The Metaverse in Asia | Strategies for Accelerating Economic Impact

Deloitte Center for

the Edge

The Metaverse in Asia
Strategies for Accelerating
Economic Impact
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The Metaverse in Asia Pacific | Strategies for Accelerating Economic Impact

Acknowledgements
Authors

Research, Writing
and Graphics

We would also like to thank the following individuals
for their support and contributions:

Duleesha Kulasooriya
Managing Director, Center for the Edge
Deloitte Southeast Asia
duleeshak@deloitte.com

Amrik Ashri,
Ashley Chin,
Ian Rodgers,
Jarel Ang,
Josefa Lavandero,
Kurt Poh,
Lim Kianchong,Nicholas Kwong,
Queenie Yap,
Sam Blackie,
Samuel Smithers,
Socrates Mokkas,
Shanya Sadanandan,and Silky Hou.

Ayako Tobe,
Bergita Husni,
Bill Briggs,
Carie-Anne Bak,
Chew Chiat Lee,
Emad Tahtouh,
Frances Yu,
Hanson Wang,
Harrison Lee,James Walton,
Jennifer Wright,
Jeanette Juay,
Jefferson Djauhari,
Jehil Thakkar,
John O’Mahony,
Kim Sa Heon,

Michelle Khoo
Director, Center for the Edge
Deloitte Southeast Asia
mikhoo@deloitte.com
Michelle Tan
Senior Executive, Center for the Edge
Deloitte Southeast Asia
michelltan@deloitte.com

02

Leigh Mannes,
Lisa Zhou,
Metinee Jongsaliswang,
Mike Bechtel,
Narain Chutijirawong,
Oh Sung Hoon,
Paul Stapelberg,
Peeyush Vaish,
Philip Law,
Rick Wen,
Robert Hillard,
Shevon Huang,
Sreeram Ananthasayanam,
Steve Aditya,
and Uyen Tran Ngoc Tu.

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Executive Summary
Embracing the metaverse could
unlock a trillion-dollar opportunity
in Asia. Developing the technology
stacks, human capital and regulatory
frameworks required will benefit
a wide range of industries andeconomic activities.

Neal Stephenson’s novel Snow Crash, novel-turned-Hollywood movie Ready
Player One, and Facebook’s rebranding to Meta, have all embedded theterm ‘metaverse’ in the public consciousness. Though there is no universal
definition of the metaverse, we see it as a facet of the 'next internet', a highly
immersive virtual world where we will interact, work, and play.
The metaverse is no longer science fiction. Early metaverse platforms are
already being used by millions. In Asia, many consumers are already gaming,socializing, attending concerts, and purchasing items on virtual platforms
such as Roblox, Decentraland, Fortnite, and Asia’s very own Sandbox and
Zepeto. Industries and businesses are also experimenting with metaverse
technologies. Several governments in the region, including China, South Korea,
and Japan, have featured the metaverse in their economic plans.
The potential impact of the metaverse on Asia and globally could be significant
if investments are made into fundamental and enabling factors. Though
investments made in the next five to ten years may not have immediate shortrun returns on output, these investments will likely play out over a longer timeframe as the technologies mature.
Using early estimates on the potential metaverse investments from theliterature, we estimate that the impact of the metaverse to GDP in Asia could
be between US$0.8 trillion - US$1.4 trillion per year by 2035, roughly 1.3-2.4%of overall GDP per year by 2035.1 However, the development path of thisnascent technology still remains uncertain.

The potential impact of themetaverse to GDP in Asia is
US$0.8T-US$1.4T per year by 2035,
roughly 1.3 – 2.4% of overall GDP.
How will these economic benefits materialize? The metaverse creates
new marketplaces and types of businesses, and could expand access to
information, digital content and digital infrastructure. New employment
opportunities and ways of working might emerge both at the individual andorganizational level.
These impacts have ramifications across many sectors, not just inentertainment and gaming. Retail, e-commerce, and manufacturing
processes can be radically transformed. Innovations in healthcare andeducation will not only create economic value, they may also improve wellbeing and the human condition.
How much of the economic benefits are realized, and how quickly, depend on
unique strategies the underlying economies may take to accelerate economic
benefits of the metaverse.

1. Based on metaverse investment ranges from the literature, we explore a central metaverse investment scenario of $700bn over five years being maintained globally to 2029, alongside a boosted investment scenario of $1,350bn. Annualized, these equate to $140bn and $260bn per year, respectfully. To estimate the economic impact for Asia, we first estimate the impact of the global investment scenarios on
global GDP per year by 2035. Following this, we apportion the impacts on an economy level based on their contribution to global GDP, which are then summed up to form the regional estimate.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Asia's favorable demographics, supply chain market share, and growing
influence on socio-cultural trends underline its potential role in shaping themetaverse. This is bolstered by the high level of awareness and support
its populations have for the metaverse. Each economy in our analysis2 isapproaching the metaverse from its own unique direction based on its
combination of characteristics, which makes this region an interesting one
to watch.
Some lean into their sectoral expertise. Economies which excel inthe manufacture and export of electronics, such as Taiwan and South
Korea, may be well-positioned to benefit from the increasing demand for
hardware and other user-devices. Economies with large technology or
R&D sectors, such as Japan, Singapore, South Korea, and Hong Kong could
benefit from the demand for platforms and the design of complementary
hardware and software. Vietnam and Thailand are innovating with web3and blockchain technologies.
Others build on their strong institutions. Economies like Hong Kong andSingapore have positive investment environments and strong digital andpatent laws. These become welcoming environments for investors anddesigners keen to make headway in the metaverse.

Each economy in our analysis isapproaching the metaverse fromits own unique direction, whichmakes this region an interesting
one to watch.
Yet others tap into their natural and cultural endowments. China andIndonesia, for example, which are abundant in natural resources like nickel,rare earth and lithium, are poised for the increase in manufacture of newuser-devices. Vietnam, Philippines, Pakistan, India and Indonesia have large
digitally-ready workforces. All of the economies can also bank on their richcultural capital to build creative content for the metaverse.
In this report, we present a three-pillar framework to evaluate thepossible economic impact of the metaverse in each economy. First, we
identify macroeconomic determinants or factors that determine
the opportunity available based on economic characteristics such as
income levels, sectoral structure, and innovation environment.

2. In this report, we cover 12 economies in Asia including Hong Kong, Taiwan, India, Indonesia, Japan, Mainland China, Pakistan, Philippines, Singapore, South Korea, Thailand, and Vietnam. We may quote Asia figures from other studies which have a different coverage of economies.

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We then look at the economy’s technology fundamentals that are
required for the metaverse to exist and operate, including computing
power and connectivity, user device ownership, and digital transactions.
The third pillar is ecosystem enablers that support the adoption of
the metaverse. For each economy, we highlight differentiated strategies
and key sectors to watch for breakout innovations.
Those with favorable macroeconomics and strong technology
infrastructure will likely achieve strong economic value creation fromthe metaverse first. Given the confluence of technologies needed, thelikelihood that the metaverse will allow developing economies to completely
leapfrog technology infrastructure, the way mobile technology did, is low.
But macroeconomics are not deterministic. Understanding the potential
opportunity and leaning into specific technology and talent investments
will also allow for economies to accelerate their journey and achieve
economic impact.

The Metaverse in Asia | Strategies for Accelerating Economic Impact

The successful future of themetaverse calls for action notjust by governments, but all
ecosystem actors.
While the metaverse is inevitable, a responsible metaverse is not. To
realize the full potential of the metaverse, some important issues must
be addressed – climate, inclusion, mental health and online harms, civic
discourse, and an economy's social fabric. A more immersive, pervasive
internet could potentially exacerbate negative externalities.

But the metaverse could also provide us with new tools to tackle theseimportant issues such as through bridging physical distances, changing
behaviors to be more sustainable, and bringing communities closer.
Forward thinking can turn these challenges into opportunities.
Positioning Asian economies for the metaverse is a strategic move.
The successful future of the metaverse calls for action not just bygovernments, but all ecosystem actors including telecom operators,
technology sector, businesses and start-ups, researchers and academics,
metaverse users, and the general public. By investing in key enablers,
economies have the potential to accelerate the economic and social
benefits of the metaverse.

Over 60% of the world’s youth, aged between 15
and 24, live in Asia and Oceania.
South Korea and China are leading the world in 5G
deployment.3
The 12 Asian economies in our study exported
81% of the total value of cellphones4 and 75% of
integrated circuits5 globally in 2021.
India, the Philippines and Pakistan are top
destinations for IT outsourcing.6

1.3 billion mobile gamers across Asia, the biggest
mobile player base worldwide.7

3. European 5G Observatory, "South Korea leads in 5G rollout, followed by China and Japan", accessed October 19, 2022.
4. The Observatory of Economic Complexity (OEC) “Telephones for Cellular Networks or for Other Wireless Networks.” accessed August 25, 2022.
5. The Observatory of Economic Complexity (OEC) “Integrated Circuits,” accessed August 25, 2022.
6. Deloitte, 2021 Global Shared Services and Outsourcing Survey Support, 2021.
7. Statista, “Mobile gaming market in the Asia Pacific region – statistics & facts,” accessed May 23, 2022.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Metaverse.
\ (me-tә-vәrs) \ noun. The conceptof a highly immersive virtual world
where people gather to socialize,
play and work.8

8. Merriam-Webster, "What is the 'metaverse'?," accessed September 28, 2022.

06

ThailandThe Metaverse in Asia | Strategies for Accelerating Economic Impact

Japan

South Korea

Singapore

Pioneer of the video game industry
is leveraging its strong heritage indigital craftsmanship to create newmetaverse industries

First major economy to articulate acomprehensive strategic blueprint
to foster its metaverse industry

As one of the best places in theworld to do business, it attracts
top metaverse companies toheadquarter in the country

Hong Kong

Mainland China

TaiwanHong Kong University of Scienceand Technology is one of thefirst schools in the world to havea digital twin, along with mixed
reality classrooms

The second largest economy in
the world seeks to create ametaverse that complements
the real economy

Holds more than 90% of the
manufacturing capacity for
the world’s most advanced
semiconductors

Indonesia

Philippines

Thailand

Building a metaverse to level theplaying field for micro, small andmedium enterprises

Key source of talent for metaverse
support services as a leading
destination for business process
outsourcing

With its large creative sector(10% of GDP) and entrepreneurial
culture, local metaverse projects
are sprouting

India

Pakistan

Building robust digital payments
infrastructure, including plans for apilot launch of the digital rupee, which
will facilitate metaverse transactions

Third largest contributor oftechnical labor globally, and could
be a key source of talent for the
metaverse

VietnamRanked the highest globally on the2021 Global Crypto Adoption Indexand is setting up a Metaverse
Village to spur innovation

Note: Refer to specific economic profiles for more details and sources.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

AIGeneratedArt

CoversHong Kong

Monster Building in Hong Kong,
photographed from below, Digital art

The cover page and several images
within the report were createdusing AI art generators, such as
Dall-E 2, which generates art basedon text and image prompts. Suchtools speed up and augment thecreative process of digital content
and art that could fill the virtualworlds of the future. These were
the prompts used to generate
images in this report.

Cityscape of Singapore as painted by Pablo Picasso in 2020, Cubism, Digital art, Unreal engine, Octane renderer, 4K; King PowerMahanakhon; Cityscape of Dehli

Spaceman dunking in midair, Choi
Hung Estate basketball court in Hong
Kong, as painted by Salvador Dali

Cinematic lighting of the moon and stars casting over Chinatown in Bangkok, featuring neon billboards and tuk-tuks, Synthwave style;
Dotonbori district in Osaka, featuring its bright neon Glico signboard

08

Dim Sum in Hong Kong, as
illustrated in Spirited Away, Studio
Ghibli, Digital art

The Metaverse in Asia | Strategies for Accelerating Economic Impact

India

Indonesia

Japan

Mainland China

Pakistan

Philippines

Wide shot of a vibrant Taj Mahal on
the top of Jodhpur, in a virtual land

Garuda Batik traveling at the speedof light, Digital art, Unreal engine,
Octane renderer, 4K

Dotonbori district, Osaka, featuring
the Glico man sign, as illustrated
by Bored Ape in 2020, Digital art,
Unreal engine, Octane renderer, 4K

Wide shot of the Galaxy Soho,
Beijing, Futuristic building with aflourishing garden roof

Pakistan Monument in the evening
with fireflies gleaming in the skyline,
Digital art

Wide shot of limestone cliffs andthe underground river of Puerto
Princessa, Palawan, as painted by
Claude Monet; Purple wisteria trees

Portrait of Indian Bengal tiger as
painted by Henri Matisse, Digital art,
Unreal engine, Octane renderer, 4K

Cityscape of Jakarta in an eye,
Macro photographFushimi Inari Taisha in the middle of theocean, Kyoto, as illustrated by Hayao
Miyazaki in 2020, in broad daylight, Digitalart, Unreal engine, Octane renderer, 4K

Giant Panda skateboarding in
the middle of Bund District inShanghai, VRChat land

Hunza Valley colliding against its
reflection, Pakistan, as illustrated by
Mai Yoneyama in 2020, Digital art,
Unreal engine, Octane renderer, 4K

Banaue Rice Terraces as an tinyisland, 180, as illustrated by Takashi
Murakami, Panoramic photography

Close up shot of the Interiorof Amber Fort, India, in broad
daylight, True to life colors,
Digital art, Unreal engine, Octane
renderer, 4K

Borobudur, Indonesia, in the styleof the anime JoJo, Digital art, Unreal
engine, Octane renderer, 4K

Japanese Sumo Wrestlers wrestling
one another, as illustrated by Goro
Fujita, Digital art, Unreal engine, 3D
Octane renderer, 4K

Festive Chinese Lion Danceduring the New Year celebrationas painted by Van Gogh in 2020,
Impressionistic hues of light pink
and white

Intricate tile work of Islamicarchitecture in Lahore, Pakistan,
as illustrated by Hayao Miyazaki
in 2020, Digital art, Unreal engine,
Octane renderer, 4K

Scuba diving and swimming with
3D rendered turtles made outof golden wattles in Balicasag,
Philippines, Digital art
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The Metaverse in Asia | Strategies for Accelerating Economic Impact

South Korea

Singapore

TaiwanThailand

Vietnam

Dongdaemun Design Plaza, Seoulin South Korea, as painted by Pablo
Picasso in 2020, Cubism, Digital art,
Unreal engine, Octane renderer, 4K

Gardens by the Bay, Singapore,
skyline in the style of the anime
Sailor Moon, Digital art

Cityscape of Taipei in the style of the anime
Kitmetsu no Yaiba, in daytime, featuring
Taipei 101 Business Center, Digital art,
Unreal engine, Octane renderer, 4K

Damnoen Saduak Floating Market,
Bangkok, as painted by Kasimir
Malevich, Digital art, Unreal engine,
Octanerenderer, 4K

Wide shot of the Old Quarter, Hanoi in
Vietnam, as designed by Zaha Hadid,
Digital art, Unreal engine, Octane
renderer, 4K

Traditional Hanboks from Korea, as
designed by Issey Miyake in 2020,
Pleats, Digital art, Unreal engine,
Octane renderer, 4K

Front shot of a Traditional
Convenience standalone shop in
Singapore, Photographed in film,
Wes Anderson, Digital art

Raohe Night Market in the style of
the anime Kimi no Na wa during theevening, featuring neon lights, Digitalart, Unreal engine, Octane renderer, 4K

The interior of EmQuartier, Bangkok,
photographed from below, as designed
by Olafur Eliasson, Digital art, Unreal
engine, Octane renderer, 4K

Inside Tan Dinh Market, Ho Chi Minh in
Vietnam, as drawn by Mai Yoneyama,
Digital art, Unreal engine, Octane
renderer, 4K

Namsan Tower, photographedfrom below, as animated by Goro
Fujita, True to life colors, Digitalart, Unreal engine, 3D Octane
renderer, 4K

Rain Vortex in Jewel, Singapore,in the style of the film French
Dispatch, Stop motion animation

YaoYue Teahouse, MaoKong
Taiwan, People enjoying tea atthe speed of light in the daytime,
Digital art, Unreal engine, Octane
renderer, 4K

People and Elephants celebrating
Songkran, Bangkok, as painted
by Ripple Root, Digital art, Unreal
engine, Octane renderer, 4K

Vibrant assortment of Traditional
Patterned Vietnamese fabrics
moving at the speed of light, Digitalart, Unreal engine, 3D Octane
renderer, 4K

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Contents
Executive Summary		
3
What is the Metaverse		
13
Potential Economic Impact of the Metaverse in Asia		18
Analysis of Asian Economies		
25
Shaping the Metaverse in Asia		
27
Conclusion		
31
Profiles of 12 Selected Asian Economies 		34		Appendices		
Appendix A - Metaverse Market Sizing Research
Appendix B - Metaverse Impact Estimation
Appendix C - Glossary of Terms for the Three			
Enabling Pillars of the Metaverse

107
108
109
115

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

What isthe metaverse
While there is not yet a universally accepted definition of what the
metaverse is, there are some primary features that will likely manifest
given the direction of technological advancements. These include it being
persistent, available, synchronous and immersive. These features make itpossible to better connect the digital and physical worlds.
There are other features that are driven more by business models,
regulations, and societal values. These include the extent to which themetaverse will be user-generated, interoperable and decentralized. How
these features will be infused into the metaverse is still evolving with thediscourse around them.
The combination of these features create multiple original opportunities
for consumers and businesses to reimagine daily life.

Figure 1. Characteristics of the metaverse

Primary features
Persistent: Virtual worldcontinues to exist even if
individual players leave

User-creator shaped:
Owned and shaped by
the users
Available & Synchronous:
Multiple users can access atthe same time with real-time
interactions

Interoperable:
Seamless transition of user
experiences and objects
across multiple platforms

Immersive: Users enter a
3D world that surrounds
them sensorily

Connects the digital andphysical worlds: Ability
to simulate physical world
given 3D nature

12

Supplementary features

Decentralized:
Development of moreautonomous platforms,
where ownership is
distributed

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Progress towards
the metaverse
Early metaverse platforms are alreadybeing used by millions, and awarenessin Asia is high.

The metaverse is both a technological and cultural phenomenon thathas early iterations already present today. In Asia, millions of people are
spending their time and money on gaming, socializing, attending concerts,
and purchasing items in virtual platforms such as Roblox, Decentraland,and Fortnite. South Korean app Zepeto has over 300 million registeredusers worldwide.9 Asia has 1.3 billion mobile gamers, the biggest mobile
player base worldwide.10 On average, gamers in China, Vietnam, India, andIndonesia spend more than eight hours each week on gaming,11 which istime likely to be spent in the metaverse in future.

These are testament to the region’s openness to metaverse experiences,which already lead global averages. In an IPSOS survey, awarenessof the term ‘metaverse’ exceeded the global average in India (80% of
respondents), China (73%), South Korea (71%), and Singapore (58%). These
economies also have an overwhelmingly positive view of the potential
impact of Augmented and Virtual Reality on their daily lives (China 78%,
India 75%, South Korea 63%, Singapore 58%).12

Decentraland
A 3D virtual world browserbased platform that allows
users to buy land on theplatform through NFTs.

Horizon Worlds
Free virtual reality, online
video game with an
integrated game system.

The Sandbox
A virtual world where
players can build, own,
and monetize their
gaming experiences in the
Ethereum blockchain.

ZepetoFree social media app thatlets you create 3D avatars
to virtually connect withpeople globally.

FortniteAn online video game withdifferent game modes,
including survival, battle royale,and sandbox.

RobloxAn online platform andgame creation system thatallow users to program
games and play games
created by other users.

56k

200k

200k

20m

80m

202m

Global Monthly
Active Users (MAUs)

Global Monthly
Active Users (MAUs)

Global Monthly
Active Users (MAUs)

Global Monthly
Active Users (MAUs)

Global Monthly
Active Users (MAUs)

Global Monthly
Active Users (MAUs)

Source: Public information as of October 2022 from CNBC, DCL Metrics, Blockworks, Yahoo Finance, Epic Games, and Active Player.
9. Byun Hye-Jin, "Naver’s metaverse platform Zepeto hits 300m users," The Korea Herald, March 4, 2022.
10. Statista, “Mobile gaming market in the Asia Pacific region – statistics & facts,” accessed September 28, 2022.
11. Edgio, “Market Research | The State of Online Gaming 2021,” accessed October 5, 2022.
12. Ipsos, “How the World Sees the Metaverse and Extended Reality,” accessed September 28, 2022.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

The metaverse is a confluence of separate technologies that are rapidly evolving
These early metaverse experiences still have some limitations – streaming lags, cartoonish visuals, rudimentary functionalities. The full experience will only be unlocked when the development of several separate technologies converges.
A fully immersive metaverse with smooth real-time rendering of visually rich worlds for millions of simultaneous users is still some years away.

Hardware (User Devices, IoT)
Although VR and AR headsets are often seen as the primary gateway tothe immersive metaverse worlds, current advancements in smartphone
and personal computing devices can provide a workable interface with themetaverse. This is crucial as issues of accessibility and affordability may limit
the extent to which people can engage and benefit from the metaverse.
On the industrial end, IoT devices are critical in maximizing the benefitsof digital twins and virtual factories. However, affordability, data analytics
capabilities and cybersecurity issues must be addressed before we see
mass adoption, potentially from 2030.
Computing and Communication Networks
Significant tradeoffs between scale, fidelity and latency must be madebased on today’s technology. Both compute power and network
bandwidth will be critical in overcoming these tradeoffs.
There are multiple possible approaches to improve compute power –enhancing cloud computing, building out edge computing infrastructure,having more powerful consumer devices, and even tapping on
decentralized computing resources.

13. Deloitte, The Metaverse Overview: Vision, Technology, and Tactics, 2022.
14. Ibid.
15. McKinsey & Company, “An Executive Primer on Artificial General Intelligence,” accessed September 28, 2022.

14

A combination of these could increase computing power by the 1,000
fold needed to support a fully synchronous and persistent experienceat scale.13 But breakthrough may not be far away – Nvidia increased AI
performance by a million-fold over the last 10 years.14
The processed data then needs to be transmitted to consumers – throughfiber optic connections, Wi-Fi and mobile networks. The bandwidth, latency
and reliability of these communication networks will affect the experienceof end-users. These depend heavily on infrastructure investments,
particularly the last mile to the end-consumer. At the time of writing, mosteconomies in Asia are in the early stages of deploying 5G, fewer still havemade the latest WiFi 6E available.
Blockchain
Distributed ledger technologies form the foundation of the value transfer
layer of the metaverse, enabling the exchange of digital assets. Speed,
throughput, data storage costs and regulatory compliance challenges must
be overcome for mass application.

Artificial Intelligence
Problem-solving, creativity, social and emotional engagement of AI are still
far from maturity. Experts predict there is a 25% chance Artificial GeneralIntelligence will be achieved by 2030, or 50% change by 2040.15
3D Real-Time Rendering
Once 3D content creation can be democratized the way YouTube madevideo creation and sharing accessible to all, metaverse adoption andapplications will accelerate. This is already revolutionizing commercial
3D video creation but there is still some way to go before this is accessible
to the masses.

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Figure 2. Metaverse-enabling technologies
Technology

Existing

In progress/ Future

User Devices

Smartphones
Laptops/PC
Virtual Reality (VR) Headsets
Augmented Reality (AR) Headsets

Engaging other senses like smell and touch

Internet of Things(IOT)

Unified standards
Industrial applications

Full metaverse requires at least 6G(almost zero latency)

Computing Power

Edge/cloud computing

AI chips (rapid development)
Quantum computing (prototype stage)

Communication networks

5G
WiFi 6/6E
High-speed fiber

Big Data analytics (still maturing)
Security (e.g. distributed technology attacks)

Blockchain

NFTs/digital assets
Digital currency

Smart contracts
Increased throughput
Energy consumption
Computer vision, sensory perception
Machine learning
Natural language processing
Intelligent voice

Artificial
Intelligence (AI)3D Real-time Technology

3D Engine
Real-time rendering
Space rendering

Lowering cost to increase accessibility

Source: Adapted from Deloitte, The Metaverse Overview: Vision, Technology, and Tactics, 2022.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

The advent of virtual humans –their rising role in the metaverse
From virtual news anchors to virtual influencers, AI-humans are beginningto take on roles that traditionally requires a human face and personality.
In some instances, they are doing an even better job than their humancounterparts.
Research has found that virtual influencers have almost three times theengagement rate (i.e., likelihood of content being liked or commented on) of
real influencers. Some are so life-like that 42% of surveyed millennials andGeneration Z that had followed a virtual Instagram influencer did not realize
they were computer-generated.16
Virtual influencers are taking Asia by storm. Imma in Japan, Rozy in Korea
and Made-in-Thailand Ailynn are winning lucrative endorsement deals frombig brands.

16. Alexander Frolov, “Virtual influencers – are they all they’re cracked up to be?” accessed September 28, 2022.
17. The Guardian, "World's first AI news anchor unveiled in China", November 9, 2018.

16

But the most exciting developments might emerge from China. It’s statenews agency Xinhua introduced the world’s first AI news anchor backin 2018. These anchors, who work tirelessly round-the-clock, mimic thegestures and facial expressions of real-life broadcasters.17 Such technology
is quickly finding applications in other fields such as customer service
and sales.
With the rising popularity of livestreaming, companies like Baidu andSogou are developing virtual avatar technologies that could lower costs forbusinesses compared to hiring real livestreamers.
Traditionally-human roles are starting to be taken over by their virtual
doppelgangers. This is both exciting and intimidating, with many businessand social implications that will need to be studied.

Image Credits: StarryAIThe Metaverse in Asia | Strategies for Accelerating Economic Impact

Introducing the Virtual Influencers of Asia

Imma

Hatsune Miku

Angie

Rozy OhAI Ailynn

Country of Origin: JapanCountry of Origin: JapanCountry of Origin: Mainland China

Country of Origin: South Korea

Country of Origin: Thailand

First lifelike virtual human and model inJapan, produced by Aww Inc.

