If the Covid-19 pandemic had never struck, the world could have produced an additional US$10.3 trillion worth of goods and services. This is enough to buy the ten biggest companies listed on the market, or nine times more valuable than all the property in New York City, wrote the Economist.

How can Southeast Asia address the economic challenges posed by the pandemic? Innovation and digital tools will light the way, say experts from the Organisation for Economic Co-operation and Development (OECD) and Singapore Economic Development Board.

They discuss the strategies that can strengthen Southeast Asia’s recovery and how the region can maintain its positive progress.

Innovation as the key to recovery

Adopting a future-oriented strategy can help forge a stronger path for recovery, says Piret Tõnurist, Senior Project Manager, Observatory of Public Sector Innovation, OECD.

This means “not only talking about future issues, but actually innovating today”, to address these challenges, she explains. One way to do this is treating global crises not as one off events, but as opportunities to prepare for similar issues in the future.

This preparation is called “anticipatory innovation”, says Tõnurist. This involves scenario planning, predictive analytics and resource simulations to test and ensure nations are ready to respond to future challenges.

Finland is working with the OECD to adopt this anticipatory innovation framework across its government, she highlights. One standout innovation from this project is the development of an AI programme to tackle growing societal challenges.

The AI system will analyse data regarding citizens’ life events such as starting school, having children, and retiring. This will create a “snapshot” of citizen well-being, enabling government services to efficiently provide exactly what a citizen needs, says Finland’s Ministry of Finance.

Supporting ageing populations and reducing the social exclusion of young people are among the future issues that this AI system will help to address, the Ministry says.

Anticipatory innovation can help nations start their recovery on the right path. It helps to ensure “that we do not build another fragile system that is ripe for a global crisis, like climate change”, Tõnurist says.

Tech and the region’s recovery

Southeast Asia is likely “to enjoy good economic growth as Covid-19 becomes endemic”, says Ms Jacqueline Poh, Managing Director, Singapore Economic Development Board.

One promising sign is the growing number of citizens who are moving online. A study from Google, Temasek and Bain found that the region saw 60 million new individuals begin to spend money online since the pandemic started, Poh highlights.

Further developing tech industries is one way that Singapore will remain competitive in the region. Advancements in robotics and AI will help the country’s manufacturing sector grow by 50 per cent over the next 10 years, she adds.

The region’s openness to technology, data and experimentation is a key example of how the region is succeeding, says Piret Tõnurist, Senior Project Manager, Observatory of Public Sector Innovation, OECD.

But it’s not all smooth sailing, as Southeast Asia faces challenges in its recovery. Improving digital connectivity in the region for more stable and accessible internet networks will be key, Tõnurist and Poh agree.

The Covid-19 pandemic also disproportionately affects “poor and vulnerable groups”, Tõnurist emphasises. Addressing widening inequality gaps and developing an “inclusive recovery” is necessary for the region, she states.

The role of skills

Southeast Asia will need to train its workers to make the most of business opportunities post-pandemic, says Poh. As global companies look to strengthen their supply chains in the region, the development board expects to see new investments in the region.

“But to capitalise on these opportunities, regional governments will need to invest in upskilling workers,” Poh says.

While skills are important, the wider system is worth focusing on as well, Tõnurist emphasises. Even the most motivated and future-oriented civil servant can be restricted when they are not allowed to take risks in their work, she says.

To make the most of innovation skills, governments should expect anticipation from public sector staff. This means letting staff take risks and learn from failures, she explains.

Given the pandemic’s wide-ranging impact, the road to recovery is not simple. But future-looking innovation and technologies such as AI can be the bricks that Southeast Asian nations use to rebuild.