According to the eConomy SEA Report 2023 by Google, Temasek Holdings, and Bain & Company, the digital divide between urban and rural Southeast Asia is widening. While digital inclusion and connectivity have increased as much as three times since 2015, ecosystem investments and tech-powered initiatives are needed to reduce the gap and ensure the growth of the Internet economy.

Research from Statista shows that one of the leading challenges faced by the Association of Southeast Asian Nations (ASEAN) in 2023 is the widening socio-economic gaps and income disparity. Cambodia has the highest percentage at 61.9%, followed by Thailand at 59%, Singapore at 49%, and Malaysia at 47.6%. The Philippines comes in at 38.4%, Indonesia at 36.4%, Vietnam at 34.6%, Brunei at 25.8%, Laos at 19.6%, and Myanmar at 6.9%.

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Other issues affecting the region include unemployment and economic recession, climate change, political instability, military tensions, US-China trade wars, terrorism, and deteriorating human rights. While the focus is usually primarily on the impact on metro cities, rural areas can play a pivotal role in boosting Southeast Asian economies if leaders harness their potential.

Understanding the current state of the rural areas in ASEAN

While the SEA Report shows that metro cities are getting closer to a digital penetration saturation point, rural areas have headroom for improvement. For example, Indonesia’s rural internet penetration in 2015 stood at 20% but reached 74% in 2022. Meanwhile, Malaysia went from 49% in 2015 to 89% penetration in 2022.

Several key issues are contributing to the divide. The first issue is the lack of adequate investment and tech talent in rural areas. Most investors focus on developing companies in the cities because many resources are available there, and they will not need to spend additional money to operate seamlessly. 

Secondly, non-urban locations need better infrastructure. In some situations, it can be a nightmare trying to connect to the internet or transport goods or products to customers. Also, regional governments need to do more to fund rural communities or build the systems required for transitioning to digital solutions. Thus, it takes work to attract large, local and foreign companies to these out-of-city places to open their subsidiary businesses.

A third factor is the high cost of technology, and global economic challenges like inflation and recession make it difficult to afford internet-capable devices. Moreover, paying to install the infrastructure required is expensive, leading startups and governments to avoid developing rural areas. The pricing also limits access to smartphones, which prevents residents from browsing or using financial tools on mobile apps.

Climate change has dramatically damaged Southeast Asia, with floods, droughts, soil erosion, destruction of marine life, and more bringing additional challenges. As such, setting up a business in rural locations is only attractive if the government offers solutions and subsidies.

Using tech-powered initiatives and solutions to bridge the gap between rural and urban Southeast Asia

One of the solutions for advancing technology in rural areas is to bring high-speed internet to such locations. Last year, Microsoft partnered with Malaysia’s Ministry of Higher Education and telecommunications provider AxiCom to introduce community WiFi to non-urban places. The initiative will deliver equitable broadband access, affordable internet, cost-friendly tech devices, and digital skills.

Digital literacy training is vital to ensuring communities can use various technologies and improve their quality of life. They can access financial solutions through their devices and receive deliveries conveniently and securely.

Vietnam established the Smart Rural Development Programme to digitally transform areas outside the cities, enhance living standards, and lessen the service gap between urban and non-urban locations by the end of 2025. Plus, the government will implement measures to convert communal public documents and store them online. 

Furthermore, integrating farm technology to resolve agricultural challenges like dealing with weeds or adding fertiliser at the right moments will be beneficial. Additionally, plans, sustainable development policies, and tech-powered initiatives can deliver services in different sectors, such as logistics, health, education, and security. 

Countries like Thailand are focusing on improving their rural small and medium-sized enterprises (SMEs). They can do so by boosting the tourism sector through mobile applications and enhancing the agricultural sector’s productivity using innovative tech, such as sensors and data analytics. In places like Malaysia, there is a quest to adopt renewable technologies like solar energy and battery tech, which also enhance the accessibility to technology.

Finally, cashless payments became essential due to the COVID-19 pandemic. Thus, regional governments should encourage the sale of more affordable internet-capable smartphones to allow the use of mobile wallets and continue reducing the costs of browsing data.

With technological inclusion and participation, it is possible to reduce the digital divide in rural Southeast Asia. It will democratise access and encourage active involvement through consuming the products and services in the Internet economy, helping non-urban areas to thrive.