Open-sourced Anime character madeby fans. Virtual singer with a computergenerated voice and 3D graphics

Lifelike virtual human complete withzits, crooked teeth and other humanimperfections. Created by Jesse Zhang
with a Shenzhen-based CGI firmFirst lifelike virtual influencer in South
Korea. She is a model, DJ and influencer
created by Seoul-based creative
company Sidus Studio X.

First lifelike virtual influencer fromThailand created by AIS Bangkok.

Over 300,000 followers on Weibo
and Douyin.

Over 144,000 followers on Instagramand has earned over US$800,000 fromsponsorship deals in 2021 including
Tiffany & Co and Calvin Klein.

Over 400,000 followers on Instagram.
Modelled for top brands including
Porsche Japan, IKEA, Dior, Puma, Nike,
Amazon, and so on.

Over 2.5 million followers on Facebook.
Teamed up with Lady Gaga and Pharrell
Williams on her world concert tours.

Although only recently launched in
September 2021, she already has
27,000 followers on Instagram. She is
the Brand Ambassador for AIS, one ofThailand’s largest mobile operator.

Source: VirtualHumans.org, Aww Inc., Crypton Future Media, Jesse Zhang, LOCUS-X, SIA Bangkok

17The Metaverse in Asia | Strategies for Accelerating Economic Impact

Potential
Economic
Impact of the
Metaverse
in Asia

While the development path of the metaverse remains uncertain, early estimatessuggest it is a trillion-dollar opportunity for Asia in the coming decades.
The extent of the economic impact of the metaverse
both in Asia and globally remains uncertain as thetechnology is nascent.
Early estimates from the literature suggest that thepotential growth and contribution of the metaverse
could be significant globally:• The potential global market size estimates of themetaverse (i.e., revenue) range from US$678.8 billion(Grand View Research) up to US$13 trillion (Citi GPS)per year by 2030.18• The potential GDP impact estimates of the metaverse
globally range from US$1.5 trillion per year by 2030
and US$3 trillion per year by 2031.19• For Asia Pacific, a report by the Analysis Groupestimates that the net contribution to GDP could be
US$1.28 trillion per year by 2031.20

As the metaverse and the technologies surrounding
it continue to evolve, the form that the metaverse will
eventually take and and how much it may displaceor be additive to current growth is still uncertain.
Therefore, the timing and the size of the economic
impact of the metaverse is challenging to forecast andwill depend on a wide set of socioeconomic factors andenablers. For example, focusing just on applications
such as VR/AR, use cases in various sectors, orparallels with previous technologies may misspotential unforeseen innovations, underestimating thepotential impact of the metaverse. On the other hand,accessibility and affordability issues could limit therealization of an economy's maximum potential.

As with innovations such as Web 2.0, the economic
impacts of the metaverse will most likely be realized
over a decade or more after the initial investments.
This follows a S-curve framework where technology
typically enters an initial innovation phase before
experiencing a period of rapid growth, until the market
finally matures.21
Nevertheless, published research has provided
some key datapoints that, combined with publishedeconomic research, can give us further insight into themetaverse’s economic potential.
Refer to Appendix A for more details on market
sizing research.

However, capital investments made into developing
metaverse technologies, as well as the digital talentand skills to support them, will contribute to economic
growth regardless of the final form of the metaverse.

18. Grand View Research, "Metaverse Market Size, Share & Trends Report, 2030," accessed September 28, 2022; Citi GPS, "Metaverse and Money”, accessed September 28, 2022. Further examples of research that have attempted to undertake market sizing can be found in Appendix B.
19. PwC, "Seeing is believing”, accessed September 28, 2022; Analysis Group, "The Potential Global Economic Impact of the Metaverse," accessed September 28, 2022. Analysis Group estimate the net impact based on assuming that the metaverse may evolve like mobile technology in terms of the level and rate of adoption by users and the impact on GDP. The research produces an impact for the APAC region($1.04tr) with India ($0.24tr) estimated separately.
20. Analysis Group, The Potential Global Economic Impact of the Metaverse, 2022.
21. See a summary of the S-Curve literature by Analysis Group, The Potential Global Economic Impact of the Metaverse, 2022.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Metaverse investments today lay thefoundations for the future…

…generating additional economic growth overthe next two decades…

…leading to an economic impact for Asia

For economic impacts to materialize, considerable sustained investment
into developing and operationalizing the metaverse will be needed across
key sectors such as infrastructure, computing hardware, and softwaredevelopment. Early estimates by Goldman Sachs suggest that metaverserelated investment may range from US$135 billion to US$1.35 trillion in
the coming years, further suggesting that it may land in the US$135 billion
to US$700 billion range.22 A report by McKinsey however suggests thatmetaverse investments may be closer to the higher Goldman Sachs estimate
as they observe that over US$122 billion had already been invested in thefirst six months of 2022, following US$57 billion of investments in 2021.23
Given the above, we analyse two investment scenarios:

Investments made into the Information and Communications Technology(ICT) sector have significant impacts on the economy. It has been found that
ICT capital accounted for about 15 percent (0.53 percentage points) of world
GDP growth between 1995-2003.25 However, the literature also suggests thatthese investments spur companies in the supply chains and wider economy
to further invest, developing new offerings, that can have material long term
growth impacts that are realised over decades.26

Using the sources from the literature, we estimate that these metaverse
investment scenarios may lead to an economic impact for Asia of between
US$0.8 trillion and US$1.4 trillion per year by 2035.29 This is approximately
between 1.3-2.4% of projected GDP of Asia in 2035.

• A central metaverse investment scenario of US$700 billion over five
years being maintained globally up to and including 2029; annualized thisUS$140 billion per year, equivalent to 0.15% of World GDP in 2021.24

To estimate the impact of the two investment scenarios, we take acentral estimate of the relationship between ICT capital economic output
estimated from the economic literature, an elasticity of 0.1.27 In otherwords, a 10% increase in net ICT capital stock is associated with a 1%
increase in economic growth.28• A boosted metaverse investment scenario of US$1.35 trillion over five
years being maintained globally up to and including 2029; annualized thisUS$270 billion per year, equivalent to 0.28% of World GDP in 2021.

These are short-term impacts of the assumed continued and sustained
investment to 2029, and how these may materialize by the mid 2030s.
These figures do not necessarily consider the impact of improvements to
supporting connectivity infrastructure required for the metaverse (e.g., thespill-over economic impacts of 5G infrastructure).
This paper adopts the methodology developed in Deloitte's report on "TheMetaverse and its Potential for Türkiye”. Refer to Appendix B for details on thefull methodology.

The potential impact of themetaverse to GDP in Asia is about$0.8T-1.4T per year by 2035,
roughly 1.3 – 2.4% of overall GDP.

22. Goldman Sachs, Framing the Future of Web 3.0. Metaverse Edition, 2021.
23. McKinsey & Company, “Meet the metaverse: Creating real value in a virtual world,” accessed September 28, 2022.
24. World Bank, “World Development Indicators,” accessed September 28, 2022.
25. Jorgensen and Vu, "Information Technology and the World Economy," The Scandinavian Journal of Economics 107, no. 4 (2005), p. 631-650.
26. Czernich et al., "Broadband infrastructure and economic growth," CESifo Working Paper 2861, 2011.
27. Ketteni, Mamuneas & Stengos, "The effect of information technology and human capital on economic growth," Macroeconomic Dynamics 15, no. 5(2011): p. 595-615 ; Venturini, "The long-run impact of ICT," Emperical Economics 37, no. 3 (2009): 497-515
28. OECD, "STAN STructural ANalysis Database," accessed October 20, 2022.
29. The methodology used to measure impact for Asia can be found at Appendix B.

19

The Metaverse in Asia | Strategies for Accelerating Economic Impact

How the metaverse transforms economies:

Some transformational effects on the region’s economies include:

As a unifying goal, the metaverse could drive
investment in and adoption of the underlying
technologies such as 5G, Edge Computing, and
IoT. In turn, this propels digital transformation andcapability development, which have positive spillover
effects to the overall economy. These provide
strong justifications for early investment and clear
development roadmaps for the metaverse.

Expansion of access to information, digital content
and digital infrastructure. The metaverse will facilitate
connections among individuals and communities,
removing physical barriers for the transmission of ideas
or exchange of goods and services. Indonesia’s WIR Group is creatinga metaverse platform to bridge the gap between businesses and local
consumers, many of whom reside in the country’s rural areas withlimited access to digital technology and financial services. The platform
is anticipated to enable suburban retail stores in Tier 2 to 3 cities to set
up virtual shops which allow members in their communities to browse
products and have them delivered instantly.30 A proliferation of use
cases for the metaverse will boost demand for improvements in digital
infrastructure, making investments by telecommunication providers
more viable.

30. Tech in Asia, “Indonesia’s WIR rides metaverse to IPO success, but revenue stream raises questions,” accessed September 28, 2022.
31. Asian Regional Integration Center, Asian Economic Integration Report, 2021, p.292.
32. Royal Thai Embassy, “Thailand’s creative industries showing steady growth,” accessed September 28, 2022

20

Creation of new employment opportunities including
jobs that have yet to exist. To create digital content, develop
metaverse experiences and services, and operate theinfrastructure, new skills will need to be developed. Analysis
by ADB estimated that a 20% expansion in the digital sector could create over
300 million new jobs in Asia over 5 years.31 The creator economy will also be
a significant contributor to several economies in Asia, such as in the case ofThailand where creative industries contribute roughly 10% to its GDP.32

The Metaverse in Asia | Strategies for Accelerating Economic Impact

The metaverse will lead to the creation of
new marketplaces and types of businesses
Improvement in ways of working
between geographies, businesses,
and organizations. The metaverse
could facilitate remote working,training and collaboration across different locations.
This will increase productivity and flexibility forworkers. The ability to visualize 3D space also
creates new forms of collaborations among
businesses, government agencies and communities.
Singapore is the first to have a country-level 3D
digital twin,33 which supports city planning, as well as
the development of industries such as tourism, realestate, commerce, drones in built-up environments,
autonomous vehicles, and IoT applications.

Creation of new marketplaces
and types of businesses,
particularly for digital assets andcontent. NFTs provide digital artists
a way to monetize and generate royalties from theirdigital creations. Platforms like Roblox and Zepeto
create new marketplaces for virtual wearables anditems. Beyond individual companies, the Stock
Exchange of Thailand is also experimenting with a new
digital marketplace to facilitate trading of investment
and utility digital tokens.34
These provide an early look at the full economic
potential of the metaverse. Once thesetransformations in the digital economy are fully scaled,
it will be transformational for the more than 4 billion
people who live, work, and play in the region.

New marketplaces
Users and businesses cometogether in new marketplaces
to exchange digital goods andservices, and even products
or assets based in the physicalworld, underpinned bytechnologies such as digital
twins and blockchain.
New types of businesses
Demand for novel metaverserelated products, ancillary
services to facilitate engagementwith new marketplaces (e.g.,training, compliance, strategy
and optimization).
Generating value
New marketplaces andbusinesses will lead to newmechanisms for value creationin economies, providing users
with goods and services toenhance their metaverse
experience. This can create new
employment opportunities.

33. George Lawton, "How Singapore created the first country-scale digital twin", VentureBeat, February 23, 2022.
34. Open Gov Asia, "Thai Stock Exchange to launch digital asset trading platform," accessed October 26, 2022.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Sector-specific impacts: the metaverse will havewide ramifications across many sectors
The impact of the metaverse is not uniform, and will
be felt first in sectors that are already experimenting
with new use cases. Sectors that have madeinroads into the metaverse include entertainmentand gaming, healthcare, retail and e-commerce,manufacturing, and education.

Entertainment

Healthcare

K-Pop labels are venturing into the metaverse with virtual celebrities, virtual
fan-meets, and music releases on metaverse platforms. By doing so, it hascreated unprecedented levels of reach and engagement with audiences: 46
million fans attended Blackpink’s virtual avatars fan event to receive digital
autographs from the group.35 Aespa, a Korean “cross-metaverse” band whichfeatures four members with their own virtual counterparts, debuted atnumber three on the Billboard 200, the fastest female K-pop act in history toenter the top 3.36 While metaverse technologies are not yet mature enoughto stream rich content like concerts to large audiences synchronously in realtime,37 these early experiments show the potential demand and global reachof such entertainment experiences.

Two major Southeast Asian hospital operators, IHH Healthcare and Siloam
International Hospitals, have accelerated investments in VR, AR and metaverse
environments to improve telemedicine services.38 South Korean startup
Looxid Labs uses a VR sensory headset to measure working memory,
attention level, and spatial perception of the elderly in Seoul and Busan.39
Singapore’s National University Health System (NUHS) is also investing inholographic technology, including using mixed reality to teach medical andnursing students,40 research on applications in brain surgery, and real-time
volumetric rendering and positioning of ultrasound scans.41 NUHS is one of
the founding members of The Holomedicine Association, an internationalorganization comprising clinicians, scientists and industry partners engaged inholomedicine R&D.42 The economic and social benefits of these developments
are enormous, particularly among the fast-ageing societies in the region.

35. Chang May Choon, "South Korea's K-pop stars extending their reach as avatars in the metaverse," Straits Times, September 10, 2022.
36. Soompi, "aespa Becomes Fastest Female K-Pop Act To Enter Top 3 Of Billboard 200 As “Girls” Debuts At No. 1 On Top Album Sales Chart," accessed October 19, 2022.
37. CNA Lifestyle, “JJ Lin’s Sanctuary virtual concert fraught with ‘streaming issues’”, accessed September 28, 2022.
38. Erwinda Maulia, “Southeast Asian hospitals look for high-tech future in metaverse”, Nikkei Asia, January 21, 2022.
39. Nation Thailand, “Metaverse technologies bring health care to Korean doorsteps”, accessed September 28, 2022.
40. Microsoft News Center, “Medical education goes Holographic with mixed reality from Microsoft”, press release, January 11, 2022.
41. PR Newswire, “Holomedicine Research in Singapore, Using Mixed Reality Technology to Enhance Diagnosis, Education and Patient Care,” accessed September 28, 2022.
42. ibid.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Retail and e-commerce

Industrial and Manufacturing

Education

Major brands are setting up shop in metaverse platforms like Roblox,
Decentraland and Sandbox. AR will also transform the retail experience, witha Meta survey of shoppers in Asia Pacific finding that two-thirds of those whoare likely to shop on social media want to try on products virtually, from the
comfort of their home.43 These include viewing how products look in theirhome, trying products like make-up on themselves, and browsing products.
The use of AI can automate customer service experiences in the metaverse,
particularly with the language diversity in the region. Hong Kong company
Whatsquare is an AI chatbot platform to facilitate “conversational commerce”
in 32 different languages in Asia.44

Metaverse technologies could lead to better real-time monitoring of supply
chains, operational effectiveness, and collaboration between different
stakeholders. The Hong Kong International Airport (HKIA) developed a live 3D
digital twin linked to real-time data from IoT devices that will facilitate “holistic
airport management, predictive decision making and maintenance” for the fulllife cycle of its buildings. In the future, advanced biometrics powered by facialrecognition could also allow passengers to move through checkpoints without
the need for document checks.45

The use of immersive technologies could enhance education delivery andquality by producing more engaging curriculum content and delivering this at
scale including to the differently-abled. Several universities across the region
have started experimenting with metaverse classrooms, including Thammasat
University in Thailand, the Singapore University of Social Sciences, The Hong
Kong University of Science and Technology’s Guangzhou campus, andseveral South Korean universities. Vietnam's High School for Gifted Students,
Hanoi National University of Education, has also forayed into the metaverse
with a digital cultural museum.46 Korean startups such as BestTech andVictoria Productions have also developed metaverse solutions (XR content)
for education. Nevertheless, the overall effectiveness of remote learning,particularly in developing nations, is subject to inclusive access to the digital
infrastructure, which will be discussed later.

43. Meta Foresight, “APAC brands break new ground in the Metaverse with innovative AR experiences,” accessed September 28, 2022.
44. Whatsquare, “Whatsquare” accessed October 3, 2022.
45. Airport Authority Hong Kong, AAHK Sustainability Report, 2019, p. 69-70.
46. Coincu, "One of Vietnam’s top prestigious schools enters the metaverse," accessed October 19, 2022.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Figure 3: Sectoral impacts in the short-term and long-term
Sectors affectedin the short-term

Immediate

Long-term (5+ years)

Entertainment& Gaming

Concerts, showsand sports

Immersive
games, movies,
and socialization
spacesInteractive sports andevents (e.g., on the
court, in the game)

Interactive virtual
tourism

Immersive “theme
park” experiences that
adapt to customers’
data profiles

Healthcare

Virtual wellness andexercise classes

Data analyticspowered healthinsights andrecommendations

Immersive
telemedicine andtherapy

Digital models of
hospital flow andoperations

3D models of patientsto show simulated
impacts of healthchanges

Retail &E-Commerce

Boutique shopping(e.g., pop-up shops)

Digital customer
contact centres

Data-enhanced
everyday shopping(e.g., groceries,
furniture andappliances)

Immersive home
and auto buying

Full sensory
immersion in retailexperiences

Manufacturing

Reduction of costs
through productmodelling

Predictive
maintenance ofequipment

Collaborative productdesign and modelling

Enhanced quality
control throughproduct simulations

Complex operational(e.g., supply chain,process and workflow)
simulations to
optimize production

Professional
Services &Education

Telecommunicationsand virtual
collaboration

Immersive
professional
training

Digital twins of physicaloperations andlocations

Metaverse-basedclassroom tools andfully metaversenative schools

Metaverse-native anddependent companies

Source: Deloitte, "A whole new world? Exploring the metaverse and what it could mean for you," accessed October 19, 2022.

24

Emerging

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Analysis of Asian Economies
The differentiated strategies of eacheconomy make this region an interesting
one to watch.
How much of the potential economic impact is realized, and how quickly,
depends on the strategies each economy adopts. We take an in-depth
look at 12 selected economies – their unique propositions, challenges andopportunities – and provide a holistic understanding of the metaverse
potential in each. While it will likely take years for the metaverse to mature, wehighlight early adopters in each of the economies today.
The metaverse framework
Based on their respective contributions to global GDP, we derive the GDP
contribution for each of the individual economies in our study. We thenprovide a qualitative analysis of each economy considering each of thesethree enabling pillars (figure 4).47 Finally, we seek out early signals forwhich sectors today demonstrate the potential to lead in the metaverse’s
development tomorrow. Through looking at sectors to watch, we highlightthe forerunners of metaverse development in each economy.

Figure 4: Three enabling pillars of the metaverse

1 2 3What is thepotential of the metaversein the economy?

What technology is needed
to materialize the metaverse’s
potential in an economy?

How can the ecosystem bedeveloped to enable thefull potential of the metaverse?

Metaverse
Macroeconomic Determinants

Metaverse
Technology Fundamentals

Metaverse
Ecosystem Enablers

Economy-level characteristics that
determine the potential of themetaverse. These characteristics
include, but are not limited to:

For its potential to materialize
and the metaverse to exist, somefundamental technologies are nonnegotiable. These include:

To facilitate the widespread
adoption and efficient operationof the metaverse, factors such associal acceptance and businessenvironment will play a key role.
These include:•Sectoral structure•		 Compute power• Security and privacy•Innovation environment•		 Connectivity•Competition within the metaverse•Income level•		 User devices•Technology readiness of business•		 Transactions•Digital skills•Interoperability

Refer to Appendix C for a detailed description of each characteristic in thethree enabling pillars.

•Accessibility•Social acceptanceSource: Deloitte Analysis

47. Given the uncertainties around the evolution of the metaverse, this provisional framework, which provides a good approximation of the enablers, will be further refined as new and more appropriate indicators indicators are developed in the future.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Leveraging strengths for the metaverse
Based on our analysis, the following are possible strategies economies may consider to best play to their strengths.

Sectoral Expertise

Institutions and Institutional Quality

Natural and cultural endowments

Economies with sectoral expertise which align to the anticipated needs ofthe metaverse can start positioning those sectors today for future demand.
For instance, those that excel in the manufacture and export of electronics
and electrical equipment, such as Taiwan and South Korea, are wellpositioned to benefit from the increasing demand for hardware and otheruser-devices.

Institutions such as an economy’s political, legislative or businessenvironments can make or break metaverse-related activities. Economies
with positive investment environments, strong digital and patent laws aswell as protections over intellectual property, will attract large investments
into the design and innovation of the metaverse. Hence, economies likeHong Kong and Singapore are attractive for investors and designers keen
to make headway in the metaverse.

China and Indonesia, which are rich in natural resources (e.g., nickel, rareearth and lithium), are poised to benefit from increased manufacturingof new user devices. Others like Vietnam, Philippines, Pakistan, India, andIndonesia have digitally-ready workforces that can serve manpower needs
across the region.

Similarly, economies with large technology sectors or high investmentin the research and development of digital technologies, such as Japan,
Singapore, South Korea, and Hong Kong, can benefit from increased
demand for platforms and the design of complementary hardware
and software. Vietnam and Thailand are innovating with web3 andblockchain technologies.

26

Soft power can be of equal or even greater importance than hard power– economies which do not possess vast natural resources can leverage on
characteristics such as geography, language and culture to determine themarket size and demand for localized content as well as to build culturalexperiences for the wider metaverse ecosystem. For example, economies
such as Thailand and India can bank on their strong cultural capital toestablish a unique signature in the metaverse early on.

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Shaping theMetaverse
in Asia
The metaverse presents challenges, but if
well managed, therein lies opportunity too.
The metaverse could help tackle important
issues through bridging physical distances,encouraging more sustainable behaviors,and bringing communities closer.
Nevertheless, a more immersive andpervasive internet can exacerbate negative
externalities. Forward thinking can turnrisks into opportunities.

Image Credits: DALL-E

Climate Impact. The overall climate impact of the metaverse
depends on how it can drive behavioural changes.
The growing metaverse requires more data storage and processing
systems to support real-time interactions and new applications of AI.
These energy-intensive processes will challenge decarbonization efforts
as over 70% of Asia Pacific’s emissions footprint remains coal-based.48 The
anticipated demand for new devices and hardware such as VR headsets
and internet server will foster greater demand for materials such as rareearth metals (e.g., lithium used in batteries and energy storage systems),
with China supplying more than 58% of the world’s market.49 The mining ofthese materials and the creation of e-waste risks environmental damage.

Some of the climate impacts of the metaverse may be offset by changing
carbon-emitting behaviors, such as reducing commute and overseas
travel by facilitating remote work. As another illustrative example, virtual
fashion reduces the amount of physical apparel produced, correspondingly
reducing wastage and the associated climate impact. Virtual fashion is
gaining prominence in the metaverse: the Hong Kong-based luxury fashion
retailer I.T released an entire collection digitally, with pop-up boutiquesthat housed no physical apparel, but AR and VR tools for shoppers to “try”
clothing on before ordering.50 By reducing the amount of physical apparelproduced, climate impact is reduced.

48. Wood Mackenzie, “Asia Pacific’s energy transition conundrum- is net zero possible?” accessed September 28, 2022.
49. Bai et al., “Evaluation of resource and environmental carrying capacity in rare earth mining areas in China,” Scientific Reports 12, no. 6105 (2022).
50. The Fabricant, “I.T Hong Kong And The Fabricant Create Luxury Retail Game Changer”, accessed October 3, 2022

27

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Inclusion. We have a collective responsibility to ensure themetaverse is accessible to all, within and across societies.
The metaverse opens up new opportunities for people to experienceplaces and events across distance and barriers. In conjunction with theTokyo Paralympic Games held in 2021, the first official Paralympic game
‘The Pegasus Dream Tour’ was launched. The avatar role-playing gameallowed players to try out various Paralympic sports and watch live
performances.51 This enables sports enthusiasts of all abilities globally tofeel part of the Games, even in the wake of global travel restrictions due tothe COVID-19 pandemic.
However, users need stable and high bandwidth connectivity to access themetaverse—a requirement not all can presently meet. In developing partsof Asia, ADB estimated that only 41% of households have internet accessand only 18% have a computer.52

If the cost of devices needed to access the metaverse is high relative toaverage incomes, then parts of society may be excluded from participatingin the metaverse.

Mental Health. An immersive metaverse could lead to social
withdrawal and depersonalization, but could also widen the reachof mental health support.

Besides digital infrastructure, deficits in digital skills hinder the metaverse’s
accessibility. In the Philippines, only 16% of children from households withprimary and secondary-educated adults possessed the digital skills toaccess remote learning, compared to 40% from households with tertiaryeducated adults.53

As an immersive virtual space, over-consumption of the metaverse
comes with risks related to symptoms of depersonalisation andderealization56 —symptoms caused by internet addiction. While thelink to internet addiction is still not conclusive, a 2013 study in South
Korea found that nearly one in ten study participants who were socially
isolated for at least three months were addicted to the internet,
with more than 50% who were thought to be at high-risk of internet
addiction.57 The advent of the metaverse may encourage users to
depend on the metaverse completely for socialization, neglecting
the offline world. Should their connection sever due to technicaldisruptions, these users stand to lose their entire social world,worsening their mental health.58

If relevant stakeholders collaborated to bridge the gap in digital
infrastructure and skills, the metaverse can truly become an inclusive
space where people’s location, gender, physical attributes or personal
circumstances matter less than their ideas and attitudes.54
Several companies have highlighted their efforts in creating an inclusive
metaverse: Meta, for example, has developed over 1 quintillion avatar
combinations and launched cochlear implants, wheelchairs and over-theear hearing aids for avatars, creating a world where everyone can findthemselves represented in the metaverse.55 Public sector involvement may
complement efforts to ensure devices and aids reach all who need them.

