Regional and sub-regional approaches to the Digital Economy: Lessons from Asia Pacific and Latin America
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1 Regional and sub-regional approaches to the Digital Economy: Lessons from Asia Pacific and Latin America A study for the CAF Development Bank of Latin America Elena Scaramuzzi - Cullen International Barcelona, MWC18 Ministerial Programme February 28, 2018
2 4 key questions 1. Lessons to be learned from Asia-Pacific 2. Where do we stand in Latin Americaand in Central America? 3. Trade Alliances and the Digital Economy 4. Possiblenext steps
3 Asia-Pacific: thriving ICTs and economic growth (but high intra-regional differences) Source: Cullen International based on ITU and IMF data (2016). Average world GDP growth in 2016: 3.2% The key challenge for all countries is to be (and remain) in area 4 Achieve very high economic growth with high ICT performance - and stably remain in that situation New Zealand is in area 4 and South Korea is close to that position
4 Strategies and policies play a significant role JAP Fixed SGK Fixed SGK Mobile KOR Mobile KOR Fixed CHN Gigabit society is a reality in some Asian countries 100 JAP Mobile USA In some countries, a connected society has been at the top of the political agenda for years AUS CAN 10 CHL PER Approaches are very diverse MEX 1 PER Government role can also be very diverse Source: Cullen International
5 Significant investment in telecoms infrastructure in Asia-Pacific (US$878bn in ) Peru Chile Singapore Chinese Taipei Canada New Zealand Mexico Malaysia Russia US Japan Korea Australia China Data source: APEC % of this investment was in China
6 often with strong government support strategies, wholesale-only networks, PPPs
7 International connectivity Efforts to increase connectivity in Asia Pacific Submarine cables connectivity within the region and with other regions Deployment of IXPs and agreements to decrease international roaming prices Singapore, Hong Kong and Tokyo are the top hubs in Asia Pacific. These hubs have a similar international capacity as the United States hubs and double the amount of the Latin American ones. Submarine cables per region (Cullen International based on Telegeography, 2016)
8 World trade today is centred in the Northern hemisphere Americas Europe Asia-Pacific Source:
9 B2C e-commerce: sales for US$2.2 trillion Russia 1% LATAM France 3% India 1% Canada 1% South Korea 3% Germany 3% Japan 5% 2% Others 13% UK 8% US 26% China 34% Six out of the top ten countries in the global B2C e-commerce are APEC economies B2C e-commerce sales in Asia Pacific represented 46.5% of the world market, up 28.4% from 2014 China alone represented 72.5% of the total Asia Pacific sales Only 2% of B2C e-commerce is taking place in Latin America Data sources: UNCTAD, e-commerce foundation 2016
10 e-commerce is growing everywhere, but more opportunities in emerging markets Source: Cullen International based on UNCTAD, e-commerce foundation (2015 data)
11 ICT cooperation on several fronts Area of cooperation How Who Telecommunications Action Plan until 2020 International Roaming APEC TEL Working Group APT Internet Economy Roadmap focusing on 11 areas APEC ad Hoc Steering Group Electronic Commerce Blueprint on e-commerce since 1998 APEC Electronic Commerce Steering Group Science, Technology, Innovation Strategic Plan Policy Partnership on Science, Technology and Innovation Source: Cullen International
12 Cross-border personal data transfers: 2 regional mechanisms APEC has established 2 (voluntary) regional mechanisms: 1) Cross-Border Privacy Enforcement Arrangement (CPEA), with 9 participating economies so far 2) Cross Border Privacy Rules (CBPR) system that goes one step further, as it establishes the privacy policies and practices of companies operating in APEC are assessed and certified by a third party. 4 participating economies so far
13 Latin America: high intra-regional differences The key challenge for all countries is to be (and remain) in area 4 Achieve higher economic growth with improving ICT performance Source: Cullen International based on ITU and IMF data (2016) Uruguay, Chile and Costa Rica are in that position. Central America needs substantial improvement in ICT rankings
