One Region, Ten Digital Futures: Inside ASEAN’s Uneven Transformation

Digital connectivity is spreading across Southeast Asia, but networks alone are not producing equally competitive markets, capable institutions or trusted digital systems. New research published in the journal Sustainability shows that ASEAN's digital gap is narrowing in headline terms even as deeper structural differences remain.

The study "Digital Transformation in ASEAN Economies: A Temporal-Taxonomic Analysis of Structural Heterogeneity and Convergence Dynamics," by Barbara Siuta-Tokarska, Iwan Awaluddin Yusuf, Małgorzata Kowalik, Gagan Deep Sharma, Marcin Suder and Beata Basiura compares digital development across all ten ASEAN economies and assess how their positions changed between 2017 and 2022.

The researchers developed the CMG index, which combines three dimensions: Connectivity; Market development; and Governance, Sustainability and Trust. The approach is designed to show not only how digitally advanced a country is, but also whether its digital ecosystem is balanced, or whether infrastructure, markets and institutions are moving at different speeds.

The Region Is Converging

The study reveals that ASEAN's digital disparities narrowed substantially between 2017 and 2022. The coefficient of variation in the overall CMG index fell from 41.3% to 27.2%, indicating that national digitalisation levels became less dispersed. Connectivity, market conditions and governance-related indicators all showed some degree of convergence.

At first glance, this looks like an unambiguous regional success. Lower-income and less digitally developed economies appear to be closing part of the gap with ASEAN's leaders, but the regional average tells a more complicated story. The mean CMG score barely moved, rising from 0.515 in 2017 to 0.517 in 2022. Connectivity improved, as did the Governance, Sustainability and Trust dimension, but the average Market score declined from 0.420 to 0.310.

ASEAN became more equal without experiencing equally strong digital progress across every dimension. Some countries advanced rapidly, particularly from a low starting point, while others slowed or lost momentum. Convergence can occur because lagging economies improve, because leading economies stagnate or through a combination of both. Only the first path represents uniformly positive catch-up. The study points to a mixed pattern: real progress among some less-developed members, alongside weakness in market development across parts of the region.

Singapore remained the strongest overall performer, while Malaysia and Indonesia also posted relatively high scores. Lao PDR, Cambodia, Myanmar and Vietnam recorded notable improvements, although several still remained below more advanced regional economies.

ASEAN should resist interpreting narrowing gaps as evidence that its digital transition is largely complete. The region is becoming less unequal in aggregate, but the quality, depth and resilience of national digital systems remain highly uneven.

Connectivity Is Winning; Digital Markets Are Falling Behind

ASEAN's strongest progress came in connectivity. Mobile coverage, internet access and broadband infrastructure expanded rapidly, particularly in countries that began the period with weaker digital foundations. This reflects a familiar development pattern: infrastructure can often be scaled more quickly than the economic and institutional systems needed to make full use of it.

However, connectivity is an entry point, not an end state. A mobile signal does not automatically create productive firms. Broadband does not by itself generate competitive online markets. Internet access cannot guarantee consumer protection, cybersecurity, digital skills or reliable cross-border payments.

The Market dimension exposes this gap. Although disparities narrowed, the average score declined, suggesting that digital-market development was less consistent and more vulnerable to national and external pressures. The study links these problems to regulatory fragmentation, uneven foreign investment, non-tariff barriers and differences in national institutional frameworks. Smaller enterprises are particularly exposed because they often lack the resources to navigate complex rules, multiple payment systems and conflicting data requirements.

Governments frequently treat infrastructure as the principal barrier to digital transformation. It is visible, measurable and attractive to investors. Towers can be counted, cables mapped and subscriptions reported.

Market quality is more difficult. It depends on competition, entrepreneurship, investment conditions, logistics, payment interoperability, access to finance and regulatory predictability. These elements develop slowly and can deteriorate even when connectivity improves. The paper's internal analysis reinforces this point. In 2022, the Market component was almost unrelated to Connectivity and negatively associated with the governance-related dimension. The overall consistency of the CMG index also weakened sharply, with Cronbach's alpha falling from 0.743 in 2017 to 0.366 in 2022. This does not make the index useless. It reveals something more important: digital infrastructure, markets and institutions were no longer moving together.