51. International Paralympic Committee, “World’s first official Paralympic video game launched,” press release, July 23, 2021.
52. Asian Development Bank, “Learning and Earning Losses from COVID-19 School Closures in Developing Asia,” accessed September 28, 2022.
53. World Bank Group, Remote Learning During COVID-19: Lessons from Today, Principles for Tomorrow, 2021.
54. World Economic Forum, “Building an inclusive metaverse starts now. Here’s how,” accessed September 28, 2022.
55. Meta, “How we are helping build the Metaverse with Diversity, Equity and Inclusion in Mind,” accessed September 28, 2022.
56. Carina Peckman et al, “Virtual reality induces symptoms of depersonalization and derealization: A longitudinal randomised control trial,” Computers in Human Behaviour 131, no. 107233 (2022).
57. Lee et al., "Home visitation program for detecting, evaluating and treating socially withdrawn youth in Korea," Psychiatry and Clinical Neurosciences 67, no. 4 (2013), p. 193-202
58. CIO Today, “Healthcare System Reimagined in Metaverse,” accessed September 28, 2022.
59. Acceleration Economy, “The future of healthcare and patient care in the Metaverse,” accessed September 28, 2022.

28

At the same time, the metaverse also holds equal potential to ease such
persons back to society. Through the metaverse, virtual consultations andremote diagnostics could make healthcare more accessible. The further
use of VR and AR in the metaverse could also enhance the reach ofmental health support through providing cognitive therapy and psychiatricevaluations virtually.59

The Metaverse in Asia | Strategies for Accelerating Economic Impact

If the challenges are well-managed, themetaverse has the potential to result inseveral societal benefits that might havesignificant direct and indirect impacts
on society, and are not captured by the
economic impact studies.

Trust and safety. As the metaverse develops, discourse aroundhow safety can be assured in a more immersive virtual space willcontinue to evolve.

Politics and Governance. The metaverse fosters both greater
connection between the people and the government, and greater
political division.

The relatively anonymous nature of the internet can sometimes facilitate
harmful behaviours such as harassment, bullying or verbal abuse. The
immersive environment of the metaverse may intensify these experiencesfor victims. The development of the metaverse raises additional concerns
over cyber and identity fraud, data privacy breaches and intellectual
property theft.60

Public institutions are building their digital presence, making informationand services more accessible to users. This could improve howcommunities work together, better address concerns, and encourage civil
engagement. Taiwan’s digital democracy efforts include allowing anyone tofile an e-petition on its national platform, and a collaborative meeting will
be held for petitions that receive at least 5,000 signatures.64 Engagementlevels could be even higher if these collaborative meetings were held in
the metaverse. Singapore envisions involving residents in decisions about
upgrades to their local towns by visualizing proposals through a countrylevel digital twin.65

India is one of the first countries to explicitly mention the metaverse in
its policy considerations on bullying and sexual abuse.61 India’s upcoming
digital regulatory framework, the Digital India Act (DIA), will look at crimesin the metaverse that spread misinformation or incite violence.62 Singapore
will also be rolling out rules to tackle online harms in Singapore as early as
2023 under the Code of Practice for Online Safety and the Content Codefor Social Media Service.63 Balancing these considerations without stifling
innovation will be crucial for regulatory bodies globally.

On the other hand, current Web 2.0 social media platforms show the
double-edged quality of the internet to both foster political community andcreate political division.66 As more daily activities, including work, move intoa virtual and borderless environment, social identities may start to become
more attached to online rather than physical communities, exacerbatingecho chambers. Community building efforts both online and offline areeven more critical to maintain these connections between people.

60. Brian Pinnock, “The metaverse will not be immune to cyber threats,” Mail & Guardian, July 26, 2022.
61. Vallari Sanzgiri, “MeitY’s Digital India Act Due In Winter Session, Says Report: OTT, Metaverse In Ambit,” Medianama, August 17, 2022..
62. Sachin Dave, "Digital India Act to police social media and OTT platforms", Economic Times, October 19, 2022.
63. Irene Tham, "Rules to tackle online harm in Singapore could be rolled out as early as 2023," Straits Times, September 29, 2022.
64. Audrey Tang, “Inside Taiwan’s new digital democracy,” The Economist, March 12, 2019.
65. Singapore Prime Minister’s Office National Research Foundation, “Virtual Singapore,” accessed September 28, 2022.
66. Brookings Institution, "How tech platforms fuel U.S. political polarization and what government can do about it," accessed October 19, 2022.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Actionable Insights for
Key Stakeholders
While the metaverse is inevitable, a
responsible metaverse is not.
The successful future of themetaverse calls for collective
responsibility by all ecosystem actors,
including government, telecom
operators and the technology sector,
businesses and start-ups, researchers
and academics, metaverse users andthe general public.

Governments
Governments play an essential role in realizing the
economic benefits of the metaverse, while managing therisks. There are five major bottlenecks67 at this stage ofmetaverse development which governments can act onin concert with other stakeholders.
• Enhancing accessibility to the virtual world.
The economic and social benefits of the metaverse
rest on the proportion of the population that hasaccess to the metaverse. This includes not only theunderlying digital infrastructure such as 5G/Wi-Fi 6E/
fiber connections and devices such as smartphones
and computers, but also the social aspects like digitalskills and social acceptance.
• Shaping governance of the metaverse. As
experimentation with metaverse technologies
become more prolific, now is the time forpolicymakers to proactively shape and influence
the rules of engagement in the metaverse. Many
economies are exploring new laws for digitalcurrency, tokenization of digital assets, and NFT
trading. Regulations over online harms, ethical use
of AI, and new governance structures will haveto evolve with emerging use cases. Frameworks
for interoperability are also helpful in preserving
consumer freedom and choice.

67. Deloitte, The Metaverse Overview: Vision, Technology, and Tactics, 2022.
68. ibid.
69. Jonathan Keane, “South Korea is betting on the metaverse-and it could be a blueprint for others,” CNBC, May 30, 2022.
70. Manh-Hung Tran ,“Rise of the metaverse in Vietnam – What’s happening?" July 1, 2022.
71. Medium, “How ‘Green’ is the METAVERSE? The two sides of the environmental impact of the metaverse,” accessed September 28, 2022.
72. World Economic Forum, “Even though it’s virtual, the metaverse does actually impact the environment,” accessed September 28, 2022.

30• Encouraging industrial applications of themetaverse. At present, the metaverse is mainly usedin entertainment and gaming fields. Government
intervention may be required to nudge businesses
to adopt metaverse technologies for manufacturing
and other industrial uses. For example, China hasannounced plans to support industrial applicationsof metaverse technologies,68 and South Korea isinvesting US$177 million to develop industry inthe metaverse.69• Managing data security and privacy
protection. As more user data is collected for AIpowered algorithms, opportunities to exploit data
vulnerabilities will grow. Regulators will have tobalance strengthening information security without
stifling technological progress. Vietnam, as with many
economies in the region, has plans for legislativereforms in the areas of data privacy, cyber security,
consumer protection, and intellectual property.70• Encouraging sustainable energy usage. Powering
the needs of the energy-intensive metaverse is likely
to create challenges for decarbonization efforts.71 To
ensure that the metaverse’s supporting infrastructureis built and operated sustainably, forward planning is
crucial. For example, moving local data centres into
the cloud could be between 22-93% more energy
efficient than utilizing traditional local data centres in
offices.72 The metaverse should be viewed as a green
opportunity – by redesigning essential activities liketransport, logistics, and manufacturing to use themetaverse, governments can actively reduce theircarbon footprint.

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Telecom Operators and Technology Sector
The metaverse will be defined by the infrastructure
it is built upon. Telecom operators thus hold the key
to the metaverse, by installing enabling infrastructure(e.g., through 5G networks/Wi-Fi 6E/ fiber connections)and incentivizing mass adoption. By 2025, 14% of
the Asia Pacific population is expected to adopt
5G73 – a development that will directly facilitate thematerialization of the metaverse. Telecom operators
are not just enablers of the metaverse, but co-creators
who are well-placed to lead the development of themetaverse both regionally and globally. Forwardthinking telecom operators may begin planning foredge computing and connectivity services that widen
metaverse access, facilitate efficient data transfers, andreduce network congestion.
Private Sector
To unlock the full economic potential of the metaverse,
metaverse technologies must be integrated intobusiness practices. Businesses can leverage upon newtechnologies to reach consumers, improve internal
operations, or contribute to platform development.
Businesses also play a pivotal role in facilitating thesocietal transition into the financial metaverse – forexample, integrating digital payments would familiarize
users with using digital currencies. In economies suchas China, India and Indonesia, digital payments haveovertaken classical payment methods in popularity.74
The private sector could also increase the social
acceptance of new technologies by showcasing thepotential of additional value for businesses andconsumers through exhibitions and demonstrations.
For example, South Korea’s SK Telecom recent launchof ‘Ifland’, a new metaverse platform, helped embed
the metaverse in public imagination and enhance
confidence in new technologies.
Researchers / Academics
The metaverse is a product of constant innovation – assuch, R&D is key to a resilient and productive future
metaverse economy. Researchers play instrumentalroles in developing appropriate hardware such asheadsets, smart-glasses and sensors, and in working
with industry leaders on applying technology tobusiness problems. In turn, the uptake of newtechnology hinges upon complex sociocultural factors.
Research centers play a vital role by offering hands-on
technological experiences to users, which combats

cultural aversion to new technologies.
The Singapore University of Social Sciences has set
up a Node for Inclusive Fintech, which includes ametaverse lab that raises awareness on the potential ofthe decentralized web to be used for societal good.75
Users and the General PublicSocial acceptance of metaverse technologies is key tothe metaverse’s success. Users will directly shape themetaverse’s development through their adoption of
new technologies and their advocacy for use cases.
With highly adaptable digital consumers who are
enthusiastic about new technologies,76 Asia is likely torespond enthusiastically to the development of themetaverse. However, as with any new technology, it
is vital to address fears over uncertainties with theimpact on livelihoods, culture and ways of living. The
presence of community and advocacy groups to give
voice to these concerns can ensure the metaverse
develops inclusively.

"We believe in the open
metaverse and that nobody
should own or control it.
We believe that it shouldbe accessible to as many
people as possible.”77
Alvin Graylin, China President at HTC

73. Computer Weekly, “5G connections in APAC to surpass 400 million by 2025”, accessed September 28, 2022.
74. TechWire Asia, “It’s endgame for traditional payments as mobile wallets emerge victorious,” accessed September 28, 2022.
75. Singapore University of Social Sciences, “Metaverse Lab,” accessed September 28, 2022.
76. McKinsey & Company, How Asia can boost growth through technological leapfrogging, 2020.
77. Nina Xiang, “HTC Wants to Build An Open Metaverse While Splinternet Accelerates,” Forbes, April 13, 2022.

31

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Conclusion
Asia is a prime market for the adoption of this next iteration of the internet. The metaverse presents a trilliondollar opportunity to significantly transform major economies in the region. Vice versa, the Asian economies will
make a meaningful impact on how the metaverse takes shape globally.

1

The uncertainty around the future
form of the metaverse results in a
broad range of economic impact
estimates.

As a nascent technology, there remains uncertainty as to how themetaverse will evolve. This presents a significant opportunity forbusinesses and governments to invest and shape its development.

32

2

Certain industries and regions
are expected to be the primary
beneficiaries of the metaverse,with wider value generated as thetechnology matures.

Sectors in which early adoption of the metaverse is expected include
retail, manufacturing, healthcare, education, and the creative
industries which include gaming and entertainment. Therefore,knowledge-based economies are expected to realize the metaverse
opportunity in the near-term.

The Metaverse in Asia | Strategies for Accelerating Economic Impact

3

How much of the potential economic
impact is realized, and how quickly,
depends on the strategies eacheconomy adopts.

Economies can tap on a range of strategies that play to their strengths
in specific sectors, institutions or natural and cultural endowments. At
the same time, economies will need to make thoughtful investments
to develop enablers and address gaps, so that their overall economic
potential is not limited.

4

There is a collective responsibility tocreate a responsible metaverse thatmitigates the risks associated withdigital technologies.

Importantly, policymakers and other ecosystem actors must ensure thedesign of the metaverse and the surrounding legislation and regulations
are fit for purpose such that as many of the upsides are gained whilst
limiting the impact of any potential pitfalls.

5

If designed well, the metaverse
could deliver significant
economic and social benefits.

All economies have the potential to realize increased economic growthand productivity whilst also capturing sizable social returns when
improving the standard of living for their respective populations.

33

Profiles of 12 Selected
Asian Economies
Hong Kong 			34

35

Pakistan 			65

India 					41Philippines 			71Indonesia 			Singapore 			7747Japan 			53South Korea 			83

Mainland China 		59Taiwan 				

89Thailand 			95

Vietnam 				101

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Hong Kong
Potential 2035 economic impact of the metaverse

US$7-14

B per year

35

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Hong Kong
Hong Kong’s lead as an international business hub
could be furthered with the metaverse. The city'ssound polices and investments have created afavorable environment with high internet accessibility
and a strong startup scene for businesses.
While the government has been taking a cautious
approach towards the metaverse, it is committed
to creating a conducive environment for innovationand technology developments. It is looking formetaverse-related technologies to guide its digitaltransformation to a smart city, including the use ofdigital twin technologies, such as in the developmentof the Hong Kong International Airport (HKIA),1 andsmart sensor networks across the city.2 Companies,
like Meta, are responding to its business-friendly
environment by tapping on the city as a testing
ground for metaverse initiatives.3

Metaverse technologies provide opportunities
especially for the real estate and luxury goods andfashion industry in the city. Hong Kong-based startup
Animoca Brands has a growing portfolio of metaverse
businesses, including popular metaverse platform, theSandbox.4 Mega City, a cultural hub in the Sandbox
metaverse, is one example of a burgeoning virtual realestate sector.5

Within this year, there have been over 10 NFT-related
events in the city, including "A Woman's World", a
NFT art showcase by domestic female artists, Asia’s
largest NFT exhibition “ARTAVERSE” with more than
100 exhibitors, and K11 MUSEA’s “METAVISION”,
exhibiting more than 200 NFT works.7

Hong Kong is also leveraging on its position at theintersection of culture and technology to make an
impact in the metaverse. Its marquee offerings like Art
Basel Hong Kong, Christie’s Hong Kong Auctions, arebeing complemented by the emergence of digital art in
the metaverse.6

Hong Kong already possesses excellent information and communication“ Currently,
technology infrastructure and business environment, allowing local industries and research“

institutions to develop related virtual user experience and technologies.
Alfred Sit, Former Hong Kong Secretary for Innovation and Technology

1. OpenGov Asia, “HKIA Develops Digital Twin”, accessed October 3, 2022.
2. Business Environment Council, “Smart And Sustainable City Development: Hong Kong and International Experiences”, 2022.
3. Jiaxing Li, “Zuckerberg’s Meta To Push Metaverse Initiatives To Hong Kong Cafes and Schools as Interest In Virtual World Hots Up”, South China Morning Post, June 14, 2022.
4. Animoca Brands, “About Us”, accessed October 3, 2022.

36

5. ibid.
6. RCommon Affairs, “Hong Kong Heads Into The Future With Digital Art”, accessed October 4, 2022.
7. Ibid.

1

1

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Macroeconomic Determinants• Hong Kong is overwhelmingly a service-based economy(93.4% of GVA). It has three key industries: financial andinsurance services, trading and logistics and education.
These are expected to be impacted by the metaverse in thenear term.
• Hong Kong is ranked 14th in the world, based on the Global
Innovation Index 2022, suggesting a strong propensity
for innovation potentially in the form of new services andbusiness models in the metaverse.
• Hong Kong has a high GDP per capita, suggesting thataffordability of required immersive hardware on average
may be less of a limiting factor on the economic impact ofthe metaverse.

HONG KONG IN NUMBERS

Potential 2035 economic impact of the metaverse:

US$7-14B per year, 1.3-2.4% of GDP
2020 GDP:

368B

US$

Per capita(Constant 2017 US$):55,918US$(high income)Key sectors:

Financialservices

21.2
of GVA

Population:

7.48M
100%

urban

22%

below 25

52%

with basic digital skills

2%%

ICT sector:

Wholesale andretail trade

19.5

Globalinnovation index:of GVA%

Education

9.8
of GVA%

3.5
of GVA%#14/132

unbanked

Sources: World Bank World Development Indicators 2020, Our World in Data 2017, ITU Digital Development Dataset 2019, World Bank Global Findex, UN Data
Note: Hong Kong is not ranked on the EIU Business Environment Ranking and Digital Readiness Index

37

2

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Technology Fundamentals
5G Coverage (%)• Extensive 5G coverage and a high number of active mobile
broadband subscriptions will help propel metaverse applications.
• In e-commerce, digital wallets are expected to overtake credit
cards and comprise 40% of the city’s online transaction value by2025, which bodes well for the adoption of payment rails in
the metaverse.8• Digital skills gap is limiting the uptake of new technologies formore than a third of domestic businesses surveyed by the Hong
Kong Government.9

99
International
Bandwidth perinternet user
100

Fixed Broadband
Subscriptions per
100 inhabitants• Its Smart City Blueprint 2.0 includes initiatives which can beenhanced with metaverse technologies, such as intelligent
transport and traffic management, the use of blockchain
technology to enhance traceability of pharmaceutical products,
and the use of IoT sensors for pest control, among others.10

38

135
58
ICT Goods
Exports (% ofmerchandise trade)

57

ICT Goods Imports(% of merchandise trade)
8. JChartered Public Accountants Australia, “Hong Kong Businesses Embrace Digital Transformation Yet Talent Shortage Bites”, press
release, August 10, 2022.
9. Hong Kong Government, Hong Kong Smart City Blueprint 2.0, 2020, p. 17
10. Korn Ferry, “Hong Kong Must Use Its Competitive Advantage To Close The Skills Gap”, accessed October 3, 2022.

38

Sources: GSMA Mobile Connectivity Index 2021, ITU Digital Development Dashboard 2020, UNCTADStat 2019

Active Mobile Broadband
Subscriptions per 100
inhabitants

Hong Kong
Asia Average (Selectedeconomies)3

3

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Ecosystem Enablers
Digital Skills
Hong Kong is home to one of the world’s leading technologicalecosystems, ranking 2nd out of 64 economies in the IMD World Digital
Competitiveness Ranking second in 2021. However, due to reduced
international labor flow and talent displacement, Hong Kong could facea shortage of 746,000 workers by 2030 due to skill gaps, out of which
8.4% could be in its technology industry.11

The government has been taking action to uplift its digital skills training,
partnering with industrial stakeholders, like IBM, to train vocational
institute students with the latest digital skills like AI and blockchain.12 It
also continues to nurture a pipeline of talent through the Research Talent
Hub and STEM Internship Scheme.13 The Chinese government will also
support Hong Kong’s talent cultivation, in its efforts to develop the city into
an international innovation and technology hub in its 14th Five-Year Plan
(2021-2025).14 Prospects remain bright for metaverse developments as its
educated youth base has shown a fair amount of interest in the metaverse,
which could be a starting point for more talent to flow into championing
metaverse developments.15

Competition within the metaverse
In the technology sphere, the city has a proven track record of
producing unicorn startups, including SenseTime, Lalamove, WeLaband Klook. The strong startup scene is underpinned by the city’s
provision of reliable IT infrastructure, financial ecosystem and its
proximity to large pools of potential customers in Mainland China.16
On the metaverse frontier, Hong Kong-based startup Animoca Brands,
continues to grow its portfolio of household names in the metaverse, which
includes Axie Infinity, Opensea, Yield Guild Games and Dapper Labs (NBATop Shot). Kikitrade, a cryptocurrency investment platform is attempting
to reinvent the experience by making its platform social-driven.17 It has also
partnered with other platforms under the Hong Kong Metaverse Industry
Alliance to promote innovations in the Web 3.0 space, and in the scienceand technology space.18 Whatsquare, an AI chatbot platform, has promised
to facilitate “conversational commerce” in 32 different languages in Asia.19
Combined, these developments contribute to an emerging scene thatwill continue to boost metaverse developments locally, and therefore will
increase competition and players within the metaverse.

11. Korn Ferry, “Hong Kong Must Use Its Competitive Advantage To Close The Skills Gap”, accessed October 3, 2022.
12. Vocational Training Council, "VTC and IBM announce collaboration to promote digital skills training in Hong Kong,” press release, November 30, 2021.
13. Alpha Beta, Transforming Hong Kong Into A Smart City: The Economic Opportunity Of Digital Technologies and Skills, And Google’s Contribution, 2021, p. 7.
14. Cao Qingqing, “Hong Kong On Highway To Become Global Tech And Innovation Hub 25 Years On”, CGTN, July 3, 2022.
15. Hong Kong Federation of Youth Groups, “Tapping Into The Economic Opportunities Of The Metaverse”, accessed October 4, 2022.
16. Greenhouse, Hong Kong Startup Ecosystem Report, 2021.
17. Tech Node Global, “Hong Kong Social Crypto Investing Platform Kikitrade Nets $6 mil Funding Co-led By Appworks and Media Asia”, accessed October 4, 2022.
18. Hexun Hong Kong, “Hong Kong Metaverse Alliance Opening Ceremony”, accessed October 4, 2022.
19. “Whatsquare.” accessed October 3, 2022.

39

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Sectors to Watch
Built Environment
Home to one of the world’s most expensive real-estate markets,
property tycoons and individuals alike are now venturing into virtual
land. The average price for a plot of virtual land on Sandbox rose as highas US$20,000 at one point, and has since fallen to around US$5,000.20
The first phase of a sprawling ‘Mega City’ has been built in the Sandbox,with partners from the Hong Kong property, film, music, entertainment,
professional services, finance, and gaming sectors coming together
to co-create this cultural hub.21 Combining the rich experience in realestate development and entertainment fields, how these collaboratorsdevelop their virtual plots to host events, games, or social hubs will serveas an inspiration for how activities in traditional commercial real estatedevelopments could be moved into the virtual realm.
The built environment sector also stands to benefit from digital twins that
could be created in the metaverse. Midlands Holdings, one of the largest realestate brokerages operating in Hong Kong and China, has utilized digital twins
to create virtual 3D experiences for its entire portfolio of properties.22 TheHKIA has also developed a live 3D digital twin linked to real-time data from
IoT devices that will facilitate “holistic airport management, predictive decision
making and maintenance” for the full life cycle of its buildings.23 In the future,advanced biometrics powered by facial recognition could allow passengers
to move through checkpoints without the need for document checks.24
Metaverse technologies is set to change how firms, customers and users
come to interact with the built environment.

Culture and Art
The world of culture and art is increasingly influenced by metaverse
technologies. As the region’s cultural center, its marquee offerings like Art
Basel Hong Kong, Christie’s Hong Kong Auctions, as well as West Kowloon
Cultural District and the M+ Museum are adapting to the rise of digital art in
the metaverse.25 The Hong Kong Museum of Art and the Affordable Art Fair
have included digital art within their line-up.26
Attempts to integrate developments in the metaverse extends to theadjacent world of fashion and luxury and Hong Kong consumers are shifting
consumption towards e-commerce.27 For example, I.T., a leading multi-brandfashion house in Hong Kong, recently commissioned digital fashion house
The Fabricant to represent an entire collection solely in digital form.28 Throughthis move to embrace AR and VR technologies in their business model,
customers of I.T could interact with shoes and apparel through web browsers
and VR headsets. The metaverse is a space conducive to the vigor of thecreative industry, and developments in metaverse technologies will only
present further opportunities for the industry to experiment and innovate.

20. Xinmei Shen, “Animoca Brands launches new season for The Sandbox amid plunging metaverse real estate prices”, South China Morning Post, August 19, 2022.
21. TechNode Global, ”The Sandbox expands cultural hub in the metaverse with major Hong Kong partners unveiled in Mega City 2”, accessed October 3, 2022.
22. Matterport, “China and Hong Kong-Based Residential Real Estate Company Midland Holdings To Digitalize Its Property Portfolio With Matterport”, press release,
February 14, 2022
23. Hong Kong International Airport, “AAHK Sustainability Report 2018/19: Smart Airport”, accessed October 3, 2022

40

24. ibid
25. Common Affairs, “Hong Kong Heads Into The Future With Digital Art”, accessed October 4, 2022
26. Sue Hua, “Disruption, Digitalization and Connectivity: Asia’s Art Market in Transformation,” Arts 2022. 11, no.3 (2022).
27. Hong Kong Business, “Treat Yourself: Hong Kong’s Wealthy Buy More Luxury Items After COVID”, accessed October 3, 2022
28. The Fabricant, “I.T Hong Kong And The Fabricant Create Luxury Retail Game Changer”, accessed October 3, 2022

The Metaverse in Asia | Strategies for Accelerating Economic Impact

India
Potential 2035 economic impact of the metaverse

US$79-148

B per year

41

The Metaverse in Asia | Strategies for Accelerating Economic Impact

India
Set to become the third largest economy by 2030,1
India has a population that is young, digitally connected,
and ready for the metaverse. With over half of its
population under the age of 30, the country produces
the highest number of STEM graduates globally.2 It is
demographically well-positioned to contribute digitallabor to the metaverse, especially since it is already ago-to destination for IT offshoring globally and is evolving
rapidly into a product development hub.3
While the country has no shortage of labor, brain drain
has been a growing concern.

Two in three Indian emigrants are highly educated,4 andthe development of the metaverse in India may help toretain talent by providing more opportunities for digitallyskilled Indians. Beyond its demographics, attitudes of its
population towards the metaverse are more optimistic
than the rest of the world. Large Indian corporations
such as Infosys and Tech Mahindra have set up
metaverse subsidiaries.5 Further, India’s unique cultural
propositions in language, religion, and entertainment
can give its metaverse offerings a distinct flavor.

However, to reap the full benefits, existing challenges
such as technology equity will first need to beaddressed so that the full potential of the metaverse
can be harnessed in India.
In this case, India’s large population will prove to beboth a boon and a bane – India will have to encourage
its technologically advanced population to enter the
metaverse, while ensuring that such progress includes
all economic and social groups.

we're thinking about what the next generation is going to look like in“ Whenterms of where all these creators and developers are going to come from,
who are going to really build the foundation of the metaverse, I think it's
just obvious that India is going to be a huge part of that.

