Why does ASEAN need an Institute for Innovation, Technology and Industry (AIITI)?

Yong Yang
5 min readOct 13, 2023

By How Yong Yang

Why is the ASEAN Institute for Innovation, Technology, and Industry important?

First, establishing the ASEAN Institute for Innovation, Technology, and Industry (AIITI) helps build a common and inclusive Epicentrum of Growth , as proposed by Indonesia’s 2023 Chairmanship. To achieve sustainable growth, it has to be innovative and inclusive. The late Austrian economist Joseph Schumpeter developed the theory of “creative destruction”, and argued that innovation and entrepreneurship is the key to achieving higher total factor productivity and long-term economic growth. Although a few Southeast Asian countries have built their manufacturing capabilities through foreign direct investments, they remain incomparable to their East Asian counterparts in their local “capacity to design, to innovate, and to diversify into new and more profitable areas with good long-run prospects”. The East Asian economies have homegrown yet regional, if not global, firms such as Samsung, Toyota, Huawei, and Alibaba, that are innovative.

The ability to innovate is present in ASEAN. Nevertheless, ASEAN should leap from adaptive innovation to “frontier innovation”, a term coined by James Liang, co-founder of Trip.com Group. The former refers to assimilating ideas and technologies, and adapting them to the local markets, whereas the latter enables one to create ideas, technologies, business models, and content that are unique.

Fourth, the exponential growth of technologies requires ASEAN countries to respond cohesively and effectively to the former’s impact on societies. Azeem Azhar, author of Exponential , argued that the gap between technology and society is widening exponentially. Unlike technological changes that are accelerating, societies are evolving at a gradual, incremental pace. This also reinforces the previous factor and could affect Southeast Asian countries’ sustainable growth if left unattended. Although a few East Asian countries have grown significantly due to their export orientation decades ago, ASEAN economies may not be able to enjoy such an advantage in the long run. Because production costs are progressively reduced by Artificial Intelligence (AI) and robotics, a trend that is being accelerated by the rise of technological sovereignty , known as the state’s capacity to “provide the technologies it deems critical to its welfare and competitiveness” without practicing autarky. This reduces the need for multinationals to outsource production overseas. More importantly, ASEAN needs to have a regional strategy to at least prepare for, if not manage, the rise of critical technologies. Barring artificial intelligence, other technologies including quantum computing, nuclear fusion, and genetic engineering demand more effective policy and regulatory coordination from ASEAN.

What is new about the ASEAN Institute for Innovation, Technology and Industry?

The ASEAN Institute for Innovation Innovation, Technology and Industry (AIITI) would be an independent advisory body dedicated to research and strategic facilitation of the region’s innovation, technological and industrial developments. AIITI’s role would be three-fold: strategic intelligence hub, policy advisory, and system steward.

Besides, the Institute would offer policy advice to ASEAN governments on their national innovation, science and technology, and industrial strategies. A possible reason why some ASEAN countries delayed releasing their national AI strategies could be that they lack the necessary resources to deploy research for informed policymaking. It can help to facilitate industrial transformation in the respective countries that align with the regional strategic plan. AIITI could identify emerging technological areas that different ASEAN countries can venture into depending on the countries’ potential capabilities and comparative advantages. ASEAN countries can complement each other in various technologies creating a network of regional resilience as their national technological resilience is strengthened and offering the opportunity to grow ASEAN’s homegrown companies which can compete with the existing players. If ASEAN wants to maintain its centrality and evolve into a global pillar of strength, as it builds a multipolar world, strengthening the countries’ capabilities is critical to staying in the driver’s seat.

Lastly, the Institute would be a system steward for the future of policymaking lies in the ability to see the interrelationships among the different systems and actors involved. AIITI should engage country representatives from different sectors to jointly develop a vision for ASEAN, and uncover the opportunities and challenges. To effect change, the Institute can employ systems thinking to deepen key stakeholders’ awareness of the challenges at hand helping them to better achieve their goals through jointly developing new alternatives. AIITI would then facilitate the integration of emerging technologies strategies and industrial policies. With greater manpower than a committee, it can better foster the development of a regional innovation ecosystem, enhance enterprises’ innovative capabilities, and facilitate the infrastructural development of emerging industries. These are necessary steps to take if ASEAN intends to avail itself of its demographic advantage and drive synergies. It is also a cultural bridge builder of ASEAN enabling entrepreneurs to acquire an accurate local understanding of the individual markets.

In line with the ASEAN Leaders’ Joint Statement on the Establishment of an ASEAN Villages Network in May 2023, the Institute’s immediate goals would, however, be to promote agricultural, rural, and social development by accelerating the adoption of digital technologies in rural areas and among Micro-, Small and Medium-sized Enterprises (MSMEs). In addition, AIITI can build a network of talents across the ASEAN region because interpersonal interaction is crucial to capacity building. Innovation, emerging technologies, and industries would spur the upgrading of infrastructure, and create new Science, Technology, Engineering, Arts and Mathematics (STEAM) and entrepreneurial opportunities for ASEAN youths. The demand for careers in culture, arts, and humanities would rise as people-to-people ties increase. New economies compel higher education institutions to improve their education quality, thereby retaining talents in the ASEAN region as the most expensive resource in the 21st Century is talent, which is more valuable than Southeast Asia’s abundant natural resources. ASEAN citizens would enjoy more inclusive education as a result. A published in 2020 showed that in 2018 fewer than 10% of all inbound and outbound student mobility was between ASEAN countries. Interestingly, a likely by-product of AIITI’s efforts would be the strengthening of ASEAN’s regional resilience to enhance its weak intra-ASEAN University Student Mobility should ASEAN universities’ quality of education increase.

In summary, the ASEAN Institute for Innovation, Technology, and Industry (AIITI) can still work within the ASEAN framework, unlike the European Union (EU) model which would require national governments to surrender partial sovereignty. While ASEAN does not need an EU Commission-like organization, which would possibly lead to more red tape and waste of resources, the middle-aged ASEAN needs a body to muster thinkers, artists, entrepreneurs, and scientists who would determine its future.

Originally published at https://ps-engage.com on October 13, 2023.