14 Fixed and mobile service penetration: Latam average is higher than the World average Colombia Mexico Nicaragua Panama Honduras Guatemala El Salvador Dominican Republic Costa Rica Belize World fixed penetration Latam fixed penetration World mobile penetration LAC mobile penetration Mobile cellular Subscriptions per 100 people Fixed telephone Subscriptions per 100 people Data source: ITU, 2016 data
15 But more efforts are still needed to increase BB connectivity at national levels Fixed broadband Mobile broadband Colombia Mexico Costa Rica Panama LAC average: 32.7% Nicaragua El Salvador Honduras Dominican Rep. Guatemala Source: CullenInternational based on ITU, 2016 data Fixed BB also includes non residential 0% 10% 20% 30% 40% 50% 60% Percentage of population with mobile broadband subscription
16 At regional level, need to increase internet capacity and presence of IXPs Telegeography s global internet map, identified São Paulo, Buenos Aires and Rio de Janeiro as the top hubs in the region, and confirmed 2014 predictions, most of the international internet connectivity from Latin America is with the US Source: CullenInternational based on Telegeography, 2017
17 85% of the traffic generated in Latin America must travel through international connections with the US (1) CAF: Expansion of regional infrastructure for the interconnection of Internet traffic in Latin America, No more recent data publicly available (2) Figure: Cullen International based on Telegeography, 2017
18 The only significant project on regional connectivity in Latin America is in Central America
19 Latin America: B2C e-commerce is growing >120 M e-shoppers 27% are mobile shoppers Sales: US$ 46.3bn (+28.5%) 55% of consumerslook for productinformation/compare prices online Only 7% of revenues and 13% of volumes are cross border in South America Most popular products Source: Cullen International based on e-commerce Foundation, UPU, Statista (2015)
20 But improvement is still required in most countries Source: Cullen International based on UNCTAD s e-commerce Index, 2016
21 Gaps within and across regions Putting all countries on a map we see different gaps exist within and across regions 2017 economic outlook improves for several countries But no dramatic changes expected in Latin American economies In terms of ICT, some countries have started or proposed significant reforms
22 Countries are already involved in multiple alliances Source: Cullen International 2017
23 All with ICT agendas, or at least a few initiatives APEC PACIFIC ALLIANCE TPP MESOAMERICA PROJECT MERCOSUR EU Regional network (REDCA) International roaming Radio Spectrum R&D, IPRs Consumer trust Cross border e- commerce
24 What is needed to bridge the current regional and sub-regional gaps in Latin America? Infrastructure - Investment stimulus - Regulatory harmonisation - Reduce dependency, increase affordability of regional communications Content and applications e-commerce - Innovation, R&D - Cultural heritage - IPR and Copyright - SME, start-ups, new business models - Funding Consumer trust Data protection & flows Payment systems Logistics Taxation
25 Looking for synergies: what more could be done? Current REGIONAL activities in ICTs MERCOSUR International roaming Radio spectrum Exchange of information on legal and regulatory frameworks on telecoms PACIFIC ALLIANCE International roaming IP / IXPs Radio Spectrum Regulatory frameworks Net neutrality Aspects of e-commerce (signatures, e-ids) MESOAMERICA PROJECT Infrastructure connectivity, REDCA SMEs What more could be done? Cooperation in R&D, emerging technologies cross-border e-commerce Beyond exchange of information? Cooperation in R&D and innovation Cross-border e-commerce IPR, copyright More strategic regulatory harmonisation Enlargement issues More work on legal and regulatory harmonisation Cross-border e-commerce
26 Recommendations for the CAF Strategy needs high level support Gather coordination efforts around inclusive and independent regional entity. Ensure appropriate organisation Implementation roadmap should allow flexibile commitments on clear milestones Establish technical assistance with public / private support. Monitoring and evaluation mechanisms
27 THANK YOU!
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