“Mark Zuckerberg, Co-founder, Chairman and CEO of Meta Platforms at Fuel for India 2021, December 2021

1. Yogima Seth Sharma, “India can be 3rd largest economy by 2030 on back of four big reforms: Arvind Panagariya,” The Economic Times, February 25, 2022.
2. Niall McCarthy, “The Countries With The Most STEM Graduates,” Forbes, February 2, 2017.
3. Ananya Bhattacharya, “Brain drain: Two in three Indian emigrants are highly educated,” Scroll.in, April 10, 2022.
4. Ibid
5. Ayushman Baruah, “IT firms tap nascent metaverse to help clients explore its potential,” Mint, October 19, 2022.

42

1

1

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Macroeconomic Determinants• Services-led economy (55.0% of GVA), with the three largest
sectoral contributors to India’s economy being agriculture(18.4% of GVA), followed by manufacturing (14.7% of GVA),
and wholesale and retail (11.3% of GVA).
• GDP per capita stood at US$6,187, suggesting that theaffordability of required immersive hardware on average
may be a limiting factor for a significant segment of the
population to enter the metaverse.
• India received a record amount of VC investments in 2021,
reaching US$38.5 billion. The record number of investments
have fueled India’s vibrant start-up ecosystem which is
US$400 billion in valuation with 50,000 active start-ups
including 107 unicorns.6 Notably, consumer technology,
fintech, and software as a service (SaaS) accounted for 75%
of all VC investments by value. The composition of its vibrantecosystem signify an innovation environment aligned with themetaverse’s development.7

6. Invest India, "The Indian Unicorn Landscape," accessed October 25, 2022.
7. Bain & Company, India Venture Capital Report 2022, 2022.

INDIA IN NUMBERS

Potential 2035 economic impact of the metaverse:

US$79-148B per year, 1.3-2.4% of GDP
2020 GDP:

2.5T

US$

Per capita(Constant 2017 US$):

6,187

US$
(low middle income)Key sectors:
Agriculture,
forestry and fishing

18.4
of GVA%ICT sector:
Manufacturing

14.7
of GVA%

Wholesale andretail trade

11.3
of GVA%

6.1
of GVA%

Population:

1.38B
46%

urban

35%

below 25

22%

unbanked

Sources: World Bank World Development Indicators 2020, Our World in Data 2017, ITU Digital Development
Dataset 2019, World Bank Global Findex, UN Data

Globalinnovation index:#40/132

EIU businessenvironment ranking:#57/99

Digitalreadiness index:#101/141

43

2

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Technology Fundamentals• In 2020, smartphone penetration rate was approximately 43.5%.
However, given its large population, the volume of smartphone users
is high. Current predictions indicate that there will be 1 billion Indian
smartphone users by 2026.8 As the second largest smartphonemarket in the world, early iterations of the metaverse accessible via
smartphone will find a large audience in India.

• There is a digital divide in India in the usage of the internet and accessto digital infrastructure based on gender, rural-urban residence, caste,
and age.9 To that end, India also launched the world’s largest rural
broadband connectivity program, BharatNet, which aims to extend
fiber connection to all villages in India by 2025.10 However, beyond theurban-rural divide, more will need to be done to bridge other areas ofthe digital divide (for example, in gender) so that the full potential ofIndia's large population can be harnessed for the metaverse.

5G Coverage (%)

International
Bandwidth perinternet user

Fixed Broadband
Subscriptions per
100 inhabitants
54
0

2

2

• Real-time digital payments in India make up 40% of all suchtransactions globally, which is the highest in the world. The successof its fintech ecosystem in encouraging mass adoption can be
attributed to a combination of low cost internet data, high smartphone
penetration rate, and India's Unified Payment Interface (UPI).1153
11
Active Mobile Broadband
Subscriptions per 100
inhabitants

ICT Goods
Exports (% ofmerchandise trade)

ICT Goods Imports(% of merchandise trade)
8. Deloitte, Technology, Media, and Telecommunications – Predictions 2022, 2022, p. 4.
9. Felix Richter, “The World’s Largest Smartphone Markets,” Statista, March 1, 2022.
10. Wire & Cable India, “Six Lakh Villages to be Fiberised by 2025: Devusinh Chauhan,” February 9, 2022.
11. Subrata Panda, “India leads the world in real-time digital payments, says PM Modi,” Business Standard, August 15, 2022.

44

Sources: GSMA Mobile Connectivity Index 2021, ITU Digital Development Dashboard 2020, UNCTADStat 2019

India
Asia Average (Selectedeconomies)3

3

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Ecosystem Enablers

Social acceptance
Enthusiasm for the metaverse exceeds the global average in India.
80% were familiar with the metaverse, above the global average, and
75% of respondents expressed positive feelings about engaging withextended reality.12 The enthusiasm and familiarity with the metaverse
will support the development and social acceptance of the metaverse in
India. Corporations are keen to invest in the metaverse, and consumers
are excited to use related products. Already, India is making headway
into the metaverse through their first metaverse influencer,13 the firstmetaverse wedding,14 the world's first food metaverse,15 and several
Indian production houses have used the metaverse to enable next
generation entertainment.

Digital skills
With 46% of its population under age 25,16 India can provide thenecessary manpower to fuel the growth of the metaverse. Within thisyoung population, 32% choose STEM tertiary education programs, andthe country produced the most STEM graduates globally with 2.7 million
graduates in 2018.17 However, more needs to be done to upskill its broader
population – 95% of workers in India reported that more digital skills
are needed to cope with changes in their jobs due to COVID-19.18 The
development of the metaverse could create new opportunities that benefit
its economy and retain talent within its shores.

Security and privacy
On the cybersecurity front, India is one of the first countries to explicitly
mention the metaverse in its policy considerations on bullying andsexual abuse.19 India’s upcoming digital regulatory framework, theDigital India Act (DIA), will look at crimes in the metaverse that spreadmisinformation or incite violence.20
Nevertheless, some observers have expressed concerns over the
potential scope of its censorship laws.21 Such healthy debates are to
be expected as India moves towards the complex task of regulating
the metaverse ahead of its peers. Complementary to this, dataprotection laws will also have to quickly catch up. As the world’s fastestgrowing market for new internet users, India had a record number ofcybersecurity incidents in the recent years with the exponential growthof personal data.22

12. Ipsos, How the world sees the metaverse and extended reality, 2022.
13. Bayar Jain, “Into the metaverse with Kyra, India’s first meta influencer,” Lifestyle Asia, September 1, 2022.
14. WION, “In a first, India couple to host wedding reception in Metaverse,” January 18, 2022.
15. Rajiv Singh, "OneRare: Meet the world's first food metaverse", Forbes India, October 19, 2022.
16. Mint, "More than 50% of India's population 25 yrs or older: Survey," accessed October 19, 2022.
17. Katharina Buchholz, “Where Most Students Choose STEM Degrees,” Statista, September 16, 2020.
18. Amazon, “95% of India workers say they need more digital skills to adapt to job changes due to COVID_19, but less than half of organizations have a training plan in place,” press release, March 22, 2022.
19. Vallari Sanzgiri, “MeitY’s Digital India Act Due In Winter Session, Says Report: OTT, Metaverse In Ambit,” Medianama, August 17, 2022.
20. Sachin Dave, "Digital India Act to police social media and OTT platforms", Economic Times, October 19, 2022.
21. Ibid.
22. Economic Times, “India records 36.29 lakh cyber security incidents since 2019 till June this year,” July 19, 2022.

45

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Sectors to Watch
Digital Payments
Digital payments will be a crucial component of the metaverse to trade
digital assets. India could feature strongly in this development, as it has
the highest rates of real-time digital payments in the world.23 This is driven
by the digital infrastructure developed through the government-led India
Stack which sought to bring its population into the digital age. The India
Stack involves projects such as Unified Payments Interface, the world’s
largest real-time digital payment system, as well as Aadhar, the world’s
largest biometric ID system. Through such a digital infrastructure, India
is making massive leaps in financial inclusion. Improvements in digital
infrastructure have meant that significant progress in increasing thenumber of adults with bank accounts was made in just 7 years.24
Given this existing infrastructure, if India can build on the existing
India Stack into the metaverse’s digital components such as blockchain
and NFTs, it should be able to rapidly create scale given their large
population. To begin, the government released a national blockchain
strategy in December 2021. The government is also considering a Digital
Rupee, to be issued by the Reserve Bank of India from 2022-23.25 With
more regulatory certainty and a clear legal framework for Virtual Digital
Assets, India's mature digital payments systems can be leveraged toorchestrate the economic infrastructure of the metaverse.

Gaming and Entertainment
India is the world’s largest mobile gaming market in terms of app
downloads.26 The gaming market in India is anticipated to more than triple
to US$7 billion by 2026,27 a promising development as games are an entry
point into the metaverse.
Already, Indian gaming companies such as Alter.game and The
Spartan Group have begun to venture into the metaverse.28 Beyond
gaming, India is also making strides in the film industry – Pooja
Entertainment bought its first virtual plot in the metaverse and plansto create immersive and life-like experiences for viewers.29 India media
conglomerate, Zee Entertainment, also welcomed its recruits via themetaverse for the first time and plans to introduce NFTs from TV
shows, movies, music, and original web series.30 Through entertainment
platforms such as gaming and films, it could make the metaverse moreaccessible to many who already engage with these platforms.

23. Subrata Panda, “India leads the world in real-time digital payments, says PM Modi,” Business Standard, August 15, 2022.
24. Aaryaman Vir and Rahul Sanghi, “The Internet Country,” Tigerfeathers, January 15, 2021.
25. Ritwija Darbari, “India could have a key role to play in building the metaverse. Here’s why,” World Economic Forum, March 7, 2022.
26. Sensor Tower, The State of Mobile Gaming 2022, 2022, p. 11.
27. Lumikai, “Leveling Up: India’s Gaming Market 2021,” November 20, 2021.
28. Gulf News Report, “Spartan Group pioneers the technological adoption in the Indian online gaming industry,” Gulf News, June 21, 2022.
29. Economic Times, “Bollywood's metaverse moment: Pooja Entertainment claims digital land, Deepika & Kamal Haasan venture into VR,” February 15, 2022.
30. Hemant Kashyap, “ZEE To Dip Toes Into The Metaverse With NFTs From Movies, TV Shows, Web Series,” Inc42, May 21, 2022.

46

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Indonesia
Potential 2035 economic impact of the metaverse

US$28-52

B per year

47

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Indonesia
As the next facet of the internet, the metaverse can fuel Indonesia’s US$70
billion internet economy growth engine.1 Recording a staggering 49% growthin 2020, the country’s internet economy is projected to reach US$146
billion by 2025.2 President Jokowi has championed the digital economy asa key pillar to propel Indonesia into the top 10 global economies by 2030.3
The Digital Indonesia Road Map 2021–2024 seeks to accelerate this digitaltransition by laying out four strategic areas of focus – digital infrastructure,
government, economy and citizens.4

Indonesia seeks to leverage the metaverse to help micro, small and medium
enterprises (MSMEs) grow. If successful, this would quickly catalyze broadbased economic benefits. MSMEs currently employ 97% of Indonesia’s
workforce5 and contribute to over 60% of the national GDP.6 PT TelkomIndonesia, the state carrier, has been tasked by the government to develop
a metaverse for local MSMEs to compete with larger foreign businesses.7
MSMEs are likely welcoming of such platforms having experienced the valueof digital merchandising, which kept close to 80% of the MSMEs surveyed
open during the pandemic.8

let other countries create a new world with their own payment system,“ Don’twhile the market remains in Indonesia. Then we will regret it.

“

Erick Thohir, Indonesia’s Minister of State-Owned Enterprises, at the launch of Indonesian metaverse platform “metaNesia”, Aug 2022

1. Bain & Company, Temasek and Google, e-Conomy SEA 2021, 2021.
2. Asia Nikkei, “Indonesia Seeks Industry Upgrades to Join World’s Top 10 Economies”, accessed October 3, 2022.
3. Antara, “Minister Outlines Priorities Within Digital Indonesia Road Map,” Antara News, March 23, 2022.
4. World Economic Forum, “How Digitalization is Accelerating the Growth of MSMEs in Indonesia,” accessed October 3, 2022.
5. Alpha Beta, Skills For the Future: Capturing the Economic Opportunity of Digital Skills in Indonesia, 2021.
6. Business Times, “Indonesia Launches Owns Metaverse to Promote its Small Businesses,” August 1, 2022.
7. World Economic Forum, Why e-Commerce is Key to Indonesia’s Small Businesses, accessed October 3, 2022.
8. Ibid.

48

1

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Macroeconomic Determinants• With one of the largest youth populations in the world
behind India and China, Indonesia’s next generation stands
to gain from the metaverse.
• Manufacturing and raw resources make up the bulk ofIndonesia’s economy, with the three largest sectoral
contributors to Indonesia's economy being manufacturing(20.6% of GVA), followed by agriculture, forestry andfishing (14.2%) and wholesale and retail trade (13.4%).
Manufacturing is one of the first sectors expected to be
impacted by the metaverse.
• As a lower middle income country with a GDP per capita of
US$11,446 in 2020, affordability may be an issue for some ofits citizens.
• Indonesia is ranked 75th in the world on the Global
Innovation Index 2022, lagging behind its Asian peers.
• It has produced 11 unicorn start-ups, one of the mostamongst Southeast Asian countries.9 This constitutes 31% ofSoutheast Asia’s share of unicorns.

9. Choo Yun Ting, More ASEAN Start-Ups Become Unicorn Thanks to Robust Funding, Rising Middle Class: Report, Straits Times,
October 21, 2021.

INDONESIA IN NUMBERS

Potential 2035 economic impact of the metaverse:

US$28-52B per year, 1.3-2.4% of GDP
2020 GDP:

1.03T

US$

Per capita(Constant 2017 US$):11,446US$(low middle income)Key sectors:
Manufacturing

20.6
of GVA%ICT sector:

Agriculture,
forestry and fishing

14.2
of GVA%

Wholesale &Retail Trade

13.4
of GVA%

4.7
of GVA%

Population:

274M
44%

below 25

48%

unbanked

Sources: World Bank World Development Indicators 2020, Our World in Data 2017, ITU Digital Development
Dataset 2019, World Bank Global Findex, UN Data

Globalinnovation index:#75/132

EIU businessenvironment ranking:#54/99

Digitalreadiness index:#73/141

49

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Technology Fundamentals
5G Coverage (%)• Indonesia is a mobile-first nation, and has the fourth mostnumber of smartphone users globally.10• Indonesia is expected to lead Asia in overall IT spending overthe next four years, reaching US$6 billion by 2024.11• The establishment of physical cloud infrastructure in Indonesia
by global players like Alibaba, Google and Amazon will reduce
latency of connection.12

Fixed Broadband
Subscriptions per
100 inhabitants

International
Bandwidth perinternet user

• The adoption of digital payments is currently lagging behindthe other selected Asia economies.13

61
5
4
3
9
104
Active Mobile Broadband
Subscriptions per 100
inhabitants

ICT Goods
Exports (% ofmerchandise trade)

ICT Goods Imports(% of merchandise trade)
10. Statista, ”Number of Smartphone Users by Leading Countries in 2021", accessed September 29, 2022.
11. Hidayat Liu & William Bakara, “The Technology Trends that Could Turbocharge Indonesia’s Economy”, McKinsey & Company, April 26, 2022.
12. ibid
13. World Bank Global Findex, “Received Digital Payments (% Age 15+),” accessed September 29, 2022.

50

Sources: GSMA Mobile Connectivity Index 2021, ITU Digital Development Dashboard 2020, UNCTADStat 2019

Indonesia
Asia Average (Selectedeconomies)3

3

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Ecosystem Enablers

Digital Skills
As part of the Digital Indonesia Roadmap, Indonesia aims to provide 12.5
million Indonesians with trainings in basic digital skills, digital culture, digital
ethics, and digital safety, and 100,000 workers with intermediate digital skills
in areas such as cloud computing, artificial intelligence, the internet of things,
cybersecurity, and big data analytics.14 These create the foundations forIndonesia to realize its economic potential in the metaverse. But Indonesia
may need much more to sustain its digital economy growth, with the WorldBank estimating that 9 million additional ICT workers are needed by 2030.15
Support from multinationals like Google, Huawei and ZTE could fill this gap.
Huawei has pledged to contribute to Indonesia’s digital upskilling efforts,
and is planning to train 100,000 digital workers to be competent in cloudcomputing and 5G in the next 5 years.16

A digitally competent populace will provide growth impetus for Indonesia’s
MSMEs, where human capital development is a key barrier for growth.17
The government has helped to onboard 10.2 million MSMEs onto digitalplatforms under the #BanggaBuatanIndonesia campaign (Proudly Madein Indonesia).18 Further growth potential in the metaverse could entice thebuild-up of digital skills amongst its talent and businesses.

Accessibility
Indonesia’s vast geography spans across thousands of islands, which could
pose a hurdle to the deployment of metaverse technologies requiring
fiber optic and broadband cables, and worsen the digital divide.19 The
Palapa Ring Project, which sought to extend the reach of its fiber optic
and wireless network nationwide, was completed in 2019. It has helped tobridge internet connectivity and reduced the inequality in mobile network
experience across the archipelago, especially compared to Java, Indonesia’s
political and economic center.20 The average 4G availability and download
speed experience has improved by 12% and 59% respectively across all
regions since 2018.21
Indonesia’s WIR Group has its sights on creating a metaverse platform tobridge the link between businesses and local consumers, many of whom
reside in the country’s rural areas with limited access to digital technology
and financial services.22 The platform is anticipated to enable consumers inTier 2 to 3 cities and suburban retail stores to create digital avatars throughits kiosks.
In 2019, 94 million adults across Indonesia did not have access to mobileinternet.23 The expansion of digital infrastructure and platforms will allow
Indonesians to have more equitable access to the economic opportunities
in the metaverse.

14. International Trade Administration, Indonesia: Digital Economy Opportunities, U.S. Department of Commerce, December 9, 2021.
15. ibid
16. Asia Business Law Journal, “Forbidden not Forgotten,” accessed September 29, 2022.
17. Camilla Holmemo, "Human capital development is key to Indonesia’s future," World Bank Blogs, September 26, 2019.
18. The Jakarta Post, "Govt aims for 10 million MSMEs to go digital by year end," accessed September 29, 2022.
19. Carnegie, Endowment for International Peace, “Localization and China’s Tech Success in Indonesia,” accessed September 29, 2022..
20. Open Signal, ”Palapa Ring has Successfully Improved Mobile Connectivity in Remote Indonesian Islands,“ accessed September 29, 2022..
21. Ibid.
22. Ardi Wirdana, ”Indonesia’s WIR rides metaverse IPO success, but revenue stream raises questions,” accessed September 29, 2022.
23. International Trade Administration, Indonesia: Digital Economy Opportunities, U.S. Department of Commerce, December 9, 2021.

51

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Sectors to Watch
Start-Up
Indonesia has emerged as one of the foremost emerging start-up
ecosystems globally, with Jakarta ranked 3rd on the Global Startup
Ecosystem Report 2021.24 The country has produced 11 unicorns, one of
the most amongst Southeast Asian countries.25 Although still maturing,
Indonesia also boasts one of the largest venture capital markets inSoutheast Asia.26 The momentum kickstarted in Jakarta has also spread toother cities, such as Yogyakarta and Tasikmalaya.27
Ajaib, an online brokerage platform, has adopted Bored Ape Yacht ClubNFT #2831 as its mascot to support Indonesia’s adoption of metaverse
and Web 3.0 technologies.28 The newly-crowned unicorn intends to tap on
the Bored Ape to educate the public about crypto assets and blockchain
technology.29 Good Games Guild, a budding metaverse startup, has its sights
set on creating the largest virtual world economy by incentivizing greater
participation in play-to-earn games.30 It offers scholarships to sponsor playto-earn gamers, and builds tools to enhance the experience of gaming in the
metaverse.31 Indonesian NFT project, Karafuru NFT, and USS Feed launched
the Karafuru Carnival in Jakarta in April 2022. The offline festival featured
local NFT projects to the broader public, making it more accessible for alarger audience.32 Overall, the metaverse is sure to have an impact on thedevelopment of the startup ecosystem in Indonesia.

Finance
Islamic finance, or Shariah-compliant financing (SCF) has grown at an
estimated compound annual growth rate of 17% since 2009.33 Being oneof the fastest growing sectors in the global financial ecosystem, it has
amassed US$1.9 trillion in total assets since 2015. Catering to the largest
Muslim population globally, the Jokowi administration has sought toadvance the growth of SCF within Indonesia.
Indonesia could play an influential role in how the financial rails of themetaverse are developed in a Shariah-compliant manner that addresses
concerns with cryptocurrencies. Bank Syariah Indonesia, formed from a2021 merger of three state-owned banks, has inked an agreement with the
WIR Group to develop virtual banking services in the metaverse.34 Despite
the cryptocurrency ban by Indonesia's National Ulema Council, observers,
observers have identified the greatest potential in economic transactionsin the Islamic metaverse.35 Seizing on the burgeoning opportunities inIndonesia, IBF Net, a blockchain company, has set-up a center of excellencein Jakarta to study and develop possibilities within an Islamic metaverse
economy.33 Bank Indonesia, Indonesia's central bank, is also planning toissue a white paper on Central Bank Digital Currency (CBDC) developmentin end-2022.37

24. Startup Genome, The Global Startup Ecosystem Report 2021, 2021.
25. Choo Yun Ting, “More ASEAN Start-Ups Become Unicorn Thanks to Robust Funding, Rising Middle Class: Report,” Straits Times, October 21, 2021.
26. Vertex Holdings,”Venture Capital Landscape in Southeast Asia,“ accessed August 10, 2022. 32
27. KrAsia, ”Indonesia’s Innovative Startups are the Catalyst for Increasing Investments,” accessed September 29, 2022.
28. TechinAsia, ”Indonesia’s Ajaib introduces Bored Ape NFT as Mascot,” accessed September 29, 2022.
29. Jakarta Daily, “Indonesian Trading App Ajaib Sets ‘Bored Ape’ NFT as its Mascot,” accessed September 29, 2022..
30. Dunia Games, ”Good Games Guild, an Indonesian Startup Company that Brings the Future to Gaming and Metaverse", accessed September 29, 2022.
31. Good Games Guild, “Whitepaper V.1,” accessed October 5, 2022.

52

32. Cision, “Karafuru NFT and USS Feed Presents the Indonesia's Biggest NFT Real-Life Experience Project,” PR
Newswire, April 1, 2022.
33. Asian Development Bank, ”Islamic Finance," accessed October 5, 2022.
34. Technology for Indonesia, ”Cooperating With WIR Group, Bank Syariah Indonesia Develops Metaverse Service",
accessed October 5, 2022.
35. Zawya, ”IBF Net’s COE to Configure Islamic Meta Economy,“ accessed October 5, 2022.
36. iFN Fintech, ”IBF Eyes Islamic Metaverse; Sets Up Indonesian COE,“ accessed October 5, 2022.
37. Bank Indonesia, “Bersiap kembangkan CBDC, BI segara rilis white paper,” press release, July 28, 2022.

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Japan
Potential 2035 economic impact of the metaverse

US$87-165

B per year

53

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Japan
With the metaverse, Japan will be able to tap on its
strong heritage in digital craftsmanship and technicalprowess to benefit a broad range of sectors at awider scale.
PM Fumio Kishida's administration's plan to bring
Japan into the digital era is highly compatible withthe development of the metaverse: developing afacilitative environment for the promotion of Web
3.0, including blockchains, NFTs and the metaverse,
upskilling digital talent, investing in digital technology,
increasing R&D in AI and quantum technologies,
creating a start-up boom, and reviving Japan as aninternational financial center.1

This will mark a distinct shift beyond gamingand entertainment, which Japan has establishedthemselves as a leader in.
As one of the world’s first gaming markets andcurrently the third largest,2 after China and the US,
gaming in Japan has become more than a part ofthe economy – it has assimilated into culture. Long
before 'metaverse' came into common parlance,
Japan captured the popular imagination with the
fantasy worlds of manga, anime and video games.
These are now a source of inspiration for many
virtual worlds and characters. The video gameindustry and gaming consoles would not be what

they are today if not for Japan. Today, Japan’s culturalappeal remains prominent, with spin-offs like
Pokemon Go remaining the highest grossing mobile
AR game in the world.3 Compared to the emphasis
on industrial uses in the US, early explorations of VR
in Japan took on a different trajectory to become atool for renegotiating personal space and a portal to“other world” fantasies.4
Early experiments in metaverse technologies aredemonstrating how Japan can capitalize its strong
cultural and technological capital to provide newofferings in retail, tourism and many other sectors.
The ability to do this at scale will translate to wider
economic and social benefits.

will develop an environment for the promotion of web 3.0,
“ Japansuch as blockchain, NFTs and the metaverse, and achieve a society“that facilitates the birth of new services.

Fumio Kishida, Prime Minister of Japan, at the Guildhall in London, May 2022

1. Fumio Kishida, “Speech on the New Form of Capitalism and Why Japan is a “Buy", accessed September 29, 2022.
2. Newzoo, Global Games Market Report, 2022.
3. SensorTower, “Pokemon GO Catches $6b in Lifetime Player Spending,” accessed September 29, 2022.
4. Paul Roquet, The Immersive Enclosure: Virtual Reality in Japan (New York: Columbia University Press, 2022).

54

1

1

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Macroeconomic Determinants• The metaverse will have wide ramifications across sectors inJapan, including business-to-consumer (B2C) and business-tobusiness (B2B) industries. Japan is a service-based economy(70.0% of GVA), with the three largest sectoral contributors toJapan's economy being manufacturing (20.5% of GVA), followed
by wholesale and retail (12.7%), and real estate activities (11.8%).

