Asia Pacific pulling ahead in 5G and IoT investments

05 July 2021 Consultancy.asia 4 min. read
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Businesses across Asia Pacific have come to embrace a 5G-powered future – more so than their American and European counterparts. A new EY study examines global tech perceptions amid a pandemic recovery. 

EY surveyed more than 1,000 executives across North America, Europe and Asia – soliciting information on tech investments, progress and intentions for the future. The backdrop is pandemic-induced disruption to all aspects of life and business – and a widespread focus on digital to support these fundamental shifts. 

The survey confirmed this reliance on tech: over 70% of respondents revealed the pandemic has accelerated digital transformation plans, while 65% position emerging tech as critical to recovery. Laying the base for these transformations is 5G tech – with over 50% of respondents noting an increase in 5G and Internet of Things investments over the last year. 

Covid-19 impact on tech investments

“Just as 4G networks has fundamentally disrupted consumer technology, 5G will be the game-changing technology for industrial transformation across all sectors,” explained Joongshik Wang, EY Asean Tech, Media and Telecom lead. 

“Access to 5G networks will be key to realising the potential of industrial disruptive technologies such as AI and IoT that will enable enterprises to establish their market leadership. Laggards will face strong barriers to entry and struggle to bridge the digital divide.” 

Those who haven’t yet invested in 5G are hopping on board with urgency. Analytics, AI, robotics, automation and other emerging tech dominate the current digital spend across enterprises – although nearly 60% plan to make 5G investments over the next three years. As it happens, APAC is leading this charge in this 5G push. 

5G and Internet of Things take centre stage

Nearly 80% of APAC businesses are currently involved in a 5G rollout, or plan to do so in the next three years. This stands at roughly 70% in the Americas and Europe. The pandemic has also been a stronger catalyst in APAC than anywhere else: with nearly 30% in the region giving their 5G and IoT spend a boost since last year – compared to only 13% and 15% in the Americas and Europe. 

And the commitment to 5G goes further. 80% of APAC executives expect 5G to soon form the core of their business, compared to 70% in Europe and 75% in the Americas. Per the researchers, APAC’s lead has to do with a broad-based government push to realise the potential of 5G. 

Singapore, Thailand and Vietnam, for instance, have formally announced 5G strategies, while Malaysia hopes to complete its rollout by the end of this year. At the same time, Wang explained how the extra impetus in Southeast Asia relates more to catching up than taking the lead. 

Enterprise emerging technology spending intentions

“Despite strong government support for 5G in the Southeast Asia, the region is lagging behind other markets. After all, telco operators in Southeast Asia are still recuperating their investments from laying out 4G networks.”

“Furthermore, the capital expenditure of 5G technology is significantly higher than that of 4G, and industry demand is still nascent given that 5G business use cases are still emerging. Without clear and established cost benefits, overall delays can be expected in the region.”

Against this backdrop, 5G is more an emergency response than anything else. “If the status quo remains unchanged, and enterprises are unable to leverage 5G as a key enabling technology in their digital transformation plans, this will significantly impact the fundamental competitiveness of the region,” said Wang.

A broad-based and collaborative effort is key: “addressing the complex and critical challenge of enabling 5G in the region will require more than government support alone. The collective buy-in, as well as collaborative investment and effort of enterprises, telco operators and all stakeholders in the entire ecosystem, will be needed for the successful rollout of 5G,” Wang concluded.