Reimagining Economic Recovery with Digitalisation | Techsauce

Reimagining Economic Recovery with Digitalisation

Reimagining Economic Recovery with Digitalisation

Sea (Thailand) is humble to be one of the most valuable internet companies in the region. During this challenge of digital disruption Covid-19, Sea insists on being the performing key helping small businesses, especially young entrepreneurs aged between 16 to 35 years old recover from economic shocks. Sea (Thailand) is a parent company of Shopee, Garena, and Sea Money. They are currently Southeast Asia’s largest internet company with a market capitalization of an estimated 74B USD. 

Dr. Santitarn Sathrirathai, Group Chief Economists & Managing Director of Sea (Thailand) has shared his thoughts on this global pandemic affecting national economics which allows Sea to align its vision in hoping to help young entrepreneurs get through their business struggles. Before getting into the core of the problem, Dr. Santitarn has given an example of the challenges every entrepreneur has to face. It is so-called 3D challenges as it all starts with the D which are Disruption, Downturn, and Deficits. Dr. Santitarn added that the more entrepreneurs understand the 3D challenges, the easier for them to understand what they have to handle during the crisis. The first one is the Disruption. Disruption holds over 62% of entrepreneurs who find it difficult to work remotely, especially work from home. They lack the proper space to work or get their work done and also they feel unfamiliar with the new working environment. This challenge also includes the inability to access full working equipment. The second one is Downturn; over 58% of entrepreneurs feel uncertain about their financial situations as they need to be more cautious when spending. And lastly is Deficits, of 23% of entrepreneurs face cash flow problems and funding constraints. 

Besides 3D challenges that entrepreneurs have to handle during this global pandemic, there are 3 phases of Economics shocks that will affect most businesses altogether.

  1. Maximum Lockdown is the first stage of economic shock where everything needs to be shut down. Most businesses must be closed and people can not resume their normal activity and lifestyle. This significantly impacts the economics and mobility declines sharply. 

  2. The New Ab-Normal or the gradually reopening. This phase might last from 6-12 months. The business starts to get back on their feet. But they definitely can’t spend the money on their full potential. Their budget is definitely going to be tight. 

  3. The New Normal is the phase where Covid vaccine has finally been made. But unfortunately, this phase hasn’t arrived yet. Life as we know might be permanently changed forever. And weak firms with old business modes die out. 

Digital Disruption 

Dr. Santitarn believes Thailand is now going through phase 2, which will take around 6-12 months for entrepreneurs to get back on their track. He suggested the solution to get through this economic disruption in such a sustainable way which is Digital Disruption. In the digitalisation world, it is a challenge that COVID has disrupted the digital trend and made all lives change, especially when the sustainability trend is needed. So how can people align it with such a cheap trend like Covid-19? First, entrepreneurs have to look at how people adjust themselves to this ‘a must’ situation. 

The first easiest way to cope with digital disruption is for people to act faster and faster. Since the strike of Covid-19, people using social media have increased to 84% during the lockdown. And 39% can pick up new things during the lockdown as well. 

Second is the E-commerce profound and lasting shift in demand and supply. The behaviour of using e-commerce is not only rapidly changing by the customer but also by the entrepreneur as well. Since the lockdown, the number of e-commerce shopping applications has increased by up to 33%, and this behavior tends to stay permanently with the statistic guarantee at 72%. Moreover, people tend to buy healthy products more than they used to, which shows that the global pandemic has changed people’s lifestyles. It makes people more aware of their health. For entrepreneurs, 1 of 4 is the new e-commerce user who just started their business online or recently became the e-commerce buyer. And also, the number of entrepreneurs has risen as well at 33%. 

Digitalisation as an enable for transformation is to adapt to this change. There’s a solution to us as 3R which is Risk Diversification, Re-optimizing , and Re-Imagine. It is not just online, but the transformation changed our lives rapidly in so many ways. Risk Diversification is to avoid disruption. Re-optimizing finds a way to cut and manage costs. Reimagining the business which is crucial as the world might not be the same anymore. So it is important to adapt himself to the new normal era. This includes finding new business opportunities that fit the current world situation. 

However, there are also ‘The Gap’ for people who cannot overcome this change either physically or financially because of multiple issues as follow,

  • Internet access and the quality of the internet are usually followed by costs that happen to most countries except Singapore. However, it is surprising that this also happens to countries who commonly use social media such as Thailand and Malaysia. The signal is not accurate especially in remote areas. 

  • Digital skills. 78% of entrepreneurs who lack digital literacy skills found remote working difficult because they cannot use digital to align with their work. This is not only the problem that the people can’t use digital skills to adapt to their work, but the lack of digital skills also limits an individual’s potential. You are stopping yourself from using digital skills. This also affected those who have to work from home. 

  • Access to finance. You can have your good business idea or re-imagine your business, but at the end of the day, you need capital to move and execute your new business ideas. The main problem of the financial crisis is that entrepreneurs always use their own money when starting the business rather than loaning from the bank. This is also proof that some entrepreneurs can’t access the bank system which is something that both the public and private sector need to be working on.

Public-Private Collaboration to tackle education and funding gaps 

To tackle these 3 gap issues, we need collaboration from both the public and private sectors. Dr. Santitarn has given examples of the public and private sectors that play a big role in helping entrepreneurs get through a difficult time. Shopping E-Learning is an online Shopee University from Shopee application founded to support Kickstarter who has recently become e-commerce users. The program will teach them how to sell their products online efficiently during the social distancing period. Along with Shopee Financial Relief project helping cost reduction measures for sellers. Farmer Program from the Ministry of Agriculture to train and support Thai farmers to become an online setter that will know how to promote their product directly to the customers and the right targets. The ministry will also help the local farmers access to capital with the collaboration from local banks partners. They provide easy access to loans.

SMEs recovery can also be powered by digitalisation (3R) which are Risk-Diversification, Re-optimising and Re-imagining. These 3 tactics could be done in the New Ab-Normal period. And to do it well and efficiently, Dr. Santitarn suggests that we need to fill in the gap to support an inclusive economy starting by rebuilding the access to the internet at a reasonable price. It is important to make the price affordable for everyone. The next step is to invest in digital skills. We need to support young entrepreneurs to go out and try new things. Lastly, use the digital and innovation to drive financial access in the long run. To solve this problem of ‘The Gap’, it is important to meet the sustainable digital transformation goal and make sure that it also benefits the real economy and drives more inclusive economic recovery.

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