• Ranked 13th in the world on the Global Innovation Index 2022,
which suggests that Japan has a strong propensity for innovation.
• Opportunity to increase high value-added cultural and creative
exports through the metaverse, reducing the reliance on
domestic consumption as demographic challenges increase.
Japan’s overseas anime sales grossed close to US$11b in 2020,5
accounting for half the market.
• GDP per capita stood at US$39,935, suggesting that affordabilityof required immersive hardware on average may be less of alimiting factor on the economic impact of the metaverse.

JAPAN IN NUMBE R S

Potential 2035 economic impact of the metaverse:

US$87-165B per year, 1.3-2.4% of GDP
2020 GDP:

4.38T

US$

Per capita(Constant 2017 US$):Key sectors:

US$(high income)Manufacturing

39,935of GVA%

Wholesale &Retail Trade

Real Estate

12.7
of GVA%

11.8
of GVA%

4.9
of GVA%

Population:

126M
91%

urban

22%

below 2560%

with basic digital skills

2%
5. Association of Japanese Animations, Anime Industry Report 2020, 2020.

20.5

ICT sector:

unbanked

Sources: World Bank World Development Indicators 2020, Our World in Data 2017, ITU Digital Development
Dataset 2019, World Bank Global Findex, Japan National Statistics

Globalinnovation index:#13/132

EIU businessenvironment ranking:#19/99

Digitalreadiness index:#16/14155

2

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Technology Fundamentals• The country has deep capabilities across the technology stack inmetaverse-related technologies with Sharp as the single biggest
supplier of VR displays for Meta Quest 2.6 In addition, Sony has
both hardware and software capabilities, with its Playstation
operating system holding a 65% share of the game consolemarket.7 Tokyo also houses the largest cluster of data centers inAsia, primarily to meet local computing demand.8• Japan aims to create a world-class digital infrastructure as partof its drive for digital transformation in both the public andprivate sector, including stimulating new services in Web3.0 andthe metaverse. Japan is making steady progress in deploying
metaverse-ready networks including 5G and WiFi 6E technologies.9

5G Coverage (%)

47• Besides biotechnology, three of the five fields that will receive more
R&D funding from the Kishida administration have direct relevancefor the metaverse – AI, quantum technologies and digital. A fourth– decarbonization – can improve the sustainability of the energyintensive metaverse.
• More online activity, including metaverse applications, may
drive adoption of digital payments, which make up only 20% oftransactions today.10

61International
Bandwidth perinternet user

34

9
14
202

ICT Goods
Exports (% ofmerchandise trade)

ICT Goods Imports(% of merchandise trade)
6. Lauly Li and Cheng Ting-Fang, “Japan’s Sharp bets on VR hardware as ‘metaverse’ takes off”, Nikkei Asia, March 8, 2022.
7. Statista, Market Share of Game Console Operating Systems Worldwide, 2021.
8. Peter Judge, “Navigating the insular growth of Japan’s data center sector”, Data Center Dynamics, October 5, 2021.
9. Fumio Kishida, “Speech on the New Form of Capitalism and Why Japan is a “Buy", accessed September 29, 2022.
10. Bloomberg, “Cash-loving Japan Shifts from Banknotes in Boost for Lenders”, accessed September 29,

56

Fixed Broadband
Subscriptions per
100 inhabitants

Sources: GSMA Mobile Connectivity Index 2021, ITU Digital Development Dashboard 2020, UNCTADStat 2019

Active Mobile Broadband
Subscriptions per 100
inhabitants

Japan
Asia Average (Selectedeconomies)3

3

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Ecosystem Enablers
Digital Skills
Investing in people is a demographic imperative. Workers across sectorsof the Japanese economy whose jobs require digital skills contribute
US$785 billion to Japan’s GDP, or 16%. Interestingly, 75% of this value isderived from the non-technology sector, signaling the wider economic
benefits of digital upskilling.11

Already, Japan’s government has shifted vocational training to focus
on digital skills and has plans to offer digital training programmes forJapanese workers through universities and technical schools. Educators like
University of Tokyo12 and N and S High Schools13 have also begun offering
their courses within the metaverse. Interest around the metaverse could
attract further talent into the sector, particularly from overseas as Japan
attempts to diversify its talent pool.

Competition within the metaverse
A thriving start-up ecosystem will drive the creative destruction needed formetaverse innovation. Japan’s fledgling funding ecosystem (both early andlate stage)14 has yet to catalyze a sizeable number of unicorns relative toJapan’s GDP.15
PM Kishida seeks to “create the next start-up boom in Japan”, and this
could well be in the metaverse space in line with the push towards Japan’s
digital era. Startups like Cluster Inc and HIKKY are creating immersive
environments where creators, businesses and users can co-participate.
For instance, Cluster hosted the world’s first-ever VR music event in 2017,
where more than 5,000 people participated.16
There is room for more Japanese businesses to adapt and participate ina more technologically disruptive future, as Japan ranks 53rd out of 63
countries for business agility in IMD’s Digital Competitiveness Index.

11. AlphaBeta, The Economic Opportunity of Digital Skilling in Japan, 2020.
12. Brian Quarmby, "The University of Tokyo to offer courses in the Metaverse", Cointelegraph, October 19, 2022.
13. Asaki Ogawa, "Distance-learning high school holds classes in the metaverse," Japan News, October 19, 2022.
14. Tokyo Development Learning Centre, Boosting Japan’s Startup Ecosystem: Challenges, Opportunities and Recommendations, 2021.
15. Trevor Tan, “Singaporeans spend more time playing video games than South Koreans, Japanese: Survey”, Straits Times, March 22, 2019.
16. Masuru Ikeda, "Japan's Cluster secures $3.6M series B to develop own VR live show content," Bridge, October 19, 2022.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Sectors to Watch
Tourism
Prior to the pandemic, Japan was ranked the third most popular tourist
destination in Asia.17 The pandemic was a significant blow to its tourism
industry, particularly with the Tokyo Olympics being held in its midst.
This prompted experimentation with metaverse solutions, turning crisis
into opportunity.
As part of the Tokyo Paralympics, a parallel virtual experience – thePegasus Dream Tour – enabled spectators around the world to virtuallyengage in Paralympic sports and festivities.18 Tokyo Shibuya’s 2021
Halloween celebration allowed this annual tradition to continue in the
midst of social distancing restrictions.19 ANA Airways is also developing
an interactive virtual platform ANA NEO.20 Through partnering with
tourism agencies around the world, users can visit recreations offamous tourist sites and enjoy new shopping experiences.
Even as Japan’s borders open, these early experiments pave the way forinnovative travel experiences, and access to new groups of travelers –virtual or physical.

Retail and e-commerce
The metaverse era of the internet offers Japan an opportunity to unlock
the cultural capital it has built up since the 1980s-90s to influence othersectors beyond gaming and entertainment. One adjacent sector poised
to benefit is retail and e-commerce. An example is former Final Fantasy
XV Game Director Hajime Tabata,21 who is applying his experience as apioneer in creating user-centric experiences with the popular role-playing
game through his start-up JP Games. Japanese retail companies such as
Isetan and Daimaru Matsuzakaya have been utilizing virtual reality and livecommerce to promote and sell their products.22
Another popular trend that emerged in Japan in the mid-2010s is VTubers(or virtual Youtubers); digitally animated characters that can play similarroles to human celebrities like performing concerts and pitching products.
VTubers have generated widespread attention, clinching over 1.5 billion
in monthly viewership and raking in millions.23 Brands are discovering thepower of VTubers through livestreaming and advertising, not only in Japan,
but across the region too.24

17. Global Economy, “World Tourism Organization, Tourist Arrivals 2019,” accessed October 5, 2022.
18. Japan Forward, "Inside the 'Pegasus Dream Tour': The World's First Paralympics Video Game with Live Concerts," accessed October 19, 2022.
19. Kaila Imada, "Shibuya's famous Halloween parade is going virtual this year," TimeOut, October 19, 2022.
20. ANA Group, “ANA Holdings and JP Games Partner to Launch ANA NEO, Introduces “SKY WHALE” Virtual Platform,” accessed October 5, 2022.
21. Alibaba Cloud Youtube Channel, “Construct your Metaverse with Alibaba Cloud," accessed October 5, 2022.
22. AR VR News, “Japanese department store Isetan to provide VR shopping experience”, accessed October 5, 2022.
23. Anime News Network, “Virtual Youtuber Views Grew to Over 1.5 Billion Views Per Month by Oct 2020,” accessed October 5, 2022.
24. Jada Nagumo, “Japan's virtual celebrities rise to threaten the real ones,” Nikkei Asia, January 19, 2020.

58

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Mainland China
Potential 2035 economic impact of the metaverse

US$456-862B per year

59

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Mainland China
Mainland China’s deep technology andmanufacturing verticals are shaping a metaverse
with its own Chinese characteristics. The state
wants the trajectory of metaverse developments tocomplement the real economy,1 in line with Presidentof the People's Republic of China Xi Jinping's
declaration that “the real economy is the very
foundation of an economy… and an important pillarof national prosperity”.2
Beijing has announced a two-year metaverse
innovation and development plan (2022 – 2024)
to develop the technological infrastructure andpromote its use in various fields, including educationand tourism.3 Shanghai included the metaverse inits 14th five-year plan, encouraging its applicationin areas such as public services, business, social
entertainment and industrial manufacturing,4 andHomegrown technology giants are making metaverse
investments through both acquisitions and research.
Bytedance acquired VR headset company, Pico6 andvirtual social platform, PoliQ.7 Alibaba has invested
at least US$1 billion in AR and VR startups in recent
years.8 Baidu is developing the technological tools
to enable developers and creators to create themetaverse through its XiRang platform.9 Huawei
and Tencent joined hands with other companies
to set up The Joint Research Institute of Metaverse
and Virtual-Real Interaction with China’s premier
universities, including Fudan University and
Peking University.10

Ensuring that they stay on the right side ofregulators, industry leaders like Tencent, Ant Group,
Baidu and JD.com have joined an industry pledge toensure digital collectible sales adhere to the ban on
cryptocurrencies, requiring real-name authenticationof buyers and sellers and reining in secondary
marketplaces.11
Domestic consumers are already embracing digitalconsumer store experiences, and livestreaming.
Virtual influencers are set to be a key feature of China’s
US$171 billion live-commerce market, which grew at
a compound annual growth rate (CAGR) of more than
280% between 2017 and 2020.12 With the country’s
vibrant entrepreneurial spirit, strong government
support and direction, and the well-capitalized financial
ecosystem in first-tier cities, China stands ready totake advantage of the plentiful opportunities that the
metaverse economy will provide.

Competition in the internet sector has come to a new stage,
and we are going to embrace the fourth generation of theinternet, which will be the age of the metaverse.

““

is constructing the Zhangjiang metaverse-themedindustrial park. Other provincial governments
have also signaled their support, including Jiangsu,
Zhejiang, Wuhan and Heifei.5

Luo Jun, Secretary General of the Metaverse Committee of China Computer Industry Association
1. National Center for Science and Technology Innovation, “Artificial Intelligence Can Harmonize and Accelerate the Development of the Real Economy,” September 5, 2022.
2. CPC Central Committee Bimonthly, Qiushi, “Accelerate Economic Modernization,” accessed September 19, 2022.
3. Coco Feng, “China’s World Metaverse Conference Kicks Off In Beijing In Display of National Ambition But Few Foreign Presenters,” South China Morning Post, August
26, 2022.
4. Shanghai Municipal People’s Government, “Boosting the Development of Low-Carbon Industries and Artificial Intelligence Assisted Manufacturing, And Nurturing
The Development Pathway Of The Metaverse,” accessed September 19, 2022.
5. Deloitte, The Metaverse Overview: Vision, Technology and Tactics, 2022.
6. Arjun Kharpal, “TikTok Owner ByteDance Takes First Step Into Virtual Reality With Latest Acquisition,” CNBC, August 30, 2021.

60

7. Jiaxing Li, “ByteDance’s Metaverse Investments Continue With Acquisition of Chinese Virtual Social Platform PoliQ,” South China Morning Post,
June 27, 2022.
8. Cissy Zhou, “Alibaba Leads $60mil Funding Round for Smart Glasses Maker Nreal,” Asia Nikkei, March 30, 2022.
9. Nina Xiang, “Baidu Wants Its XiRang Platform To Be The Enabler Of the Metaverse,” Forbes, May 12, 2022.
10. Pandaily, “Huawei, Tencent and Others Build Joint Metaverse Research Institute,” accessed September 19, 2022.
11. Coco Feng “China NFTs: Tencent and Ant Group Join Industry Pledge to Ban Cryptocurrency and Fight Speculation,” South China Morning Post,
July 4, 2022.
12. McKinsey, It’s Showtime! How Live Commerce Is Transforming the Shopping Experience, 2021.

1

1

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Macroeconomic Determinants• China’s economy has a strong and growing service sector focus(50.9% of GVA). The largest sectoral contributor to its economy
is manufacturing (29.3% of GVA), followed by wholesale andretail trade (9.5%), and financial and insurance activities (8.0%).
These sectors have the potential to be impacted by metaverse
technologies in the near term.

• Strong propensity for innovation in the metaverse, with China
ranked 11th globally, based on the Global Innovation Index 2022.

MAINLAND CHINA IN NUMBERS

Potential 2035 economic impact of the metaverse:

US$456-862B per year, 1.3-2.4% of GDP• China is an upper-middle income country. Given its large
population, there will be a wide range of ways that users willaccess the metaverse depending on factors such as income
and age.

2020 GDP:• The policy direction of metaverse-related strategies follows
China’s current industrial policy of technology independence
and increased domestic consumption, as seen in the StateCouncil’s Next Generation Artificial Intelligence Development
Plan (up to 2030).13

US$• While this may take time to materialize, the country’s push formetaverse technologies to integrate with the “real economy”14
could see developments of more diverse use-cases that differ
from other countries.

13. Ping West, “China Aims To Propel The Real Economy With a Virtual Economy – Metaverse,” accessed September 19, 2022.
14. Department of International Cooperation Ministry of Science and Technology, "Next Generation Artificial Intelligence
Development Plan," China Science & Technology, October 19, 2022.

14.6T

Per capita(Constant 2017 US$):16,297US$(upper middle income)Key sectors:
Manufacturing

29.3
of GVA%ICT sector:
Wholesale &Retail Trade

9.5
of GVA%

Financial andinsurance activities

8%of GVA

3.2
of GVA%

Population:

1.402B
61%

urban

30%

below 25

11%

unbanked

Sources: World Bank World Development Indicators 2020, Our World in Data 2017, ITU Digital Development
Dataset 2019, World Bank Global Findex, China National Statistics

Globalinnovation index:#11/132

EIU businessenvironment ranking:#42/99

Digitalreadiness index:#54/141

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Technology Fundamentals
5G Coverage (%)• China's deep technology and manufacturing verticals provide
it with the capability to shape a metaverse that has its own
Chinese characteristics.

• The nation is building up its own technology independence across
supply chains in key areas such as semiconductors,15 which arenecessary to power devices that enable the metaverse. Being theworld’s largest market for the application of robotics,16 it has thecapacity to further scale up the production of these devices.
• The central government is scaling up its domestic 5G network,targeting for the nation’s 5G network to cover most villages by2025.17 There are plans for commercialization of 6G technology
around 2030.18 Speed and reliability of the service would haveto be further improved19 to enable higher-fidelity immersive
metaverse experiences.

52• China is trending towards becoming a cashless society, with
90% of its people in urban areas and 82% in rural areas using
digital payments.20• The Ministry of Human Resources and Social Security released aplan to increase digital skill education and training to the public tohelp more people reap the benefits of digital development.21

15. TChe-Jeng Wang, “China’s Semiconductor Breakthrough,” The Diplomat, August 20, 2022.
16. Global Times, “China’s Robotics Sector Makes Breakthroughs, Closing In On That Of Advanced Countries,” August 21, 2022.
17. The State Council, China’s 5G Network to Cover Most Villages By 2025, November 17, 2021.
18. Global Times China, ”China Aims to Commercialize 6G By 2030: White Paper”, accessed September 19, 2022.
19. Opensignal, “Benchmarking the Global 5G Experience”, accessed September 19, 2022.
20. World Bank Blogs, “What Can Indonesia Learn From China’s Digital Economic Transformation“, accessed September 19, 2022.
21. Ministry of Human Resource and Social Security, Issuing the Implementation Plan for “Skills in China” Initiative, accessed
September 19, 2022.

62

53International
Bandwidth perinternet user

Fixed Broadband
Subscriptions per
100 inhabitants

34

27

95
25
Active Mobile Broadband
Subscriptions per 100
inhabitants

ICT Goods
Exports (% ofmerchandise trade)

ICT Goods Imports(% of merchandise trade)

Sources: GSMA Mobile Connectivity Index 2021, ITU Digital Development Dashboard 2020, UNCTADStat 2019

Mainland China
Asia Average (Selectedeconomies)3

3

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Ecosystem Enablers

Competition within the metaverse
China has a complete metaverse value chain across hardware, softwareand content, which will incentivize competition across firms.22 Homegrownsoftware giants like ByteDance, Alibaba and Baidu, are racing to be at
the forefront of metaverse development. Some have taken steps to build
hardware capabilities in the metaverse as the devices are the gateway tofuture development of the metaverse. Bytedance bought over VR headset
company, Pico,23 and Alibaba-led investment in AR glasses company, Nreal.24
The firms have also further augmented their software capabilities throughacquisition and internal development – ByteDance acquired virtual social
platform, PoliQ,25 and Baidu-developed XiRang platform wishes to provide
the technological capabilities for creators to build up the metaverse.26
Industry alliances are forming, such as the metaverse committee of
the China Computer Industry Association, to help the industry join the“racetrack of the digital economy”.27

On the content side, Multi-Channel Networks (MCNs) are fueling the riseof internet celebrities like Austin Li (better known as Li Jiaqi), a prominentmale Key Opinion Leader with 45 million followers on Douyin, known as the“lipstick king”.28 MCN firms are estimated to be behind 40% of all accounts
with more than 10 million followers on China’s social media platforms.29
Corporate firepower behind the livestreaming and creator market, coupledwith AI-powered tools from the likes of Baidu’s XiRang, could help unlock
even more interactive, personalized, and real-time experiences in the
metaverse for China’s new generation of users.30

Technology Readiness of Businesses
As China moves beyond cost competitiveness towards technologicalbreakthroughs to power its next phase of growth, firms have ramped up
R&D. From 2009 to 2019, gross R&D expenditures in the country rose
threefold, to almost US$515 billion, making China the world’s second largest
R&D spender. This is supported by the central government, with stepped
up targets for growth in R&D investments, patent ownership and value
generated by the digital economy in the 14th five-year plan publishedearlier this year.31 In 2020 and 2021, Tencent and Baidu were amongst theleading companies in the world for VR and AR patent applications.32
Huawei and Tencent have also joined hands with other companies to set
up The Joint Research Institute of Metaverse and Virtual-Real Interaction
with China’s premier universities, including Fudan and Peking.33 Businesses
are beginning to leverage upon the possibilities within the digital realm.
Shoppers can seamlessly direct their digital avatars on their mobile phone
within Taobao’s virtual mall during its 618 Shopping Festival.34 Coupledwith China’s robust start-up ecosystem, domestic breakthroughs in theimplementation of metaverse technologies will emerge in the coming years.

22. Deloitte, Metaverse report – Future is here, 2022.
23. CNBC, “TikTok Owner ByteDance Takes First Step Into Virtual Reality With Latest Acquisition,“ August 30, 2021.
24. Asia Nikkei, “Alibaba Leads $60mil Funding Round for Smart Glasses Maker Nreal,“ March 30, 2022.
25. SJiaxing Li, “ByteDance’s Metaverse Investments Continue With Acquisition of Chinese Virtual Social Platform PoliQ”, Asia Nikkei, June 27, 2022.
26. Nina Xiang, “Baidu Wants Its XiRang Platform To Be The Enabler Of the Metaverse,” Forbes, May 12, 2022.
27. Coco Feng, “China’s State-Backed Metaverse Committee Aims To Help Industry Join The “Racetrack Of The Digital Economy”, South China Morning Post, May 11, 2022.
28. Alice Huang, “Who Is Millionaire Li Jiaqi, China’s “Lipstick King” Who Raised More Than US$145mil in Sales On Singles’ Day?” South China Morning Post, March 9, 2020.
29. Reuters, “China Says To More Closely Regulate Influencer Management Firms”, accessed September 19, 2022.
30. McKinsey and Company, “China’s Digital R&D Imperative”, accessed September 19, 2022.
31. The State Council, The People's Republic of China, "Plan focuses on digital economy development during 14th Five-Year Plan period," press release, October 19, 2022.
32. Yvonne Lau,”China’s Big Tech Leads In VR and AR Patent Applications. But China’s Metaverse May Look Different From Everyone Else’s,“ Fortune, January 28, 2022.
33. Pan Daily,”Huawei, Tencent and Others Build Joint Metaverse Research Institute,“accessed September 19, 2022.
34. PingWest, ”Alibaba Takes A Further Step Further Into the Metaverse By Launching a New Shopping Venue,“ accessed September 19, 2022.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Sectors to Watch
Automobile
The metaverse is likely to make an impact in the automobile industry in three
key areas – manufacturing, in-vehicle immersive experience and marketing.
BMW Group’s Plant Lydia in Shenyang China is set to be one of the world’s
first plants designed in the metaverse, with the entire production process
pre-planned through Epic Games’ Unreal Engine 3D creation platform. The
use of the platform shortened the construction time of the plant by six
months. 35
As fully autonomous vehicle technology matures, vehicles could betransformed into mobile terminals with full in-vehicle immersive
experiences. As a sign of further things to come, Chinese electric carcompany, NIO, is using AR glasses, produced in collaboration with
Alibaba-backed NReal, an AR glasses start-up, to reduce the need for incar screens.36 In a bid to accelerate this transition, NIO is also funding
ClearMotion’s development of in-car 4D motion sensors that coordinate
with the vehicle’s infotainment system.37

Engagement with consumers can be heightened through the metaverse.
Baidu-backed JIDU unveiled its first robotic car, ROBO-01, on Baidu’s
XiRang platform.38 The launch event was also livestreamed on the firm’s
WeChat video channel and Douyin. As metaverse technology matures,customers will likely be able to test-drive their vehicle within the metaverseon the day of any vehicle launch.
Healthcare
VR-based applications in healthcare training are being actively explored.
Beijing University of Chinese Medicine students have used VR technologies
to immerse in a three-dimensional human body marked with acupoints
and meridian pathways as part of their acupuncture training.39 The VR
learning system has been touted to be an improvement on traditional
acupuncture training based on two-dimensional images and the use of real
people as models. Chinese haptic robotics startup, Intelligent Haptronic
Solutions, is also developing VR-based digestive endoscopy simulatorsand training robots to enhance surgical training.40 As training applications
mature, this could pave the way for applications in actual healthcare
settings. This might go some way in alleviating the shortage of doctors inensuring quality care for its citizens.

35. BMW Group,”BMW Brilliance Plant Lydia Inaugurated: Digitalization Empowered Vehicle Plant Sets New Standards For Future-Oriented Vehicle Production,“press release, June 23, 2022.
36. Evelyn Cheng,”Chinese Electric Car Start-Up Nio Reveals A New Sedan, Augmented Reality Glasses,“ CNBC, December 18, 2021.
37. Rita Liao,”Boston’s ClearMotion Funded by NIO Capital To Switch On In-Car Metaverse in China,“ Tech Crunch, September 7, 2022.
38. Global Times,”Baidu-Backed JIDU Unveils ROBO-01, Its First Concept Robocar, Echoing Tesla’s Model-Y,“ accessed September 19, 2022.
39. Nikkei Asia, “Chinese startup set on disrupting endoscopy simulator market”, accessed September 19, 2022.
40. Elaine Yau, "Virtual reality helps Chinese medicine students learn acupuncture and doctors treat cancer," South China Morning Post, October 19, 2022.

64

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Pakistan
Potential 2035 economic impact of the metaverse

US$7-14B per year

65

The Metaverse in Asia | Strategies for Accelerating Economic Impact

PakistanAs the third largest source of skilled tech labor in
the world, Pakistan’s labor force may be a significant
source of talent to support the metaverse andmetaverse-related businesses. With over 100 million
broadband users and a median age of 22 years,1Pakistan’s youthful population is in search of new
economic opportunities.
With the establishment of new Special Technology
Zones (STZs), Pakistan could be an attractive location
for metaverse hardware manufacturers in search of
low-cost hardware production and technological talent.
Local firms specializing in AR and VR development are

emerging, such as WonderTree and Elytra Studios.
There is also a growing trend towards e-commerce,with over half of all VC funding in Pakistan channeledtowards e-commerce startups.2
Pakistani nationals own US$20 billion in cryptocurrency,
a figure that has grown exponentially in the past
two years.3 This demonstrates the growth of crypto
adoption in Pakistan despite the central bank’s
recommendation to ban cryptocurrency usage outrightin January 2022, highlighting the strength of the
population’s interest in digital currencies.4

Pakistan ranks sixth in the Global Crypto Adoption
Index 2021-22 – a development likely spurred bycontinued inflation of the Pakistani Rupee, which hit
24.93% in July 2022.5 As cryptocurrency becomesincreasingly mainstream, this provides an opportunity
for digital payments in the metaverse to take rootin Pakistan.
However, Pakistan’s exploration of the metaverse
will be contingent on its ability to overcome political,
climate and economic instability. Advancing
technological literacy and expanding internet
connectivity will be necessary first steps towards
materializing the metaverse there.

technology could become a powerful tool for tracking transactions,“ Blockchain
reducing corruption and increasing transparency in public and private
sectors [...] A systemic and inclusive approach is needed to fully benefit fromthe transformative potential of Blockchain technology as well as further its
implementation in Pakistan.

