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Comparing ASEAN IT Spend With the Developed World

The Difference Isn't As Much As You Might Think, Relatively Speaking

This is one of several articles that will cover the ASEAN region of Southeast Asian nations, and their potential for economic development, particularly as it relates to Cloud Computing.

Developing nations spend a small fraction of the amount spent by developed nations on IT. For example, Indonesia spends just $77 per person annually, according to World Bank figures. Compare this to $2,728 in Japan, $3,379 in the US, and $4,628 in Switzerland, the world leader.

But there's more to the story.

Many developing nations are playing to win these days, to improve the lot of their people through economic progress. Most developed nations, on the other hand, seem to be playing not to lose - sit on the ball and hope everything will be OK.

Developed nations have massive amounts of legacy IT infrastructure, which communicates with itself so badly that software empires have been built to glue it all together. Accepted wisdom says 80% of IT budgets are devoted to maintenance rather than innovation.

Developing nations don't have so much legacy IT. They should in theory be able to gain new agility quickly by deploying cloud computing, whether in the enterprise along the XaaS spectrum or in general society through fast-growing smart-device markets.

Time for Fun With Numbers
Beyond that surface-level view, let's think about the numbers a bit. Indonesia's per capita income is $2,349, less than the amount the developed countries named above spend on IT alone.

But yet, the country has elbowed its way into the world's G20 club of leading economies. With a population of about 230 million people (compare to 300 million and change for the US), Indonesia now has a total economy totaling more than half a trillion dollars in size.

The question is, how does that $77 per person relate to Indonesia's overall economy? And how does it compare with its ASEAN neighbors?

The $77 represents 3.3% of Indonesia's per-person income. Japan's IT spend per person is 6.9% of its per-person income. The number for the US is 7.3% and for Switzerland it's 7.2%

In other words, Indonesia would almost match the relative spend of these highly developed nations simply by doubling its annual commitment to IT. That requires a far smaller leap than the yawning 60X gap that the raw spend numbers of Switzerland ($4,628) and Indonesia ($77) represent.

Throughout ASEAN
But let's not let Indonesia off the hook, because it trails most of its neighbors in actual and relative spend as well.

The Philippines, for example, spends $113 per year - or 6.5% of its per-person income - on IT. That puts it in line, relatively speaking with Singapore ($2,400, 6.6%) and Thailand ($260, 6.7%), and in the ballpark with Japan, the US, and Switzerland. Vietnam trails, spending only $53 per person, or 5.0% on a relative basis.

One defining difference with the Philippines is the high percentage of its economy that comes from remittances by overseas workers. Officially estimated at 13% to 15%, it's augmented by large influxes by expat Filipinos and others. It's a drug that the Philippines must wean itself from if it is to continue to progress.

Malaysia is the real star of the region, with 11.7% of its per-person income (or $814) spent on IT. Malaysia has fewer than 30 million people and thus doesn't face the population pressures of many of its neighbors. Its aggressive MSC (multimedia super corridor) program, 15 years old this year, sets a regional standard for cyber-development.

The country's pride is reflected in Kuala Lumpur's Petronas Towers (still among the tallest buildings in the world), much other gleaming infrastructure, and a space program. That its uncertain political and racial harmony has been disrupted recently, with water cannons firing on demonstrators, is profoundly upsetting.

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More Stories By Roger Strukhoff

Roger Strukhoff holds a BA from Knox College, Certificate in Technical Communications from UC-Berkeley, and MBA from CSU-Hayward. He won a 2009 "Stevie" American Business Award for producing the best publication in its category. He is a former Publisher at IDG and Guest Lecturer at MIT. He splits most of his time between Silicon Valley and Southeast Asia, but can also be found at www.twitter.com/strukhoff

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