In cities like Tokyo, Singapore, Shanghai and Hong Kong, Asia boasts some of the most technologically advanced and connected communities in the world. However, new research by the Economist Intelligence Unit (EIU) highlights there is still a long way to go for the region to be a global leader in digital infrastructure, skills, and technology ecosystems – the building blocks of success in the modern economy.

As part of a new ‘Connecting Capabilities’ report commissioned by Telstra, the EIU has released the first Asian Digital Transformation Index, a ranking of 11 markets in the region plus three global comparators on 20 indicators covering digital infrastructure, human capital and industry connectedness.

We commissioned the research to improve understanding of digital capabilities in the region as access to high quality network services and a vibrant technology ecosystem are increasingly a core competitive advantage for countries and companies alike. This view was confirmed by the research, which found that 94 per cent of businesses believe a country’s infrastructure is important to their organisation’s digital transformation.

The Index shows that Singapore, South Korea and Japan are leading the pack in Asia thanks in large part to the fact they have strong enterprise grade networks, access to the latest services and technology, generally high education standards and well-connected industries.

While these countries lead Asia, they are still behind the United States and indeed Australia and the United Kingdom as well on many key measures. Moreover, the Asian region as a whole has some catching up to do.

The research shows the challenge is particularly great for large developing countries like India, the Philippines and Indonesia. So while India is renowned for their large pool of well trained, technically literate workers and Indonesia and the Philippines have some of the most active social media communities in the world, they still have a long way to go to be globally competitive right across infrastructure, human capital and ecosystems.

Asia has been a growth engine for the global economy for a sustained period now and with the region’s middle class expected to double by 2030 to more than 1.2 billion households the potential is there for further success. However, a significant deficit in areas like network quality or technical skills, will impact the ability of businesses operating in the region to succeed in the connected, digital first world of the future.

Most businesses recognise they need to act, with nine in 10 business leaders interviewed wanting to see digital transformation in their organisation. However, without access to infrastructure and a skilled workforce, the long term return on investment for business embracing digital transformation could be compromised.

The question every country needs to ask itself is – are they doing enough to ensure they have the tools their citizens and businesses will need? Countries like China, which ranked in the middle of the Index, recognise they need to improve. China plans to invest over US$100 billion in the development of internet networks in 2016 and 2017, while their ‘Internet Plus’ action plan is promoting the use of digital technologies across different industries.

China already has the largest population of internet users and one of the most advanced e-commerce sectors in the world, and this level of investment is likely to drive a climb up the Index in the years ahead.

The growing focus on digital transformation is translating into increased demand for services. As a leading provider of connectivity, managed network and cloud services in Asia, we already work with thousands of companies across the region to deliver them the technologies and tools they need to drive digital to the core of their business. We’re committed to continuing to invest in our business in Asia to deliver the latest technologies and scale up to meet growing demand and sophistication. We believe that when it comes to Asia’s digital transformation the best is definitely yet to come.

Read the full report here: connectedfuture.economist.com.

About the Economist Intelligence United Connected Capabilities Report

Connecting Capabilities: The Asian digital transformation is a report from the EIU, commissioned by Telstra. The report is based on three interrelated research efforts.

First, the Asian Connecting Capabilities Index, which is a quantitative ranking of 11 economies in the region (China, Hong Kong, India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand) and three global comparators (Australia, the UK and the US), is comprised of 20 indicators across three categories: digital infrastructure, human capital and industry connectedness. The categories and the individual criteria in them, are weighted according to the EIU’s assumptions of their relative importance.

Digital Transformation Index

Country Score
1 Singapore 75.6
2 South Korea 72.5
3 Japan 70.7
4 Hong Kong 65.7
5 Taiwan 65.1
6 Malaysia 42.0
7 China 33.9
8 Thailand 23.9
9 India 19.3
10 Philippines 18.8
11 Indonesia 16.0
Comparator countries Score
United States 77.3
Australia 74.3
United Kingdom 72.6

Second, the report and Index draws on a survey of 870 executives in the same 14 countries primarily across six industries: manufacturing, financial services, media, healthcare, professional services and logistics.

Third, the index and the survey findings were supplemented by interviews with senior executives and experts.

The EIU bears sole responsibility for the editorial content of this report. The findings do not necessarily reflect the views of Telstra.