“

Dr Arif Alvi, President of Pakistan

1. McKinsey & Company, "What’s fueling Pakistan’s emerging start-up ecosystem," accessed October 19, 2022.
2. Ibid.
3. VOI, "Pakistan Chamber Of Commerce Says Its Citizens Have IDR 284 Trillion In Crypto Assets, Third Largest In The World In Trade," accessed October 19, 2022.
4. Amitoj Singh, “Pakistan Plans to Ban Cryptocurrencies as Stance Hardens: Reports,” CoinDesk, January 13, 2022.
5. CoinMarketCap, "Crypto Adoption in Pakistan is Growing Rapidly Despite Ban,” accessed October 19, 2022.

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1

1

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Macroeconomic Determinants• Pakistan is a service-based economy (56.7% of GVA). However,the single largest sector contributing to Pakistan's economy
is agriculture, forestry and fishing (24.4% of GVA), followed bywholesale and retail trade, and manufacturing (12.4%). Retail andmanufacturing, in particular, have the potential to be impacted
by metaverse technologies in the near term.

• Pakistan is ranked 87th in the world on the Global Innovation
Index 2022, suggesting that Pakistan is unlikely to lead thedevelopment of new and unique metaverse solutions.
• Pakistan's GDP per capita stood at US$5,144, suggesting thataffordability of required immersive hardware on average may be
a limiting factor on the economic impact of the metaverse.
• With a widening current account deficit and competing urgent
priorities, such as political and economic concerns, there may
be challenges in persisting with investments in economic,
infrastructural and technological developments needed tosupport the metaverse.

PA K I S TA N I N N U M B E R S

Potential 2035 economic impact of the metaverse:

US$7-14B per year, 1.3-2.4% of GDP
2020 GDP:

320B

US$

Per capita(Constant 2017 US$):

5,144

US$
(lower middle income)Key sectors:

ICT sector:

Agriculture

24.4
of GVA%

wholesaleand retail trade

15.9
of GVA%

Manufacturing

12.4
of GVA%

1.7
of GVA%

Population:

221M
37%

urban

55%

below 25

4%

Globalinnovation index:#87/132

EIU businessenvironment ranking:#89/99

Digitalreadiness index:#117/141with basic digital skills

79%

unbanked

Sources: World Bank World Development Indicators 2020, Our World in Data 2017, ITU Digital Development
Dataset 2019, World Bank Global Findex, UN Data

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Technology Fundamentals
5G Coverage (%)• Relative to the Asian average, Pakistan has room for growth on most major
technological development indicators.
• Mobile internet penetration rates in Pakistan are lagging behind those ofmany regional peers. Nevertheless, Pakistan has over 114 million 3G and
4G subscribers - a number that is growing.6• For the metaverse to become a real part of the country's lifestyle,
improved internet accessibility is essential. The Pakistani Government
launched seven projects in March 2022 to provide broadband services toover 2.5 million people in areas currently lacking internet connectivity.7

International
Bandwidth perinternet user

• The Government has expanded optical fiber coverage, laying 820km of
optical fiber through Gilgit Baltistan, Khyber Pakhtunkhwa, and Punjab
between 2015 and 2018.8 Internet accessibility must improve before themetaverse can be widely adopted by the population.

54
0• Pakistan has a smartphone penetration rate of 22%, lagging behind that ofmany regional peers.9 However, the mobile industry in Pakistan is growing– the GSMA predicts that the economic contribution of the mobile industry
in Pakistan could reach $24 billion by 2023, accounting for 6.6% of GDP.10
Growing smartphone ownership is an avenue through which Pakistan may
begin to explore metaverse opportunities.

• Pakistan has yet to launch 5G networks, but a roadmap for the 5G rollout
is being developed by the Pakistan Telecommunication Authority (PTA).
The spectrum for 5G services is targeted to be auctioned to prospective
telecommunications providers towards the end of the fiscal year of2022/23.11

6. Kamran Haider and Faseeh Mangi, “Pakistan Inflation Surges to 24.93% amidst Rupee Slump” Bloomberg, August 1, 2022.
7. The News, “Govt approves Rs8bn broadband projects for underserved areas,” accessed October 5, 2022.
8. CPEC Authority, " Government has expanded optical fiber coverage, laying 820km of optical fiber through Gilgit Baltistan,
Khyber Pakhtunkhwa, and Punjab between 2015 and 2018," accessed October 19, 2022.
9. GSMA, Pakistan: Progressing towards a fully fledged digital economy, 2020, p. 14.
10. GSMA, Pakistan: Progressing towards a fully fledged digital economy, 2020, p. 11.
11. Ahtasam Ahmad, “5G: Too soon to Tell?” Pakistan Today, August 29, 2022.

68

Fixed Broadband
Subscriptions per
100 inhabitants

0.1

1

41

7

Active Mobile Broadband
Subscriptions per 100
inhabitants

ICT Goods
Exports (% ofmerchandise trade)

ICT Goods Imports(% of merchandise trade)

Sources: GSMA Mobile Connectivity Index 2021, ITU Digital Development Dashboard 2020, UNCTADStat 2019

Pakistan
Asia Average (Selectedeconomies)3

3

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Ecosystem Enablers

Digital Skills
Digital literacy and talent are crucial to both metaverse development
and usage. Over 25,000 graduates enter the Pakistani job market eachyear with degrees in Software Engineering and Information Technology,
making Pakistan the third-largest source of digital labor.12 An edutech tieup between ESP-Pakistan and Xero Tech is exploring the potential for joint
activities in the metaverse for Technical Vocational Education and Training(TVET), cross-training of faculty, and skills development training programsfor IT, e-commerce, and entrepreneurship.13

Competition within the metaverse
The rapid growth of the startup environment in Pakistan means that
we may soon see tech-savvy Pakistani startups entering the metaverse
space. Since 2016, almost 300 reforms were introduced to improve theinvestment climate in Pakistan, and Pakistan has been recognized as the
top reformer in South Asia.16 In response to these changes in businessregulation, investment has been flowing into the country. In 2021 alone,
Pakistani startups raised over $350 million – more than the previous six
years combined.17

State-level solutions are emerging that simultaneously increase digitalskills amongst youth while also creating employment opportunities. In
the province of Khyber Pakhtunkhwa (KP) – the third-largest province interms of economy and population – the Government has launched a digitalstrategy called “Digital KP” aimed at upskilling the province’s workforce.14 An
Early Age Programming course teaches coding skills to secondary students
across 225 schools,15 while the Digital Ambassadors Program brings digital
literacy programming to rural and underserved areas.

More Pakistani startups are exploring AR and VR spaces. For example,
WonderTree is a Pakistani tech startup established in 2015 that develops
interactive AR games for children with special needs. Backed by Samsung
and Google for Entrepreneurs, WonderTree has almost 7,000 users, and is
deployed in 57 schools and 19 hospitals.18 More startups are likely to explore
providing unique services in the metaverse if global interest, and consequently
investment, in the metaverse continues to grow.

Pakistan still has a long way to go in increasing digital literacy, but sustained
investment in digital skills will open up opportunities for both employment
and leisure.

12. Mutaher Khan, "Pakistan’s startup boom has triggered a “war for talent”," Rest of World, October 19, 2022.
13. Xero Tech, "MoU Signing between ESP-Pakistan and Xero Tech FZ LLC, Dubai, UAE," press release, August 14, 2022.
14. Anna O’Donnell, “How one province in Pakistan is looking to digital jobs for its youth,” World Bank Blogs, March 26, 2018.
15. Khyber Pakhtunkhwa Information and Technology Board, “Early Age Programming,” accessed October 5, 2022.
16. Board of Investment Pakistan, “Ease of Doing Business,” accessed September 29, 2022.
17. Atlantic Council, "Pakistan sees growing culture of innovation amid tech startup boom," accessed October 5, 2022.
18. Wondertree, “Home,” accessed September 29, 2022.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Sectors to Watch
Manufacturing
Developments across the manufacturing sector will be instrumental tothe creation of hardware and software required to make the metaverse
accessible. Pakistan is developing its manufacturing sector throughsustained investment into special technology zones (STZs). Located acrossmajor cities such as Islamabad and Punjab, the STZs are intended to
attract investment from both local and international companies. In a bid to
encourage the growth of Pakistan’s IT export industry which is expected
to surpass $3 billion in value this year,19 the STZs provide highly favorable
conditions to ICT exporters. Enterprises that move their manufacturing
processes into the STZs become eligible for tax exemptions, capital gains,
and additional quality of life benefits. STZs have caught the eye of majorinternational brands already: Samsung, the world’s largest smartphone
manufacturer, now assembles almost all models within Pakistan.20 As
Pakistan’s new STZs are completed towards the end of 2022, attractive
new manufacturing potential will be unlocked – both for Pakistan, and formetaverse hardware producers.
Retail and e-commerce
The metaverse is expected to revolutionize online shopping, andopportunities exist for this to take flight in Pakistan. Of the US$350 million
in VC funding that Pakistani startups raised in 2021, over half of all funding
was directed towards e-commerce startups.21 Pakistan is the 37th largest
market for e-commerce, with a revenue of US$5.9 billion in 2021.22

19. Tribune, "Pakistan’s IT exports to surpass $3 billion this year," accessed October 19, 2022.
20. Saad Hasan, “Can Pakistan become the next tech manufacturing hub?” TRT World, July 13, 2022.
21. Itika Sharma Punit,“It’s like drinking from a firehose: Inside Pakistan’s tech investment boom,” Rest of World, April 19, 2022.
22. ecommerceDB, "The eCommerce market in Pakistan," accessed October 19, 2022.
23. TechJuice, “Pakistan launches first AR based furniture app,” accessed October 5, 2022

70

Both business-to-consumer (B2C) and business-to-business (B2B) startups
have been emerging: offering online shopping, delivery services, and digitalizing
the informal retail sector. The future may see the Pakistani e-commerceindustry being transformed with virtual and augmented reality spaces for retail.
For example, ARER is a newly launched augmented reality tool for furniture
retail in Pakistan.23 Similarly, Pakistan-based Elytra Studios works on developinga range of immersive experiences for businesses to utilize – ranging from 3D
architectural visualizations and AR/VR experiences to game development.24
Given the popularity of e-commerce in Pakistan, it is foreseeable that AR andVR retail experiences will soon become more accessible.
Entertainment
The Pakistani entertainment industry is highly responsive to global
trends, and is already adapting to possibilities in the metaverse. Pakistanicompanies such as Big Immersive are partnering with Oculus and Vive, 25
to revolutionize gaming by creating 3D digital ecosystems for AR and VR
experiences across multiple different platforms. Celebrity entertainers areoften first entrants into metaverse spaces, and celebrities in Pakistan are
no different. metAsia Celebs – a UAE-based entertainment startup – incollaboration with TrustVibes Inc. has launched an Exclusive Metaverse
club for artists and musicians in Pakistan.26 Solo Pakistani entrants are also
gaining prominence in the metaverse. Award-winning Creative Director
Shaikh Danial, for example, lends his expertise to ‘BAPES™?’ – a metavestor
club focused on strengthening crypto native companies in the metaverse
space through the purchase of NFTs.27

24. Elytra Studios, “Services,” accessed September 29, 2022.
25. Hassan Baig, "The Metaverse opens up a world of possibilities for Pakistan. Can we take advantage?" Asian News Network, October 19, 2022.
26. News Update Times, “Launch of Pakistan’s first exclusive metaverse club,” accessed October 5, 2022.
27. Salman Sabit, "Shaikh Danial -- a Pakistani Artist shaping the future of NFTs," Daily Times, March 14, 2022.

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Philippines
Potential 2035 economic impact of the metaverse

US$10-19

B per year

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Philippines
With an internationally-oriented English-speaking
population, the metaverse could extend thePhilippines’ lead as a destination for Business Process
Outsourcing (BPO).1 If fully leveraged, the metaverse
could add up to US$19 billion to the economy in 2035,
with new employment opportunities for Filipinos inbuilding and enriching the metaverse.
This is provided the country is able to overcome gaps inits digital infrastructure. Internet speeds are slow andunstable, although gradually improving. The Government
has embarked on efforts to develop its digital
infrastructure, including a Free Wifi for All program anddeployment of fiber optic cables and wireless technology
through public-private partnerships.

This includes a US$2.1 billion investment by Globe
Telecom to deploy 1 million fiber optics cables acrossthe Philippines.2 PLDT is also investing an additional
US$80 million in collaboration with Meta and Google ina new Asia Pacific subsea cable project called Apricot.
The mobile-savvy Filipino population experienced its
first taste of the new income-earning prospects ofthe metaverse during the COVID-19 pandemic. With
unemployment soaring to 17.7%,3 many Filipinos
picked up blockchain game Axie Infinity to supplement
their income, with one source estimating that as much
as 2% of the 2021 GDP for Philippines was directly
correlated to play-to-earn games.4 Players in thePhilippines made up as much as 40% of the game’s

metaverse will be an important market where we can“ Thepromote original Filipino content and creations.

“Bureau of Copyright and Related Rights Director Emerson G. Cuyo, Intellectual Property Office of
the Philippines4

1. Outsource Accelerator, "Pandemic pushes offices toward the metaverse," accessed October 19, 2022.
2. Manila Bulletin Technews, “The Globe Group commits push for PH digital readiness,” Manila Bulletin, October 19, 2021.
3. Raul Dancel, “Coronavirus: Unemployment in the Philippines reaches record high of 17.7%,” Straits Times, June 5, 2020.
4. Antler, “The New Creator Economy: Unpacking Web 3.0 Gaming”, accessed October 5, 2022.
5. Arjun Kharpal and Ryan Browne, "Hackers return nearly half of the $600 million they stole in one of the biggest crypto heists," CNBC, October 19, 2022.

72

user base at one point. Enterprising start-ups createdguilds to sponsor players and share in their earnings.
However, a hacking incident and a plunge in theunderlying cryptocurrency’s value impacted players’
earnings severely, sowing doubts over the sustainabilityof such earnings models.5 Ensuring the necessary
guardrails are in place to protect workers and consumers
will be critical to sustain social acceptance of metaverse
applications in the Philippines.

1

1

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Macroeconomic Determinants• The Philippines overall is a service-based economy (55.1% of GVA).The
three largest sectors contributing to Philippines's economy are wholesale
and retail trade (18.5% of GVA), followed by manufacturing (17.7%), andagriculture, forestry and fishing (10.2%). The retail and manufacturingsectors are expected to be impacted by the metaverse in the near term.

• Philippines is ranked 59th in the world, based on the Global Innovation
Index 2022, suggesting a lower propensity for innovation. One possible
reason is a lack of resources and funding,6 limiting the rate of metaverse
development in the country.

• Philippines's GDP per capita is in the lower-middle income range,
suggesting that affordability of required immersive hardware on average
may be a limiting factor on the economic impact of the metaverse.
• The country has a high unemployment rate, at 7.2% in July 2021.
Developing the metaverse presents employment opportunities for
Filipinos, with the IT outsourcing industry already actively recruiting
positions for building digital environments in the metaverse.7

PHILIPPINES IN NUMBERS

Potential 2035 economic impact of the metaverse:

US$10-19B per year, 1.3-2.4% of GDP
2020 GDP:

358B

US$

Per capita(Constant 2017 US$):

7,958

US$
(lower middle income)

Wholesaleand retail

18.5
of GVA%ICT sector:
Manufacturing

Agriculture

17.7

10.2

of GVA%of GVA%

3.3
of GVA%

Population:

109M
14%

urban

51%

below 25

6%

Globalinnovation index:#59/132

EIU businessenvironment ranking:#49/99

Digitalreadiness index:#81/141

with basic digital skills

49%
6. Nesta, “Understanding Innovation Policymakers in the Philippines,” accessed October 5, 2022
7. Outsourced.ph, “How technology companies can leverage the metaverse?” accessed September 29, 2022.

Key sectors:

unbanked

Sources: World Bank World Development Indicators 2020, Our World in Data 2017, ITU Digital Development
Dataset 2019, World Bank Global Findex, UN Data73

2

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Technology Fundamentals
5G Coverage (%)• The Philippines lags behind the region in connectivity, in terms ofinternational bandwidth per user, 5G coverage, active mobile broadband
subscription, and fixed broadband subscriptions. This represents asignificant barrier to partake in the envisioned metaverse’s real-time
interactions and transactions.
• Smartphone device ownership among internet users aged 16-64 jumped
from 65% of internet users aged 16-64 in 20198 to 98.5% in 2021,9 andinternet penetration rose by 6.1% to 67% from 2020 to 2021.10

International
Bandwidth perinternet user

• Both the public and private sectors are working to expand the country’s
digital infrastructure, closing the gap between the Philippines and theregion’s average. In 2021, Globe Telecom invested US$2.1 billion in
1 million fiber lines to establish 4G for mobile data and 5G coveragein accordance with government targets.11 PLDT, in collaboration with
Meta and Google, has also invested in various submarine cables in thePhilippines such as Jupiter and the newly announced Apricot, and thesecables are anticipated to increase the number of internet users in thePhilippines by 8.3 million by 2025.12• The Philippines is the top digital payments adopter in the Southeast
Asian region, with digital payments and e-cash anticipated to account for
50% of transactions by 2023.13 Even in rural areas, an increasing numberof Filipinos are paying for their groceries and medicines using e-wallet
GCash.14 This signals that the Philippines could quickly adapt to performing
transactions on the metaverse.

8. Simon Kemp, Digital 2019: The Philippines, Datareportal, 2019.
9. Simon Kemp, Digital 2021: The Philippines, Datareportal, 2021.
10. Ibid.
11. Philippine Long Distance Telephone Company (PLDT), "Broadbanding the Future," accessed October 19, 2022.
12. Analysis Mason, Economic and Social Impact of Meta’s Submarine Cable Investments in APAC, December 2021, p. 30.
13. Asia one, “The Philippines’ payments, e-commerce & banking leaders to gather live online in this September to chart the future ofcommerce,” accessed September 29, 2022.
14. Jay Hilotin, “Philippines: 1 trillion pesos in e-cash transactions,” Gulf News, January 10, 2021.

74

Fixed Broadband
Subscriptions per
100 inhabitants
47.5
0

7
64

49

25.5
Active Mobile Broadband
Subscriptions per 100
inhabitants

ICT Goods
Exports (% ofmerchandise trade)

ICT Goods Imports(% of merchandise trade)

Sources: 'GSMA Mobile Connectivity Index 2021, ITU Digital Development Dashboard 2020, UNCTADStat 2019'

Philippines
Asia Average (Selectedeconomies)3

3

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Ecosystem Enablers

Digital Skills
With only 6% of the population with basic digital skills according to ITU,
there is a significant gap to close.15 The Philippines established the Interagency Council for Development and Competitiveness of Philippines
Digital Workforce in 2022, with the purpose of raising digital skills andcompetencies to the global standard. The long-term goal is to usher
Filipino workers into digital careers in technologies that are related withthe foundation of the metaverse like artificial intelligence.16 Globe Telecom
is establishing an IT academy.17 The Google-supported non-profit Go
Digital ASEAN is teaching digital skills to up to 25,000 job seeker andentrepreneurs, boosting the population's digital literacy.18 One start up,
I AM Cardboard Philippines (IAC PH), aims to familiarize a generation ofFilipinos with metaverse technologies by bringing VR technology intoclassrooms, museums, and training programs in Manila.19

15. International Telecommunication Union, "The ITU ICT SDG indicators," accessed October 19, 2022.
16. Jovee Marie de la Cruz, “Inter-agency body to upskill Filipinos’ digital skills eyed,” BusinessMirror, September 13, 2022.
17. Manila Bulletin Technews, “The Globe Group commits push for PH digital readiness,” accessed September 29, 2022
18. The Asia Foundation, “Go Digital ASEAN: Free Digital Skills Training Now Open to 25,000 Filipinos through The Asia Foundation
with Support from Google.org,” press release, May 6, 2021.
19. I AM Cardboard Philippines, “What We’re Doing,” accessed September 29, 2022.
20. Dale Bashir, "Axie Infinity Leaves Filipino Players Penniless and Defeated," IGN, August 19, 2022.

Social AcceptanceDuring the peak of the popularity of play-to-earn blockchain-based games,
people from all walks of life were participating in it, from tricycle drivers
to elderly shop keepers in rural areas in the Philippines. Nevertheless,some were inadvertently burnt by the experience when the value of theirholdings fell.20
Both authorities and companies must work together swiftly to build asafe and trustworthy metaverse. In one example of such a collaborative
approach between regulator and game developer, the Intellectual Property
Office of the Philippines (IPOPHL) signed a memorandum of understanding
with Singapore-based metaverse virtual world platform Stardust Digital
Private Ltd.21 The Stardust platform aims to connect creators in theentertainment world to a global audience. This tie-up will look into theprotection of intellectual property developed in the country, making thenascent platform safer and more appealing to Filipino creatives.22

Accessibility
Beyond the capital city of Manila, the internet becomes much slower andmore unreliable. Only 47% of adults in the agrarian southern island of
Mindanao have access to the internet compared to 84% in Manila.23
The government’s Department of Information and Communications
Technology (DICT) is moving swiftly to tackle the nation’s outstanding
problems with internet accessibility. The Free Wifi for All Program launchedin 2020 to provide ample Wifi coverage in public spaces, beginning with
provinces that most urgently need coverage.24 From the private sector,
Telco giants PLDT and Globe also announced intentions to upgrade theirservices to provide bandwidth and coverage in line with the government’s
targets.25 These investments into digital infrastructure will enable more
Filipinos to access new opportunities that emerge from the metaverse.

21. Philippines Information Agency, “IPOPHL sets out efforts in metaverse with Stardust partnership,” accessed September 29, 2022.
22. Facebook, “Speech by Stardust Digital CEO Gin Kai Chan,” video, August 3, 2022.
23. Statista, “Share of adult population with access to the internet in the Philippines as of September 2021, by region,” accessed September 29, 2022.
24. Government of Philippine, "Free Public Wifi," accessed October 19, 2022.
25. Department of Information and Communications Technology, “PH to Improve Telco Services to Meet “New Normal” Demands,” accessed September 29, 2022.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Sectors to Watch
Gaming and Entertainment
The billion-dollar gaming industry in the Philippines26—the second largest
in Southeast Asia behind Vietnam—is receiving a boost from venture
capitalists, with the Media & Entertainment sector emerging as the second
most funded sector for startups in 2021 (US$142.5 million).27
One of the most prominent transactions was by blockchain gaming
company Yield Guild Games, which raised $17 million in 2021.28 The
company’s business model allows users to pool together and form guilds,
buying game assets across blockchain games like Axie Infinity and leasing
them to players so that they can play without initial capital, in return fora share of the player’s earnings. These ‘scholarships’ reimagine what
employment could be like in the metaverse, where players report to guilds.
Other startups involved in blockchain gaming from the Philippines include
Ark of Dreams, MetaverseGo, and Blockchain Go. The former collaborated
with Union Bank to co-create a banking experiences in the game, marking
the very first entrance of a Filipino bank into the metaverse.29

26. Statista, “Video games market revenue in Southeast Asia from 2018 to 2027, by country,” accessed September 29, 2022.
27. Foxmont Capital Partners and Boston Consulting Group, Philippine Venture Capital Report 2022, March 11, 2022, p. 4.
28. Ibid.
29. The Manila Times, “Union Bank of the Philippines enters the Metaverse with the Ark of Dreams,” accessed September 29, 2022.
30. EF English Proficiency Index, "Philippines," accessed October 19, 2022. .
31. Microsourcing, 2022 Philippines outsourcing industry report, accessed September 30, 2022.
32. Outsourced.ph, “How technology companies can leverage the metaverse?,” accessed September 29, 2022.
33. Robert D. Reyes, “Recruitday to open the first metaverse-based tech career hub in the country,” Manila Bulletin, June 8, 2022.

76

Business Process Outsourcing
The Philippines is a popular destination for companies to outsource aspectsof their business processes, with a highly literate labor force that ranked 2ndin the region in the 2020 English Proficiency Index, behind Singapore.30
The BPO industry currently employs 1.2 million workers (often in customer
support call centers), contributing US$27 million or 9% of GDP.31 However, theadvent of the metaverse could generate more roles that can be outsourced.
Outsourced.ph forecasts that more tech specialists will be needed to manage,
create, research, and troubleshoot digital environments in the metaverse,with roles like ecosystem developer, world builder, and metaverse stylist
forecasted to be in high demand.32
Recruitday is the Philippines’ first metaverse-based recruitment platform,
where users can participate in a virtual job-fair at any time of day.33 It
also offers courses to upskill workers, familiarizing users with metaverse
technologies and preparing them for roles in the BPO industry.

Singapore
Potential 2035 economic impact of the metaverse

US$9-17

B per year

77

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Singapore
With a small population and few natural resources,
Singapore’s transformation into a global economic
hub within five decades has been driven by politicalstability, robust regulatory frameworks, and a plug-andplay business environment that is open to investors.
Yet, with an ageing population and consequently asmaller workforce, there is a strong imperative toenhance this strategy by moving its workforce up thevalue chain while simultaneously attracting more talentfrom beyond its shores.

Beyond attracting talent, the country can also leverageon its reputation, as one of the best places in the world
to do business,2 to make early pivots with specialized
strategies to attract top metaverse companies andinvestors to Singapore. Apart from top companies,
other players such as content creators will prove crucial
to build an ecosystem. Priming these key players toplace Singapore at the top of their minds will allow thesmall nation-state to remain competitive as the world
moves into the next internet.

A strategy for the metaverse would build on
Singapore’s existing economic roadmaps, and early
investments could pay off in the long term. The
metaverse provides Singapore with an opportunity
to position itself as an early value-adding innovator
to attract tech talent globally to its shores. Attracting
high-skilled tech workers aligns well with the country’s
strategy of focusing on “quality rather than quantity”
when it comes to foreign talent.1

To reap these benefits, the country has many factors
in its advantage. Its regulatory framework provides
credibility and stability that complements the dynamic
and fluid nature of the nascent metaverse. In 2022,
Singapore announced that rules to tackle online harmthrough minimising local access to harmful material
are expected to roll out as early as 2023.3

These stellar credentials have already led to
HoYoverse, the creator of one of the highest
grossing games in history Genshin Impact topick Singapore as its base of operations for their
metaverse subsidiary. With the current landscape,Singapore is well-positioned to become an attractive
location for these developments – digital natives
will find it welcoming to live, work, and play in the
metaverse here.

