World Bank sets three priorities to drive ASEAN productivity
World Bank official Stephen N. Ndegwa sets out three priorities to help ASEAN raise productivity, generate higher-value growth and deepen regional integration.
- The World Bank has outlined three priorities for ASEAN to transition from an investment-led growth model to one driven by productivity: upgrading, building dynamism, and regional integration.
- 'Upgrading' involves moving into higher-value activities by opening services sectors and ensuring foreign investment leads to greater technology and skills transfer for domestic businesses.
- 'Building dynamism' aims to create a more competitive environment where a broader range of firms can innovate and grow, spreading high productivity beyond a small group of leading companies.
- The third priority is deeper 'regional integration' through closer cooperation on standards, digital trade, and skills to better utilise the scale of the 700 million-person regional market.
ASEAN must move beyond a growth model driven largely by investment, manufacturing and exports towards one that creates more value through productivity, technology and stronger regional integration, according to Stephen N. Ndegwa, World Bank Group Division Director for Thailand and Myanmar.
Speaking at the Southeast Asia Trade and Development Forum 2026 on Wednesday (September 23), Ndegwa outlined three priorities for the region’s next phase of development: upgrading, building dynamism and integrating regionally.
“ASEAN’s next development opportunity lies in raising productivity, and in this, three priorities stand out: upgrading, building dynamism and integrating regionally.”
ASEAN enters this transition from a position of strength. Its economies are relatively open, the middle class has expanded and the region has become deeply embedded in global value chains.
But the economic model that delivered rapid growth in previous decades is beginning to lose momentum. Productivity growth has weakened, demographic pressures are increasing and technological change is transforming how goods and services are produced and traded.
From production to higher-value growth
The challenge, Ndegwa argued, is no longer simply to attract investment or increase exports, but to ensure that growth creates more value within ASEAN economies.
For Thailand, the transition is particularly important. The country’s income level is about 54% of the threshold for high-income economies and it has remained in the upper-middle-income group for around 15 years.
Moving towards high-income status will therefore require Thailand to go beyond capital investment by accelerating technology adoption and developing greater capacity for innovation.
Artificial intelligence (AI) illustrates both the gap and the opportunity.
Only about 12% of Thai firms report using AI, compared with 43% in the United States. Among smaller firms, adoption stands at just 7% in Thailand, against 33% in the US.
“The largest economy-wide gains from AI will come from using the technology across factories, farms, hospitals, services and offices.”
World Bank estimates suggest that AI adoption at its current pace could add around 0.3 percentage points a year to Thailand’s productivity growth, with greater gains possible if adoption spreads more widely across businesses.
Technology is only one part of a broader shift. Services trade is growing by about 4.4% a year, while global supply chains are diversifying towards Southeast Asia. At the same time, trade restrictions and policy uncertainty are increasing.
“The appropriate response is actually deeper integration and upgrading, and not an inward turn. Openness remains one of ASEAN’s strongest assets.”
Three priorities for ASEAN
Ndegwa’s first priority is upgrading — moving into activities that generate more domestic value.
That means opening services sectors further, strengthening trade agreements and ensuring that foreign investment brings greater technology transfer, skills and opportunities to domestic businesses.
Modern manufacturing increasingly depends on logistics, finance, engineering, software and data. Yet domestic services account for only 27% of the value of Thailand’s exports, compared with 54% in Organisation for Economic Co-operation and Development economies.
The second priority is building dynamism, or creating an environment in which more firms can enter markets, compete, innovate, secure financing and grow.
High productivity in Thailand remains concentrated among a relatively small group of leading companies, while many other firms operate well below those levels.
“The growth opportunity is to bring a much broader share of the economy closer to these frontiers by strengthening capabilities, competition and access to opportunity.”
The third priority is regional integration. Ndegwa called for closer ASEAN cooperation on standards, digital trade, skills and energy grids so companies can benefit from the scale of the region rather than relying mainly on individual national markets.
“A national market of 70 million people offers a set of opportunities for a growing firm, but a regional market of 700 million offers another.”
Intra-ASEAN trade currently accounts for only about one-fifth of the region’s total trade. World Bank simulations suggest that reducing intra-ASEAN trade costs by 15% could raise economic welfare by around 3% in Malaysia and 2% in Thailand and Vietnam.
For ASEAN, the next leap will therefore be about more than producing and exporting more. It will depend on how effectively the region can turn investment into technology, technology into productivity, and its combined market of 700 million people into a platform for higher-value growth.
