have relied on word of mouth, or flyers pinned to trees and telephone poles around the city. But how can one be sure that the provider is trustworthy, and how can they be found quickly for emergency repairs?
To address this problem, Sahib co-founded a new company called Seekster. Unlike a traditional business in this space, which might hire a fleet of service providers and pay them an hourly rate, Seekster took a “platform” approach. Without hiring a single provider directly, Sahib built an online marketplace where micro, small, and medium enterprises (MSMEs)—like his own family—can find, hire, and rate the services of independent cleaners, plumbers, pest exterminators, and air conditioner technicians who sign up on the platform. Businesses on Seekster get fast and high-quality services, while individual providers get immediate access to a customer base and can parlay good ratings into much higher and more reliable incomes. In fact, Seekster providers earn more than triple the minimum daily wage of 310 Baht (about $9).
Across Asia, online platforms like Seekster—which leverage rapidly expanding mobile broadband and cloud computing services to facilitate transactions—have emerged as valuable tools for navigating the connected world. By 2020, over a billion people in the Asia-Pacific alone will be served by online platforms, and platform businesses are already active in sectors as diverse as finance, logistics, cross-border trade, talent acquisition, household services, and the traditional buying and selling of goods. Farmers in Indonesia are using platforms to access crop information from top universities, weather data from the Indonesian meteorological agency, and daily commodity prices from nearby markets. An unbanked bookseller in Gaya can conduct customer transactions, make purchases, and protect savings from financial shocks—all by using a local online payment platform. Through a local education platform, a gifted student living in a remote or rural area can access accredited university courses. And Asia’s women micro-entrepreneurs are now using many of the same platform-based business tools as well-capitalized entrepreneurs in Silicon Valley.
While the rise of online platforms suggests new opportunities for the promotion of sustainable and inclusive growth within the region, it also demands much further research, investment, and dialogue on these topics. Last month, The Asia Foundation released a new report, “Six Stories, Six Paths to Development,” that examines the impact of online platforms in addressing Asia’s development challenges. Developed with the support of Google, the paper tells the stories of several online platforms currently active in Asia that are growing MSMEs and how they are enabling financial inclusion, supporting small farms, delivering educational opportunity, enhancing health and human capital, and empowering women. These platforms work in a wide variety of contexts and rely on different core technologies. But in every case, they succeed by making it easy for people to interact with each other in a decentralized, inclusive, and mutually beneficial way—specially where existing markets are inefficient or the state faces challenges in service delivery.
Speaking at the report’s launch event in Bangkok, Dr. Pavida Pananond of Thammasat Business School was optimistic about the ability of online platforms to “empower people who function along the lower end of the industry,” and connect Asian MSMEs to global value chains. Thai internet researcher Arthit Suriyawongkul, who also spoke at the event, was also hopeful about the power of online platforms to advance growth and development, but stressed the need to develop core infrastructure that allows this to happen in an inclusive way.
The paper also provides a set of four recommendations to policymakers, development actors, and regional and national leaders:
- Support infrastructure investment efforts to increase internet access and affordability;
- Promote digital literacy for a more inclusive online environment for the one billion individuals who will access the internet for the first time during this decade;
- Create an enabling environment for platforms and users by supporting open broadband, access to finance, payment digitization, and the free flow of data; and
- Conduct coordinated research and engagement on the impact of platforms on development in the Asia-Pacific.
As more Asian economies progress to upper-middle income status and beyond, the challenge of increasing state effectiveness and shifting toward more knowledge-driven, high-value work is paramount. How online platforms might shape the region’s long-term growth story is yet to be seen, but the potential that these platforms have to revolutionize how things are done is without question.
Benjamin Lokshin is a program officer for The Asia Foundation’s Technology Programs. The views and opinions expressed here are those of the author and not those of The Asia Foundation or its funder.
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