Whilst we cannot as yet be certain of the final state at this point on what
the metaverse will evolve into, many are confident of its future.

““

As a global financial hub, Singapore has beena fertile ground for financial innovations in thecryptocurrency, web3 and digital assets space. Thereis also a Research, Innovation and Enterprise (RIE)
strategy in place to invest in forefront technologies
such as AI, cybersecurity, trust technologies, andquantum technology.4 Singapore stands in goodstead to support the technological developmentsthat will enable the metaverse to materialize.

Edwin Tong, Minister for Culture Community and Youth and Second Minister for Law, at TechLaw.Fest, July 2022

1. Michelle Jamrisko, “‘Quality’ labour: Singapore wants foreign skills, to protect jobs,” Aljazeera, August 28, 2020.
2. Business Times, "Singapore in 2nd place for ease of doing business: World Bank," accessed October 19, 2022.
3. Irene Tham, "Rules to tackle online harm in Singapore could be rolled out as early as 2023," Straits Times, September 29, 2022.
4. National Research Foundation, “Smart Nation and Digital Economy,” accessed October 5, 2022.

78

1

1

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Macroeconomic Determinants• Service-based economy (73.6% of GVA), with the threelargest sectoral contributors to Singapore’s economy being
manufacturing (22.3% of GVA), followed by wholesale andretail (19.3%), and financial and insurance activities (14.6%).
These sectors have had early use cases for metaverse
technologies such as digital twins for resource deployment,
digital clothing, and new payment forms. The impact thatthe metaverse will have on these key sectors cannot be
underestimated.

SINGAPORE IN NUMBERS• Ranked 8th in the world on the Global Innovation Index
2021, suggesting a strong propensity for innovation.

2020 GDP:• GDP per capita stood at US$94,506, suggesting thataffordability of required immersive hardware on average
may be less of a limiting factor on the economic impact ofthe metaverse.
• World’s 10th largest exporter of creative goods, generating
US$743 billion in profits.5 This stands Singapore in goodstead for the content-heavy metaverse.

Potential 2035 economic impact of the metaverse:

US$9-17

B per year, 1.3-2.4% of GDP

330B

US$

Per capita(Constant 2017 US$):94,506US$(high income)Population:

5.6M

100%
25%

below 25

55%

with basic digital skills

0%
5. Pitchaya Sirivunnabood and Herlyn Gail A. Alegre, “Supporting the creative economy for sustainable development inSoutheast Asia,” Asia Pathways, September 3, 2021.

urban

unbanked

Sources: World Bank World Development Indicators 2020, Our World in Data 2017, ITU Digital Development
Dataset 2019, World Bank Global Findex, Singapore National Statistics

Key sectors:

ICT sector:

Manufacturing

22.3
of GVA%

Wholesale &Retail Trade

19.3
of GVA%

Financial andinsurance activities

8%of GVA

Globalinnovation index:#8/132

EIU businessenvironment ranking:#1/99

Digitalreadiness index:#1/141

5.6
of GVA%

79

2

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Technology Fundamentals
5G Coverage (%)• The country, ranked first on the Digital Readiness Index, has
one of the highest smartphone penetration rates6 in the world.
The metaverse is likely to be accessible to a large proportion of
the population.

• More than 60% of Asia Pacific’s data center supply is housedin Singapore, indicating the nation-state’s potential to support
the data and computing-intensive metaverse.7 Sustainable
development of these data centers is also a priority to thesmall nation-state which is keenly aware of the land and energy
demands of data centers. After a 3-year moratorium on thedevelopment of data centers in Singapore, the government
lifted it in 2022 with new policies that calibrate data center
development through sustainable energy sources and more
efficient cooling methods.8• A global financial hub, Singapore has a robust digital payments
infrastructure which gained traction during the COVID-19
pandemic – 95% of the population aged above 15 have madeor received a digital payment.9 The country launched theworld’s first unified payment QR code in 2018 and has since
pursued aspirations to be interoperable with other digital
payments across the region. Thus far, the Monetary Authorityof Singapore (MAS) has explored or begun link-ups with digital
payment systems in India, Philippines, and Thailand.

74
International
Bandwidth perinternet user

Fixed Broadband
Subscriptions per
100 inhabitants

95
26

34

33

ICT Goods
Exports (% ofmerchandise trade)

ICT Goods Imports(% of merchandise trade)
6. Today Online, “Smartphone penetration in Singapore the highest globally: Survey,” accessed September 29, 2022.
7. International Trade Administration, "Singapore new data centers," accessed October 19, 2022.
8. Clara Chong, “Singapore pilots sustainable way to grow data centre capacity,” The Straits Times, July 20, 2022.
9. World Bank, “The Global Findex Database 2021,” accessed October 5, 2022.7.

80

Sources: GSMA Mobile Connectivity Index 2021, ITU Digital Development Dashboard 2020, UNCTADStat 2019

144

Active Mobile Broadband
Subscriptions per 100
inhabitants

Singapore
Asia Average (Selectedeconomies)3

3

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Ecosystem Enablers

Social acceptance
Nearly 16% of Singaporeans currently own cryptocurrencies, ahead of
the 11.4% global average surveyed.10 This indicates potential openness
towards digital assets and the metaverse. However, it is crucial to also
look at the attitudes of the population towards technology at large –Roland Berger’s Digital Inclusion Index 2021 found that attitudes towards
digital advancement have become more conservative in Singapore. Thisapprehension towards new technologies was attributed to the rise ofinternet scams and concerns over personal data security.11 Singapore’s
regulatory efforts to create a safe online environment are crucial toaddressing these fears.
Singapore is highly ranked on global measures of cybersecurity literacy12
and introduced the Personal Data Protection Act (PDPA) to provide abaseline standard of protection for personal data with requirements
governing the collection, use, disclosure and care of such data.13 As more
personal and environmental data is collected in the metaverse, theseguardrails will need to be enhanced. Already leading with progressive
regulations on cryptocurrencies and digital assets to balance risks with
innovation, Singapore’s moves will be closely watched by the region.

Competition within the Metaverse
A thriving metaverse is one that includes many stakeholders competing in the
product, service, or experience they offer to consumers or other businesses/
platforms engaged in the metaverse. Singapore’s vibrant tech sector ranges
from corporations such as MiHoYo to metaverse-related startups such as
BuzzAR and Brytehall that seek to create new niches in avatar engines and
NFTs respectively. Singapore is the top-ranked ecosystem for start-ups in the
Asian region and the country is fertile ground for rapid innovation.14 Notably,
59% of technology MNCs have their Asian regional headquarters based in
Singapore.15
Singapore also has advantages in digital content creation, as a leading
exporter of creative goods. For example, Lucasfilm’s ILMxLAB opened its
first international studio in Singapore with an emphasis on immersive realtime storytelling.16 These existing building blocks are optimistic signals forthe growth of a rich metaverse ecosystem.

Digital skills
The potential of corporates and start-ups in the metaverse rests on a deep
bench of digital talent. Singapore’s ability to upskill Singaporean workers
as well as attract top talent from beyond its shores is critical. To that end,
the government introduced special work visas in 2022, including Tech.Pass
and a broader Overseas Networks and Expertise (One) Pass, to attract theworld's best talent to its shores.17
For Singaporeans, the government launched a national movement,
SkillsFuture Singapore, to encourage lifelong learning in areas such as
digital skills training, as well as a TechSkills Accelerator (TeSA) to support
students and professionals at various stages of their careers to upskill
or make transitions to tech roles.18 Private sector stakeholders have also
launched similar programs. As part of Meta's Upskill 2022 initiative, thecompany launched the region's first Meta Immersive Learning Academy, an
educational program that enable beginner AR and VR creators to build theirskills and capabilities.19
These concerted efforts will raise talent across various parts of themetaverse ecosystem, through upskilling its small population and attracting
the top talent from abroad.

10. Ann Williams, “Nearly 16% of Singaporeans surveyed currently own cryptocurrency,” Straits Times, October 25, 2021.
11. Roland Berger, Bridging the digital divide: Improving digital inclusion in Southeast Asia, 2021.
12. Lester Wong, “International study ranks Singapore second for cyber-security literacy among population,” Straits Times, October 23, 2020.
13. PDPC Singapore, "PDPA Overview," accessed October 19, 2022.
14. Rei Kurohi, "S'pore tops Asia-Pacific in ranking for start-ups, 7th in the world," Straits Times, June 10, 2022.
15. EDB Singapore, "Headquarters," accessed October 19, 2022.
16. Ian Cheng, "Lucasfilm's ILMxLAB opens first international studio in Singapore," Channel News Asia, February 24, 2022.
17. EDB Singapore, "Tech.Pass," accessed October 19, 2022.
18. IMDA Singapore, "TechSkills Accelerator (TeSA)," accessed October 19, 2022.
19. EDB Singapore, "Meta launches new digital upskilling initiatives to bolster its 2022 programme," press release, June 14, 2022.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Sectors to Watch
Healthcare
Given an ageing population, Singapore has begun touse immersive virtual technologies to enhance medical
education and medical services.
Singapore’s National University Health System (NUHS)
is investing in holographic technology, including
using mixed reality to teach medical and nursing
students,20 research on applications in brain surgery,and developing real-time volumetric rendering andpositioning of ultrasound scans.21 Since November
2021, NUHS has also been one of the three worldwide
Holomedicine Centres of Excellence.
Beyond teaching and research, the use of holographic
technology has extended into medical practice with
Singapore conducting the world’s first holographyguided heart surgery.22
Urban Planning
Government agencies and start-ups in Singapore havefound innovative uses for early metaverse technologies
in urban planning. Singapore was one of the first
countries to articulate a vision of a country-scale digitaltwin through Virtual Singapore, a dynamic 3D model ofthe city which planners can use to visualize how the city
will develop and evolve in response to population growth,
new construction, and other major events.23 Since then,Singapore Land Authority had embarked on a number of
3D mapping projects over the years. 24
Some of these efforts have culminated in OneMap
3D, a dynamic visualization platform that presents animmersive experience of Singapore’s surroundings.
One use case of the platform is that clients of the realestate industry can view listings with real-time locationbased services and detailed location information.25
Singapore start-ups such as Vizzio Technologies
have also innovated new 3D mapping technologies
through combining satellite imaging and AI to create
photorealistic models of countries in a short time.26

To build on its strong foundations in the gaming
space, the country is increasing investments inmetaverse game worlds. Singapore's state holding
company, Temasek Holdings, invested US$100 million
in blockchain gaming company Animoca Brands,29
which has a broad portfolio of web3 games andintellectual property.

Gaming
Early parallels of the metaverse are observed in online
games – where gamers have played, socialized, andshopped in virtual worlds for years. Younger gamers,
particularly those between 13 and 17, are moreinterested in metaverse-style games compared to older
players.27 This demographic is expected to spend moretime and money in the metaverse in the future.

20. Microsoft News Centre, “Medical education goes Holographic with mixed reality from Microsoft,” press release, January 11, 2022.
21. National University Health Systems (NUHS), “NUHS Embarks on Holomedicine Research in Singapore, Using Mixed Reality Technology to Enhance
Diagnosis,Education and Patient Care,” PR Newswire, August 12, 2021.
22. Clara Chong, “Holography-guided heart surgery for more precise, speedier incisions,” Straits Times, January 9, 2022.
23. National Research Foundation, "Virtual Singapore," accessed October 19, 2022.
24. GIM International, "Singapore’s Journey towards a Nationwide Digital Twin," accessed October 19, 2022.
25. Singapore Land Authority, “SLA Launches OneMap3D, and Signs MOUs with Ninja Van, Kabam and Propnex to Further the Use of OneMap,” press release,
September 15, 2021.

82

Singapore is increasingly involved in the gaming
space, particularly by building its reputation as an
e-sports destination given that it already has muchof the existing infrastructure such as high internet
speeds, venue options, and a robust events industry.28
Singapore companies are also accomplished in thegaming industry – Garena, a Singaporean gamedeveloper, published Free Fire, the most downloaded
game globally in 2019.

26. Vizzio, "Immersive 3D cities of the world built by Algorithms & A.I.," accessed October 19, 2022.
27. Bain & Company, “Young Gamers and the Metaverse: How the Rules of Success Are Changing”, accessed October 3, 2022.
28. Taufiq Zalizan, “The Big Read: The serious business of gaming — Singapore eyes a slice of the billion-dollar e-sports pie”, Channel
News Asia, June 13, 2022.
29. Animoca Brands, “Animoca Brands raises US$110 million in funding round led by Temasek, Boyu Capital, GGV Capital”, press 		
release, September 8, 2022.

The Metaverse in Asia | Strategies for Accelerating Economic Impact

South Korea
Potential 2035 economic impact of the metaverse

US$36-67

B per year

83

The Metaverse in Asia | Strategies for Accelerating Economic Impact

South Korea
South Korea is a first-mover in articulating acomprehensive strategic blueprint to foster its
metaverse industry, aiming to become the fifth largest
metaverse market by 2026. From the K-pop industry
to industrial conglomerates to government agencies,
ecosystem actors across the value chain are leaning into
the metaverse.
Earmarking KrW 223.7 billion (US$167 million) to
kickstart the industry, the Ministry of Science and ICT
laid out four major goals – activating the ecosystem
for metaverse platforms, nurturing talent, fostering
companies, and setting up a safe environment for all
metaverse.1 Over 500 companies, including Samsung,Hyundai and Nexon, have formed a metaverse“

alliance to coordinate the development of platforms.
The government aims to nurture 40,000 metaverse
professionals while facilitating foreign talent and startups
to enter the Korean market. It will set up a Korean
language institute in the metaverse and a “K-Metaverse
Academy” that connects global startups with local
content companies.2 Government-sponsored metaverselabs to support the commercialization of metaverserelated technologies and one-stop customized
consulting support are also in the plans.3
Under the metaverse roadmap, focus sectors includearts, culture, education, K-pop and tourism. Thesebuild on South Korea’s position as a global cultural
trendsetter. Entertainment companies like HYBE (BTS),South Korea’s technological lead, with the highest 5G
download speeds, universal fiber network access,and leading cybersecurity infrastructure, positions thecountry well to leverage its cultural advantage into
further success within the metaverse.

The Government will serve as talent ladder for outstanding workforce trained at the K-Metaverse Academy to grow professionally intheir respective field by expanding their participation opportunities
in connection with government-led projects.

“

Lee Jong-ho, Science Minister at the launch ceremony for the K-Metaverse Academy5

1. Ministry of Science and ICT (MSIT), “MSIT to Announce Pan-Government Strategy on Metaverse,” accessed September 29, 2022.
2. The Korean Herald, “Korea Aims to Become 5th-Largest Metaverse Market by 2026,” accessed September 29, 2022.
3. Ministry of Science and ICT (MSIT), “MSIT Full-fledged Training of Young Developers and Creators in the Expanded Virtual World,” accessed September 29, 2022.
4. Tamar Herman, "K-pop labels embrace virtual stars and pursue metaverses to extend their artists’ online reach," South China Morning Post, October 19, 2022.
5. Zepeto Studio, "Business- ZEPTO Studio," accessed October 19, 2022.

84

SM Entertainment (Aespa) and YG (BLACKPINK) are
moving its global celebrities into the metaverse withdigital concerts and virtual avatars, a trend accelerated
by the COVID-19 pandemic.4 South Korean metaverse
social gaming app Zepeto is also a fast-growing creator
marketplace for virtual fashion items and has teamed up
with global brands like Disney and Nike, and celebrities
like BTS.5

1

1

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Macroeconomic Determinants• South Korea is a service-based economy (62.5% of GVA),
although the largest sectoral contributor to its economy
is manufacturing (27.9% of GVA), followed by real estate
activities (7.8%), and wholesale and retail trade (7.5%).
• As an export-driven economy (~40% of GDP),6 themetaverse will likely drive international demand for South
Korea’s electronic exports (e.g. semiconductors, whichconstitute 17% of its exports)7 and content exports (whichreached almost US$12 billion in 2020).8• South Korea has a strong propensity for innovation, ranking
5th in the world and 1st among selected economies in the
Global Innovation Index 2021, reflecting economic strength
in innovative computing and mobile technologies.
• As a high income country, affordability of required
immersive hardware on average may be less of a limiting
factor on the economic impact of the metaverse.
Nevertheless, the government has pledged to bridge thedigital divide by providing metaverse education to digitally
marginalized people.9• To enhance accessibility and encourage interaction withthe metaverse, some public and private providers in Korea
have also opened VR experience spaces for people to utilize
these technologies at a fraction of the cost of VR headsets.10

6. World Bank, “Export of goods and services (% of GDP),” accessed October 5, 2022.
7. Observatory of Economic Complexity (OEC), “South Korea Exports,” accessed September 29, 2022.
8. The Korea Herald, “K-content industry sets another export record in 2020 at $11.92b,” accessed September 29, 2022.
9. Ministry of Science and ICT (MSIT), “MSIT to Announce Pan-Government Strategy on Metaverse,” accessed September 29, 2022.
10. Kim Eun-Jung, “VR theme parks emerge as new urban entertainment trend,” Yonhap News Agency, March 22, 2019.

SOUTH KOREA IN NUMBERS

Potential 2035 economic impact of the metaverse:

US$36-67B per year, 1.3-2.4% of GDP
2020 GDP:

1.62T

US$

Per capita(Constant 2017 US$):Key sectors:

US$(high income)Manufacturing

Real Estate

27.9

7.8

42,336of GVA%ICT sector:of GVA%

Wholesale &Retail Trade

7.5
of GVA%

5.2
of GVA%

Population:

52M

81%

urban

26%

below 25

72%

with basic digital skills

1%unbanked

Sources: World Bank World Development Indicators 2020, Our World in Data 2017, ITU Digital Development
Dataset 2019, World Bank Global Findex, South Korea National Statistics

Globalinnovation index:#5/132

EIU businessenvironment ranking:#21/99

Digitalreadiness index:#8/14185

2The Metaverse in Asia | Strategies for Accelerating Economic Impact

Technology Fundamentals• South Korea leads in technology fundamentals in Asia, with asolid foundation in digital infrastructure. It stands as one of
the global leaders in consumer 5G experience,11 boasting thehighest level of internet availability amongst OECD countries,12with widely accessible and affordable high speed internet.
• South Korea is also poised to extend its lead in 6G deployment
through commercialization by 2028.13• The gap in available shared data center facilities is closing as
South Korea transitions away from local enterprise facilities
towards a co-location centric data center market, allowing for
more efficient and cheaper entry for enterprises to venture into
the metaverse and will go towards closing the wide digital gap
between SMEs and large enterprises.14

5G Coverage (%)
98
International
Bandwidth perinternet user

Fixed Broadband
Subscriptions per
100 inhabitants
44
58• South Korea has strong cybersecurity, ranking 4th in the ITU's
Global Cybersecurity Index.15

29

18
117
Active Mobile Broadband
Subscriptions per 100
inhabitants

ICT Goods
Exports (% ofmerchandise trade)

11. Opensignal, “Benchmarking the Global 5G Experience,” accessed September 29, 2022.
12. Organisation for Economic Co-operation and Development (OECD), “OECD internet access data 2020,” accessed
October 5, 2022.
13. Yonhap, "S. Korea aims to comercialize 6G mobile serices by 2028: ICT minister," Korea Herald, October 19, 2022.
14. OECD, “Economic Survey of Korea 2020,” accessed October 5, 2022.
15. International Telecommunication Union, “Global Cybersecurity Index 2021,” accessed October 5, 2022.

86

ICT Goods Imports(% of merchandise trade)

Sources: 'GSMA Mobile Connectivity Index 2021, ITU Digital Development Dashboard 2020, UNCTADStat 2019'

South Korea
Asia Average (Selectedeconomies)3

3

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Ecosystem Enablers
Technology Readiness of Business
In South Korea, platform providers such as Naver and Kakao, as wellas entertainment, telecommunications, and financial companies draw
consumers into the world of the metaverse. With that in mind, a governmentled industry alliance, created to establish the country's metaverse ecosystem,
has grown from 25 firms at launch to over 500, including Samsung, Hyundai,and SK Telecom.16 This alliance promises to unlock a wider range of business
opportunities across multiple sectors.

South Korea faces the challenge of a high digital gap between large andsmall firms, particularly in areas like cloud computing, big data, and artificial
intelligence.17 With technological giants like Samsung joining the metaverse
alongside smaller and medium-sized companies, the hope is that knowledgetransfer and partnerships between firms can accelerate development. The
public sector’s role in facilitating and fostering cooperation among companies
cannot be underestimated.

Security and Privacy
Korea is ranked highly on cybersecurity, it also had the second highest
share of internet users experiencing privacy violations in the OECD.18
The younger populace, aged 10-29, were found to be at much higher
risk of internet or smartphone addiction than other age categories.19
The government is committed to setting ethical principles for the
metaverse to make it a safe environment for all users.20 As a first step,
the metaverse alliance is a useful platform for companies to innovate
under the watchful eye of regulators. Nevertheless, forward-leaning
regulations and enforcement frameworks are necessary to ensure
trust in economic transactions and social well-being.

Digital Skills
To meet its target of 40,000 metaverse professionals by 2026, thegovernment has begun to foster a pipeline of digital talent. The “Metaverse
Academy”, set up by the Ministry of Science and ICT, had its first intake offuture developers and creators in December 2021. 21
There are also complementary plans for metaverse graduate schools, with
two universities, KAIST and Sogang University which will begin enrollment in
the second semester of 2022.22 To attract foreign talent, a Korean language
institute in the metaverse and a “K-Metaverse Academy” that connects
global startups with local content companies are also in the works.

16. The Korea Times, "Korea launches 'metaverse' alliance," accessed October 19, 2022.
17. Ibid.
18. OECD, “Economic Survey of Korea 2020,” accessed September 29, 2022.
19. Ibid.
20. Yahoo Finance, "South Korea and Meta to ramp up metaverse safety," accessed October 19, 2022.
21. Smart Times, "S. Korea’s science ministry opens metaverse academy for youths," accessed October 19, 2022.
22. Smart City Korea, "Selected by the Ministry of Science and Technology, Metaverse Graduate School of Convergence, KAIST and Sogang University," press release, May 25, 2022.

87

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Sectors to Watch
Entertainment and MediaOver the past decade, South Korea’s entertainment and media industry has
grown by leaps and bounds to capture the popular imagination. It has the
6th largest music industry in the world, the 2nd largest in Asia, the highest
number of films consumed per capita, and is a top four gaming market
worldwide.23 These pillars of music, film, and gaming continue to growrapidly as South Korea’s cultural pull strengthens.

Manufacturing
The metaverse has the potential to supercharge the diverse manufacturingbase of South Korea. South Korean auto giant Hyundai Motors signed
a memorandum of understanding with leading real-time 3D content
developer Unity to build a digital twin factory. With plans to apply thistechnology to its new center in Singapore, the virtual factory will enable
Hyundai to test-run a factory remotely.25

Metaverse-related content is making it big. Aespa is a 4-member
metaverse-themed K-pop group that each have their own virtual avatars.
Their first music video had YouTube’s fastest climb to 100 million views for a
K-pop debut.24 As one of the most digitally connected societies in the world
with fast and reliable internet, South Korea is well-placed to be a forerunnerin creating metaverse entertainment experiences.

The bigger economic impact can be realized once smaller companies areable to deploy metaverse technologies too. At the world’s largest industrial
fair Hannover Messe 2022, South Korean start-up DigiForet impressedwith its “Manufacturing AI Metaverse Factory”, where participants operated
various functions connected to a real factory, such as running the platingprocess and optimizing the operation of a plating bath based on theanalysis of the manufacturing AI.26 Sponsored by the Ministry of SMEs
and startups, the experience showcased the possibilities of uplifting the
manufacturing competitiveness of Korean SMEs.

23. Newzoo, "Key Insights into South Korean Gamers | Newzoo Gamer Insights Report," accessed October 19, 2022.
24. Raisa Bruner, ”How K-Pop Group Aespa is Making the Metaverse their Home,“ Time, May 11, 2022.
25. Pulse, ”Hyundai Motor Teams Up with Unity on Metaverse Factory to Innovate Productivity,“ Maeil Business News Korea, January 7, 2022.
26. Hannover Messe, "DigiForet," accessed October 19, 2022.

88The Metaverse in Asia | Strategies for Accelerating Economic Impact

TaiwanPotential 2035 economic impact of the metaverse

US$17-32

B per year

89

The Metaverse in Asia | Strategies for Accelerating Economic Impact

TaiwanTaiwan’s edge in hardware manufacturing equips the
economy to play a critical role in the metaverse valuechain – Taiwan’s semiconductor foundries account forover 60% of the global market share in production,1
and 92% for leading-edge semiconductor production.2
These hardware firms provide a strong foundation for
the growth of other firms along the metaverse valuechain. Taiwan Semiconductor Manufacturing Company(TSMC), the world’s leading semiconductor foundry,has been chosen by Apple to develop advanced display
technology for its proprietary AR devices.3 Display andoptical technologies are also crucial components of AR/
VR devices which can be used to access the metaverse.
Hence, Taiwan's advantages in manufacturing make it afrontrunner in AR/VR components development
and procurement.

“

The economy has a lofty digital ambition to redefineinternet access as a basic human right, paving the wayfor equitable access to the economic opportunities in
the metaverse. The target is underpinned by a robust
digital infrastructure plan, announced in 2017 by the
Executive Yuan, Taiwan’s highest administrative organ.
Taiwan has committed to providing 1Gbps internet
access in 90% of the territory to eliminate the urbanrural gap. It also plans to cultivate an innovative anddigitally-adept workforce through an online innovative
learning environment, and nurture digital creativeand cultural content into a trillion-dollar industry(US$33 billion).4 Achieving these plans will expand theeconomic impact of the metaverse domestically.

