The Road to Economic Recovery in Southeast Asiabr>
The coronavirus pandemic has devastated the global economy leaving millions on the brink of economic destitution — but nowhere are these effects felt more strongly than in impoverished regions across Southeast Asia. Poverty was previously in decline across the region, as it was throughout the world, but now governments are scrambling, trying to salvage what’s left of their economies. But, as interest rates are lowered and liquidity is injected into the markets, governments in Southeast Asia still don’t seem to understand that they’re only providing temporary solutions to a more pervasive problem.
The road to economic recovery in Southeast Asia begins with incorporating financial infrastructure that encourages economic participation. In other words, by making the tools and skills for participating in the economy accessible and transparent, people can become more empowered and financially autonomous while simultaneously stimulating the economy. With the advantages of modern technologies like blockchain on their side, financial inclusion is becoming even more of a reality across Southeast Asia and the rest of the world.
Southeast Asia isn’t what we were promised
Southeast Asia is already experiencing the devastation of the pandemic and the unraveling of years worth of progress in the region. According to the World Bank, the coronavirus will stall the number of people lifted out of poverty across Southeast Asia, while countries like Thailand, Indonesia, Malaysia, and the Philippines are expected to see an increase in poverty. The report goes on to project that due to the virus, an estimated 24 million fewer people will escape poverty this year, while 11 million people will fall below the poverty line.
Moreover, the harm caused by this particular health crisis strikes at the very center of this region’s economic foundations. In Myanmar, 68% of the country’s labor force is based in farming. Meanwhile, in Thailand, travel plays an integral role in the country’s GDP, with nearly 40 million visiting the country last year alone. And in Vietnam, the world’s fourth largest apparel manufacturer, over $3.6 billion worth of merchandise is generated in the nation every year. These three industries — agriculture, tourism, and textiles — are integral parts of the Southeast Asian economy, and some of the worst devastated by the strictures associated with COVID-19 prevention.
For years, Southeast Asia has seen region-wide progress spurred from humanitarian efforts on the part of organizations like ASEAN and the UN. And for decades, financiers and investors have expressed a great deal of excitement in the region’s fledgling economy. With a growing wealthy population, promising education institutions, and an increasing presence in the information sector, many countries in Southeast Asia appeared, to some, on the verge of a financial boom. However, what they didn’t recognize was that the governments of these countries had failed to address some of their most endemic problems — rampant inefficiencies, a bloated wealth gap, and insufficient social safety nets.
How Blockchain Technologies are Making Financial Inclusion a Reality
The impact of the coronavirus in Southeast Asia has more than exacerbated the need for lasting change in the region, and the most extensive and deeply-rooted solution lies in financial inclusion.
According to a report from KPMG, more than 470 million people in Southeast Asia do not have bank accounts, and research by the World Bank indicates that up to a billion people in Asia lack access to mainstream financial services at all. A privilege even as simple as having a bank account gives people access to financial benefits and serves as a first step in becoming financially autonomous. Yet the overhead operational banking fees are still a major barrier for people even if they have physical access to banking services.
Across Southeast Asia, a 51% uptick in internet and mobile phone use has democratized access to these financial institutions by enabling millions of people to get online bank accounts. And according to an Accenture study, banks who make financial tools accessible to the underbanked via the internet stand to make up to $380 billion in annual revenues. But more can be done as these financial tools only address bill payment and remittances rather than real wealth and asset creation.
On another level, blockchain technologies are revolutionizing access to financial services by opening up services that centralized fintech apps cannot due to overhead costs. Furthermore, the nature of digital currencies combined with their ease of access benefits people who may be migrants or are looking to store or invest assets for the first time. Not only do these technologies protect people from being gorged by fees associated with traditional finance, but they also allow the undocumented to open accounts even in the absence of identification documents.
A Deloitte study found that in the Philippines — the Southeast Asian country with the largest migrant population — cryptocurrencies are helping to cut remittance fees. The study shows that between 2014 and 2018, crypto has dramatically decreased the cost of transferring money from one country to another, and has effectively eliminated the need for third party institutions to involve themselves in these transactions. While this is not addressing the underlying issue for the need for remittances, it is creating more awareness of the potential role of crypto as a standalone system.
Furthermore, companies like IBMR.io, are leveraging blockchain technologies to incentivize financial inclusion in impoverished regions of Southeast Asia. In fact, IBMR.io has pioneered a social impact economic development reserve and advisory that empowers the urban working class in emerging markets to be agents of change. IBMR.io’s mircoasset, ARCC, derives its value and stability through alignment and contribution to economic productivity. It also incentivizes social proof of work, where users are rewarded with assets for reporting institutional corruption across the Southeast Asian region.
Financial Inclusion in the Age of the Coronavirus
With the internet and mobile phones making it easier and easier for people to access blockchain and cryptocurrency technologies, financial inclusion stands a bigger impact across Southeast Asia than ever. With the economic impact of the coronavirus threatening the progress that has taken decades to instill across the region, blockchain technologies and cryptocurrencies now have a responsibility to expand their efforts in the region to help impoverished people throughout Southeast Asia and the world make the first steps towards financial sovereignty.
By democratizing access to financial resources and making it easier for people to save and trade assets, more people will be able to participate in Southeast Asian markets; thus stimulating the economies in these regions at all levels and actively reversing some of the damage that the coronavirus has caused to the most vulnerable classes.