Countries could improve their networks without achieving equivalent commercial gains, while stronger regulation could coexist with weak entrepreneurship or limited market competition.

For ASEAN's digital agenda, this means the next phase must move beyond access targets. The region must ask whether connectivity is generating new firms, better jobs, wider SME participation and productive cross-border activity, or merely increasing consumption through a small number of dominant platforms.

Catch-Up Is Real but So Are New Fault Lines

The least digitally developed cluster recorded the fastest progress. Its CMG score rose to more than twice its 2017 level, while its Market dimension increased more than fivefold and Connectivity more than doubled. On the other hand, the most advanced and intermediate clusters recorded declines in their average CMG values.

The pattern supports the idea of technological catch-up. Countries beginning with limited infrastructure can make rapid gains through network expansion, regulatory reforms and wider technology adoption. Initial improvements may also be easier to achieve because the starting base is so low. Yet percentage growth from a low base can exaggerate the impression of transformation. A country may double its digital score and still remain far behind the regional leader in absolute terms. Lao PDR, for example, improved its CMG score from around 0.123 to 0.309 but still recorded the lowest national score in both study years.

Cluster movements also show that digital development is not linear. In 2017, Brunei, Malaysia and Singapore formed the leading cluster, while Cambodia, Lao PDR and Myanmar occupied the lowest-performing group. By 2022, Thailand and Vietnam had moved into the more advanced cluster, while the Philippines shifted into a group characterised by weaker overall performance. These movements should not be read as permanent rankings. The 2022 clusters were statistically less distinct than those in 2017, and the authors retained a three-cluster structure partly to allow comparison across time.

Still, the shifts reveal how quickly digital pathways can diverge. Policy reform, market conditions, investment flows and external shocks can move countries forward in one dimension while pulling them backward in another.

The study also finds a significant positive relationship between digitalisation and income. Wealthier ASEAN economies generally recorded higher CMG scores, with the relationship becoming stronger by 2022. Differences in GDP per capita explained around 58% of the variation in digitalisation scores that year, but the direction of causality remains unresolved. Richer economies may invest more in technology and institutions; digitalisation may contribute to growth; or both may be driven by industrial structure, education and administrative capacity. Policymakers should therefore avoid assuming that digital investment alone will close wider development gaps.

One Region Needs Ten Digital Strategies

ASEAN cannot build an inclusive digital economy through a uniform regional template. Advanced economies increasingly need to focus on artificial intelligence governance, data infrastructure, cybersecurity, digital competition and cross-border interoperability. Their challenge is no longer basic access, but sustaining innovation while managing concentration, privacy and trust.

Intermediate economies need stronger market institutions, more predictable rules and greater support for digital entrepreneurship. Expanding networks will produce limited value if firms cannot secure finance, reach regional consumers or compete with entrenched platforms.

Less-developed members still require affordable connectivity, basic skills, regulatory capacity and investment in public digital systems. But they should avoid repeating a model in which infrastructure expands first and institutional weaknesses are addressed much later.

Regional cooperation remains essential. ASEAN can lower barriers by harmonising consumer protections, cybersecurity standards, digital identities, payments and data-governance principles. Yet coordination must allow for different starting points. Rules designed for Singapore's digital ecosystem may be unrealistic for Lao PDR or Cambodia without financing, technical support and longer implementation periods.

The research itself has some limitations. Its dataset ends in 2022 and therefore does not fully capture the rapid rise of generative AI, cloud services and platform-based economic activity. It relies on national-level ITU indicators, which conceal rural-urban divides and inequalities between firms and social groups. Missing data also required statistical imputation.

Future research should extend the analysis into the post-pandemic period and include AI adoption, platform concentration, cloud capacity, digital payments and firm-level productivity. It should also examine whether convergence between countries is matched by inclusion within them.