## The Digital Accelerator: Revving Up Government in Asia

_IMF Blog, September 26, 2018_

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**Canonical URL:** [The Digital Accelerator: Revving Up Government in Asia](https://www.imf.org/en/blogs/articles/2018/09/26/blog-the-digital-accelerator-revving-up-government-in-asia)

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## Bibliographic details
- Authors: Vitor Gaspar, Chang Yong Rhee
- Published: September 26, 2018

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### Overview and context
- Asia’s digital revolution is reshaping businesses and government operations across the region.
- Authors: Vitor Gaspar, Chang Yong Rhee. Date: September 26, 2018.
- Examples cited: Alibaba, Rakuten, Go-Jek, Paytm, and widespread industrial robot use for manufacturing.

### Benefits from eGovernment
- Digitalization gives policymakers greater access to timely and accurate data, enabling better policy design and implementation.
- India’s Aadhaar:
  - Provides a unique 12-digit ID number for 1.2 billion residents in India.
  - Linked to social programs, including liquefied petroleum gas subsidies.
  - In 2013, linking Aadhaar to the liquefied petroleum gas program helped prevent claims from ghost beneficiaries or multiple claims.
  - Subsidies transferred directly to Aadhaar-linked bank accounts, bypassing dealers and improving support for the poor.
- Philippines’ Listahanan:
  - Digital registry serves as a gateway for as many as 52 social programs.
  - 75 percent of the population registered.
- Indonesia:
  - Digital social registries have helped expand the coverage of conditional cash transfer programs.
- Other public service and public financial management uses:
  - Bangladesh uses smart water meters to monitor water quality.
  - Bhutan’s e-tool has helped standardize project appraisal and selection for public investment.
- Revenue-side digitalization:
  - e-filing, e-payments, and e-customs initiatives are common in Singapore, Malaysia, Vietnam, Indonesia, and Thailand.
  - In Malaysia, ongoing efforts in e-filing and e-payments have reduced compliance time by 30 percent.

### Challenges of going digital
- Cybersecurity and fraud:
  - Increased use of digital technologies raises risks of cyberattacks; hackers can steal private information and disrupt government functions.
  - Digital environments are target-rich for fraudsters, including in cryptocurrency exchanges.
- Tax base and revenue risks:
  - Digitalization can reduce tax revenues when services shift to small-scale transactions (e.g., tourists using private homes instead of taxed hotels) that fall below tax thresholds.
  - The digital economy can facilitate profit shifting abroad, out of reach of tax authorities.
- Digital access gaps:
  - More than half of those without access to the internet live in Asia.
  - Broadband subscriptions have increased, but a widening gap exists between leaders and less advanced peers.
  - Less than one percent of Myanmar’s inhabitants have access to fixed broadband networks compared to over 25 percent in Singapore.
  - eGovernment depends on population access to digital services.
- Uneven progress across countries:
  - Korea, Singapore, Japan, and Malaysia rank in the world’s top ten of digital government.
  - India outperforms advanced economies, on average.
  - China, Sri Lanka, Indonesia, and Thailand outperform their emerging market peers.
  - Small islands and fragile states (e.g., Myanmar, Tuvalu, the Marshall Islands) have struggled to make significant advances in eGovernment.

### Policy recommendations and actions
- Strengthen cybersecurity:
  - Establish agencies to oversee cybersecurity strategy and operations (examples: Singapore and Malaysia).
- Protect tax revenues and monitor digital impacts:
  - Governments should monitor how digitalization affects revenues and consider policy responses.
  - If digitalization shifts services to smaller firms below tax thresholds, governments may choose to revisit current thresholds and change them to tax similar activities.
- Leverage digitalization to improve tax collection:
  - Digital tools can make it easier to collect data on financial transactions and improve tax collection.
  - Closing half the distance to the digitalization frontier could bring in more than one percentage point of GDP of value added tax revenue in ASEAN economies.
- Expand digital access and infrastructure:
  - Countries with unreliable internet access should enable early investments in digital infrastructure, like broadband technology, to ensure inclusion and to reap the benefits of digitalization.
- Build fiscal institutions:
  - All countries need to build fiscal institutions to manage design, planning, budgeting, and implementation of digitalization policies.

### Conclusion
- With comprehensive policy actions on multiple fronts, Asian economies can continue to drive the digital revolution and extend the digital frontier for themselves and other government innovators worldwide.

*The Digital Accelerator: Revving Up Government in Asia — Vitor Gaspar, Chang Yong Rhee (September 26, 2018).*

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## References

- [robots](https://blogs.imf.org/2018/08/29/chart-of-the-week-invest-in-robots-and-people-in-asia/)
- [experience](http://www.imf.org/en/Publications/CR/Issues/2018/08/06/India-2018-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-Executive-46155)
- [cryptocurrency](https://blogs.imf.org/2018/06/22/estimating-cyber-risk-for-the-financial-sector/)
- [https://www.imf.org/wp-content/uploads/2018/09/eng-september-20-digitaladoption1-1.png](https://www.imf.org/wp-content/uploads/2018/09/eng-september-20-digitaladoption1-1.png)
- [https://www.imf.org/wp-content/uploads/2018/09/eng-september-20-digitaladoption2.png](https://www.imf.org/wp-content/uploads/2018/09/eng-september-20-digitaladoption2.png)
- [https://www.imf.org/wp-content/uploads/2018/09/eng-september-20-digitaladoption3-1-4.png](https://www.imf.org/wp-content/uploads/2018/09/eng-september-20-digitaladoption3-1-4.png)

_Source: https://www.imf.org/en/blogs/articles/2018/09/26/blog-the-digital-accelerator-revving-up-government-in-asia_