Taiwan is touted as one of the world’s first open
digital democracies. Having piloted consensusmaking digital platforms, Taiwan can help toextend these learnings into the metaverse.
Policy-making that actively seeks consensus hashelped the economy to sidestep the polarizationand controversy that has been associated withother digital platforms.5 The government has
been in close collaboration with civic hackers
which will begin enrollment tools to nurture a lessdivided citizenry. Transparency and collaborativedecision-making are the principles of the Taiwan
civic hackers, which leverage software to augment
politics. As an open and interoperable metaverse
could foster greater levels of collaboration throughits network effects, Taiwan could serve as a beaconon navigating civic participation in the metaverse.

Taiwan is a central node of the globe’s semiconductor ecosystem and a cutting-edge
pioneer on emerging technologies like hardware-software integration, chipsets, processors,
5G and Wifi6. Taiwan developers and artists have also won global awards for VR content
creation. These are all essential elements in the metaverse.

“

Sandra Oudkirk, Director of American Institute in Taiwan @ Meta XR Hub Taiwan Launch Ceremony, 6 May 2022

1. Department of Investment Services, Invest Taiwan, Key Innovative Industries in Taiwan: Semiconductor Industry, 2021, p. 6.
2. The White House, Building Resilient Supply Chains, Revitalizing American Manufacturing and Fostering Broad-Based Growth, 2021, p. 12.
3. Lauly Li and Cheng Ting-Fang, “Apple Partners With TSMC to Develop Ultra-Advanced Displays,” Nikkei Asia, February 10, 2021.
4. Executive Yuan, “Executive Yuan Unveils Digital Infrastructure Project,” press release, March 21, 2017.
5. RadicalxChange, “Taiwan: Grassroot Digital Democracy that Works,” accessed October 3, 2022.

90

1

1

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Macroeconomic Determinants• Taiwan’s service sector makes up 61% of GVA and employsaround 60% of the labor force. The main sectors contributing
to Taiwan’s economy are manufacturing (33.8%),6 wholesale
and retail trade (16.2%) and real estate (7.9%).7 These sectors
are expected to be impacted by the metaverse in the near to
medium term.

• GDP per capita is $28,371 - affordability of required immersive
hardware may not be a limiting factor on the development of
the metaverse.
• Strong export base, with external trade 118% of GDP. Exports
reached record highs of US$446 billion in 2021 despite theweak global economy due to heightened demand for its
technological products8.
• Economies like China (40% of exports) and US (15% ofexports)10 becoming self-sufficient in key technologies may
pose challenges to Taiwan’s role within the metaverse
value chain.
9

TA I WA N I N N U M B E R S

Potential 2035 economic impact of the metaverse:

US$17-32B per year, 1.3-2.4% of GDP
2020 GDP:

656B

US$

Per capita(Constant 2017 US$):Key sectors:

US$(high income)Manufacturing

28,371of GVA%

Wholesale &Retail Trade

Real Estate

16.2
of GVA%

7.9
of GVA%

3.1
of GVA%

Population:

23.6M
79%

urban

26%

below 25

5%
6. ING Group, “Taiwan Economic Update: Inseparable From Semiconductors,” accessed October 3, 2022.
7. Department of Investment Services, Invest Taiwan, Key Innovative Industries in Taiwan: Service Industry, 2020.
8. Betty Hou and Cindy Wang, “Taiwan’s 2021 Exports Soar to Record $446b on Tech Demand,” Bloomberg, January 7, 2022.
9. Sarah Zheng, “China Reliance on Taiwan would Make Trade Retaliation Costly,” Bloomberg, August 17, 2022.
10. Evelyn Cheng, “Taiwan’s Trade with China is Far Bigger than its Trade With the US,” CNBC, August 4, 202211.

33.8

ICT sector:

unbanked

Note: Taiwan is not ranked on the Global Innovation Index, EIU Business Environment Ranking, and Digital Readiness Index
Sources: Our World in Data 2017, ITU Digital Development Dataset 2019, World Bank Global Findex, Official Government Statistics

91

2

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Technology Fundamentals
Fixed Broadband Subscriptions per
100 inhabitants• Meta choosing to set-up its first Asian Extended Reality (XR) Research
Hub in Taiwan11 is a testament to its strong technology fundamentals• Its semiconductor foundries account for over 60% of the
global market share in production, and 92% of leading-edge
semiconductor production.12• The government aims to increase accessibility to high-speed internet
to eliminate the urban-rural gap through 1Gbps internet access in 90%of the economy and the setting up of responsive digital government
services in rural areas.13• The newly set-up Ministry of Digital Affairs, overseen by Audrey
Tang, will further develop digital governance and cybersecurity
preparedness, and promote cooperation in digital services and data
democratization.14

25
5G Coverage (%)
70

123• The ministry has shown a willingness to utilize emerging digitaltechnologies, such as the Web 3.0 InterPlanetary File System (IPFS), to
guard its government websites against cyberattacks through a morerobust decentralized file network.15• Taiwan’s digital skills training is hardware-inclined. The government has
set-up semiconductor R&D centers to cultivate industrial talent, withan additional 10,000 semiconductor professionals per year.16 After thelaunch of its cybersecurity strategy in May 2021, Taiwan has trained
around 2,600 IT security professionals.17

11. Taipei Times, “Meta Launches Asia’s First XR Hub in Taipei,” accessed October 3, 2022.
12. Yen Nee Lee, "2 charts show how much the world depends on Taiwan for semiconductors," CNBC, March 15, 2021.
13. Comms Update, "Asia Pacific Telecom aims to reach 90% of population with 5G by end-2021," accessed October 19, 2022.
14. Liu Tzu-Hsuan, “Digital Affairs Ministry to be Launched on Aug 27,” Taipei Times, August 6, 2022.
15. Matt Haldane and Xinmei Shen, “Taiwan’s Digital Affairs Ministry Turns to Web3 to Guard Against Mainland China Cyberattacks
following Pelosi’s Visit,” South China Morning Post, August 11, 2022.
16. Department of Investment Services, Invest Taiwan, Key Innovative Industries in Taiwan: Semiconductor Industry, 2021, p. 3.
17. Department of Investment Services, Invest Taiwan, Key Innovative Industries in Taiwan: Information Security, 2021, p. 3.

92

Active Mobile Broadband
Subscriptions per 100
inhabitants

31
53
ICT Goods
Exports (% ofmerchandise trade)

ICT Goods Imports(% of merchandise trade)
TaiwanAsia Average (Selectedeconomies)

Sources: GSMA Mobile Connectivity Index 2021, ITU Digital Development Dashboard 2020, UNCTADStat 2019
Note: Data on International Bandwidth per Internet User is not available for this economy

3

3

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Ecosystem Enablers
Competition within the metaverse
Domestic hardware firms like Foxconn, ASUS, TSMC and HTC are global
players in their respective fields with deep manufacturing capabilities.
Growth in their areas of expertise will be further supported by theadministration, with Taiwan’s National Development Council identifying
digital technology as a core strategic industry to power economic growth.18
Nurturing more software-centric firms could help Taiwan bridge the value
chain between hardware and content companies in the metaverse. Audrey
Tang, Taiwan’s digital minister, has commented that the digital ecosystem
will benefit from the shorter iteration cycles and service-oriented
perspective that software-centric firms can bring to the table.19

Although a new wave of software-centric firms have emerged,
strengthening the pool of software firms will require a greater diversity offinancing options20 and retention of software talents.
Strengthening the pool of software firms can also bridge Taiwan’s deep
hardware capabilities with its content producers. With a deep networkof artistes that started the Taiwanese Mandopop boom, the firstmetaverse music label, 0x0, has emerged in the territory.21 Taiwan is
also emerging as a global leader in VR content production, and its VR
films have become a regular feature in international film festivals.22 La
Camera Insabbiata, a Taiwan-US co-production, also won the best VR
experience award at the Venice Film Festival’s 1st VR competition. The
documentary “FORMOSA 3D” directed by Charlie Chu, looks at forgotten
craftsmanship through augmented reality.23

Accessibility
When it comes to ensuring equal access to the metaverse, Taiwan starts
from a position of strength. Today, Taiwan ranks the 5th most free on theinternet globally in 2021 by the Freedom House,24 and the freest in Asia.
Thanks to President Tsai Ing-Wen administration's commitment to increaseinternet accessibility as a leading national concern,25 there are no significant
digital divides, except with slight geographical and age disparities.26
Taiwan has also implemented the Web Content Accessibility Guidelines
2.0 in 2017 that allow people with disabilities to access web content moreeasily.27 By pressing on with this commitment to ensure access for all to thenext version of the internet, Taiwan will be a leading example in the region
on how this can be achieved and the social benefits of doing so.

18. Executive Yuan, “President’s Six Core Strategic Industries to Power Economic Growth,” press release, December 10, 2020.
19. Public Digital Innovation Space, “Audrey Tang Interview with Cindy Sui,” interview transcript, September 22, 2017.
20. Khamila Mulia, “Taiwan Sets Sights to Become AI Hub, with Southeast Asia as Primary Market,” KrAsia, February 25, 2021.
21. Ryan Huang, Violet C Lo and Xin-Wu Lo, “Taiwan Startup Ecosystem Survey,” PwC and Taiwan Institute of Economic Research, 2021, p. 26.
22. Franchesca Judine Basbas, “Taiwan Launches First Metaverse Music Label ‘0x0’, Debuts New Supergroup Medicine Man and A-Pop,” Bandwagon Asia, May 20, 2022.
23. Taipei Times, “Taiwanese VR film wins grand prize in Venice,” September 13, 2022.
24. Freedom House, Freedom on the Net, 2021, p. 38.
25. Nicolas Rapold, “‘The Shape of Water’ Takes Top Venice Film Festival Prize,” New York Times, September 9, 2017.
26. Chris Wang, “2012 Elections: Tsai Pledges to Upgrade ICT on a par with Seoul,” Taipei Times, December 23, 2011.
27. Web Accessibility Initiative, "Taiwan," accessed on October 19, 2022.25.

93

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Sectors to Watch
Technology and Manufacturing
Taiwanese technology and manufacturing giants are poised to capitalizeon the upcoming opportunities in the metaverse. Having establishedthemselves within the global technology ecosystem, companies like
TSMC, MediaTek and HTC have hinted at their metaverse plans. Mark
Liu, Chairman of TSMC, believes that AR and VR devices could replacesmartphones and personal computers, respectively, and TSMC has beendeveloping the technologies needed for metaverse applications.28
HTC similarly has the metaverse firmly in its sight, with recent productlaunches compatible with the metaverse - HTC Vive, a VR headset, andDesire 22 Pro, which comes with a digital asset wallet and VR headset
pairing.29 The explosive demand for increasing compute power met by
the growing clusters of data centers across the globes are also quietly
powered by Taiwanese original design manufacturers (ODM), like QuantaComputer, Wiwynn, Inventec and Foxconn, all based in Taiwan.30

28. Coinspeaker, "The New HTC Desire 22 Pro Comes with Crypto and NFT Wallet Features," accessed October 19, 2022.
29. Taipei Times, ““Metaverse” Concept Likely to Create Huge Opportunities, TSMC and MediaTek Say,” accessed October 3, 2022.
30. Patrick Moorhead, “Lenovo’s Secret Recipe for Hyperscale Success is Called ODM+,” Forbes, October 22, 2018.
31. Taiwan Creative Content Agency, “TAICCA Brochure,” accessed October 14, 2022.

94

Government
Immersive environments in the metaverse could facilitate thegovernment in achieving various policy aims – from increasing
foreign direct investments to more forms of participation methods indemocratic processes. In collaboration with Smart City Taiwan Program,iStaging, an AR/VR solution provider, has experimented with providing
investors with AR/VR tours during the planning stage of industrial parkdevelopments. Taiwan Creative Content Agency (TAICCA), a government
agency, is actively promoting the integration of technology and creative
content. Its Immersive Content Grant funds creative projects that can beinteractive, multiplayer, AR, VR, MR, haptic, sound, or location-based.31
The Taiwanese government currently utilizes digital platforms, like join.
gov.tw, as local town halls. Access to the metaverse could provide
administrators with more tools to run townhalls more smoothly, while
increasing the variety of participation methods.

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Thailand
Potential 2035 economic impact of the metaverse

US$11-21

B per year

95

The Metaverse in Asia | Strategies for Accelerating Economic Impact

ThailandThe Thai Government has been quick to follow suit,with its Digital Economy and Society Ministry laying out
its plans to prepare for the technological sophistication
and regulatory complexity of the metaverse.2

Digital growth is a vital engine to achieve the country’s
targets to realize economic prosperity under Thailand
4.0. Thailand has undertaken regulatory reforms
in areas related to metaverse activities, including
crypto-friendly tax rules, personal data protection
and cybersecurity.3 The country already has a strong
technological foundation, with one of the fastest fixed
broadband speeds in the world.4

The creative sector contributed 10% of the GDP in
2021, far surpassing Asia's average of 3.5%.5 The
metaverse presents a new platform to generatevalue from Thailand’s combination of creative,
entrepreneurial and technological talents.

Thailand is also well-positioned to shape theopportunities that the metaverse will provide for thecreator economy. Thailand’s bustling creative sector is
influenced by its multi-cultural heritage.

government has developed wireless broadband to drive the“ Thecountry forward so it can benefit from the advent of virtual reality,

metaverse technology and the next evolution of the digital economy.
Minister Chaiwut Thanakamanusorn, Ministry of Digital Economy and Society,at the Bangkok Post Tech Conference 2022

1. Bangkok Post, "Thailand tops global digital rankings," accessed October 19, 2022.
2. Komsan Tortermvasana, “Thailand eyes metaverse gains,” Bangkok Post, June 30, 2022.
3. Tita Sanglee, "Is Thailand Ready for the Metaverse?," The Diplomat, December 10, 2021.
4. Bangkok Post, “Thailand Tops Internet Speed Testing,” accessed October 3, 2022.
5. Royal Thai Embassy, "Thailand’s creative industries showing steady growth," accessed October 19, 2022.

96“

Thailand is one to watch with multiple metaverse
projects sprouting from its entrepreneurial businesssector. Their willingness to take risks is due, in no smallpart, to their large market of ultra-connected Thaiconsumers, who top global rankings for weekly online
purchases, cryptocurrency ownership and mobilebanking app usage.1

1

1

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Macroeconomic Determinants• Thailand overall is a service-based economy (58.3% of
GVA). The three largest sectoral contributors to Thailand's
economy are manufacturing (25.2% of GVA), followed bywholesale and retail trade (16.8%), and agriculture, forestry
and fishing (8.6%).
• Thailand's GDP per capita stood at US$17,253 in 2020,
falling in the middle of the pack of the selected economies,suggesting that affordability of required immersive hardware
on average may be a limiting factor on the economic impactof the metaverse.
• Thailand is ranked 43rd in the world and 5th among
upper-middle income group economies based on the
Global Innovation Index 2022. By harnessing its innovation
potential, the metaverse could encourage a fresh spurt ofgrowth for the country.

THAILAND IN NUMBERS

Potential 2035 economic impact of the metaverse:

US$11-21B per year, 1.3-2.4% of GDP
2020 GDP:

432B

US$

Per capita(Constant 2017 US$):

17,253US$(upper middle income)Key sectors:

ICT sector:

Manufacturing

25.2
of GVA%

Wholesale andretail trade

16.8
of GVA%

Agriculture,
Forestry and Fishing

9%of GVA

2.9
of GVA%

Population:

70M

51%

urban

31%

below 25

17%

with basic digital skills

4%

unbanked

Sources: World Bank World Development Indicators 2020, Our World in Data 2017, ITU Digital Development
Dataset 2019, World Bank Global Findex, UN Data

Globalinnovation index:#43/132

EIU businessenvironment ranking:#28/99

Digitalreadiness index:#55/141

97

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Technology Fundamentals
5G Coverage (%)• The Thai population is a highly connected one with 80% of those aged
above 15 having access to the internet, 100% owning mobile phones
and 92% having made or received a digital payment.6• Thailand has topped We Are Social/Hootsuite’s Digital 2022 global
rankings for weekly online and online grocery purchases, andownership of cryptocurrency. The country was also first for mobilebanking app usage in last year’s ranking.7• The speed of fixed broadband service ranks third globally with anaverage download speed of 188.75 megabits per second (Mbps).8
Thailand is set to maintain this lead as it quickly rolls out 5G.

76
International
Bandwidth perinternet user

Fixed Broadband
Subscriptions per
100 inhabitants
62• These impressive statistics mean Thai consumers are in a strong
position to benefit from new applications in the metaverse economy.

16• Thailand’s export-driven economy (~60% of GDP)9 and large electronics
manufacturing base could stand to gain in the near term as related
electronic product demand increases. In particular, its emerging
semiconductor industry may see accelerated growth. These hinge on
the country’s ability to maintain political stability.

• With all government data sets set to be stored on the cloud by 2025 aspart of the Government Data Center and Cloud project, this unleashes
opportunities for the use of big data.10 Through leading by example
with the adoption of cloud technologies, this can increase trust
amongst the general population and businesses in these technologies.

6. World Bank, "The Global Findex Database 2021: Financial Inclusion, Digital Payments, and Resilience in the Age of COVID-19,"
accessed October 19, 2022.
7. We Are Social, "Digital 2022: Another Year of Bumper Growth," accessed October 19, 2022.
8. Speedtest, “Thailand’s Mobile and Fixed Broadband Internet Speeds,” accessed October 3, 2022.
9. World Bank, “Export of goods and services (2017 – 2021),” accessed October 5, 2022.
10. Pattaya Mail, "Thai cabinet approves 6.2 billion baht for government cloud system," accessed October 19, 2022.

98

16

15

90
Active Mobile Broadband
Subscriptions per 100
inhabitants

ICT Goods
Exports (% ofmerchandise trade)

ICT Goods Imports(% of merchandise trade)

Sources: GSMA Mobile Connectivity Index 2021, ITU Digital Development Dashboard 2020, UNCTADStat 2019

ThailandAsia Average (Selectedeconomies)3

3

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Ecosystem Enablers

Competition within the metaverse
With a strong entrepreneurial culture, Thai companies have beenquick to explore opportunities in the metaverse. The Metaverse
Thailand project operates a virtual version of downtown Bangkok andenables businesses to operate on their virtual land plot replete with aSingapore business address.11 Real estate company Magnolia Quality
Development has teamed up with a Thai animation company T&B
Media Global to sell digital structures in their virtual town Translucia.12
Thai metaverse designer Brandverse is spearheading a collaboration
with mall developer Central Pattana, 7-Eleven, and over 50 othercompanies and brands, on metaverse business opportunities such as
selling digital assets and holding virtual events.13 Thailand's leading
cryptocurrency exchange, Bitkub, has a registered capital of THB 290
million.14 Beyond serving as an exchange, Bitkub has also launched ametaverse platform where users can trade NFTs, as well as an academythat educates consumers on digital assets and blockchain technology.

Security and Privacy
Thailand has recently implemented data privacy laws,15 enabling Thaicompanies to better navigate digital opportunities and encouraging
consumer participation through the peace-of-mind it confers. However, thelegislation may need further strengthening to anticipate increasing amountsof personal data that the metaverse will collect, such as the tracking of eye
movements within VR headsets.
Thailand’s cybersecurity also bears concern, with the country lagging behind
its Asian peers, coming 44th in GSMA Global Security Index 2020. In his
comments at the 2022 Bangkok Post Tech Conference, Minister of Digital
Economy and Society Chaiwut Thanakamanusorn recognized the importanceof personal data privacy and cybersecurity, especially in the metaverse
era.16 He emphasized his Ministry’s commitment to improving cybersecurity
through the office of the National Cyber Security Commission and cited plans
to strengthen laws for personal data protection.

Accessibility
While Thailand boasts high levels of connectivity, this may not reflect theuneven distribution of accessibility to the internet across the country.
Geographically, Northeastern (56.8%), North (59.6%) and Southern (65.2%)
Thailand have some of the lowest levels of internet users within the
country, far below the figures in Bangkok (83.5%).17
75% of households are connected to the internet via a 3G or higher
mobile network.18 However, across income strata, only 59% of households
in provinces in the bottom quartile of GDP per capita have an internet
connection in the home, compared to 79 per cent in the top quartile.19 The
country will need to rapidly increase the accessibility and affordability of the
speedy internet connectivity to its populace, so that Thais can have more
equitable access to the emerging opportunities of the metaverse.

11. Metaverse Thailand, "What is Metaversethailand.io," accessed October 19, 2022.
12. Bangkok Post, "T&B Media launches 'Translucia' Metaverse, a Virtual World, partnering with MQDC in property -- a new world first," accessed October 19, 2022.
13. Kosuke Inoue, “Thai real estate firms hang their shingles in the metaverse”, Nikkei Asia, June 14, 2022.
14. World Economic Forum, "Bitkub Group," accessed October 19, 2022.
15. International Trade Administration, "Thailand Personal Data Protection Act," accessed October 19, 2022.
16. Bangkok Post, "Thailand eyes metaverse gains," accessed October 19, 2022.
17. Alexandra Dalferro, “Thailand’s Digital Divide: Leave No One Behind”, Fulcrum, June 27, 2022.
18. ITU, “E-learning in Thailand: Mapping the Digital Divide,” accessed October 3, 2022.
19. Alexandra Dalferro, “Thailand’s Digital Divide: Leave No One Behind,” Fulcrum, June 27, 2022.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Sectors to Watch
TourismWith a yearly contribution of around 18% to GDP prior to the pandemic,20
tourism is a sector which could derive further value from the metaverseby leveraging on immersive. experiences to further appeal to a greaternumber of international tourists. This will provide a significant boost to theThai economy as international travelers outspend their local counterparts
substantially, accounting for 60% of all tourism spending despite only
making up 33% of overall travelers in Thailand in 2019.21
The Tourism Authority of Thailand has begun experimenting in the
metaverse with the release of the “Amazing Thailand Metaverse: Amazing
Durian” virtual travel experience, a collaboration with the provinces of
Chanthaburi, Rayong, and Si Sa Ket. Through their smartphone or PC,21
tourists can create their own avatar to explore a virtual durian orchard.
Users can do so without the need for a VR headset, which creates anaccessible immersive experience.

Creative Services
Thailand ranks within the top ten creative goods exporters amongst
developing countries.23 The development of the creative and cultural
services is one of the technological and industrial goals described in the“Thailand 4.0” strategy,24 with the establishment of the Thailand Creative
Economy Agency to turn the industry into a creative hub of ASEAN andthe offering of both tax and non-tax incentives to the creative industry.
Thai virtual influencer agency SIA Bangkok has also demonstrated thetechnological capabilities to develop realistic AI humans with ‘AI-Ailynn’, thecountry’s first AI influencer.25
Thailand has inventively applied tokenization to attract new sourcesof funding for creative projects. Destiny tokens, Thailand’s first digital
investment token in a movie BuppeSanNivas 2, was oversubscribed andsold-out, raising US$7.5 million. The token was released by Kubix, under
Kasikorn Bank, to democratize investment opportunities in films to thegeneral public.26 The movie was released in July 2022, and has been thehighest grossing Thai film of 2022 so far.27

20. Travel Daily, "Tourism accounts for 18% of Thai GDP," accessed October 19, 2022.
21. McKinsey & Company, “Reimagining travel: Thailand tourism after the COVID-19 pandemic,” accessed October 3, 2022.
22. The Star, "Thailand offers virtual ‘Amazing Durian’ experience on metaverse; aims the tour for tourists to explore durian farms," accessed October 19, 2022.
23. United Nations Conference on Trade and Development, Creative Economy Outlook: Trends in International Trade in Creative Industries, 2018.
24. Royal Thai Embassy, "National strategy Thailand 4.0 officially launched," accessed October 19, 2022.
25. Bangkok Post, "First made-in-Thailand virtual influencer debuts," accessed October 19, 2022.
26. Kaisorn Bank, "KBTG establishes Kubix, a new company for the digital asset business," press release, March 19, 2021.
27. The Nation Thailand, Popular TV drama spin-off sets new box-office record," accessed October 19, 2022.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Vietnam
Potential 2035 economic impact of the metaverse

US$9-17

B per year101The Metaverse in Asia | Strategies for Accelerating Economic Impact

VietnamThe Vietnamese are entrepreneurial, creative andyoung – 37% are under 25 years of age. These traits
help the country punch above its weight in shaping
the future of the web. Vietnam has been one of themost active players in the Web3 space. Its tech unicorn,
Sky Mavis, popularized the “GameFi” (or play-to-earn)concept with its hit blockchain-focused game Axie
Infinity. Vietnam also topped the 2021 Chainalysis
Global Crypto Adoption Index signalling broad social
acceptance of cryptocurrencies largely driven initiallyby remittance payments.1 It is still uncertain the extent
to which cryptocurrencies and the decentralized web
will feature in the future of the metaverse. However,this embracing attitude by not just start-ups, but also

by the broader population, of new web technologies
and use cases puts the country firmly on its path toachieving its “Make in Vietnam” strategy.2

content industry signal a confident future for madein-Vietnam metaverse products and its over 1-million
strong IT labor force.4

This will provide momentum for the Government
to achieve its ambitious target of growing its digital
economy from the current 8.2%3 of GDP to 20% by
2025 and 30% by 2030, transforming from a low-tech
manufacturing to a service-oriented economy. The
country launched its “Make in Vietnam” strategy in2019 to develop its domestic ICT industry by shiftingfrom assembly and outsourcing to one with strong
local capabilities for product creation and design. The
Metaverse Village in Da Nang and a burgeoning digital

The Vietnamese government is actively putting in place
the guardrails for the digital age, including a flurry of
regulatory reviews of digital-related laws in the next 1-2
years.5 Already, Vietnam’s cybersecurity has improvedby leaps and bounds, rising a whopping 75 places injust 5 years from 100th place in 2017 to 25th place in
2021 on ITU’s Global Cybersecurity Index.

Vietnamese tech products created in Viet Nam, manufactured in“ MakeViet Nam, designed in Viet Nam, solving Vietnamese issues, reaching out“

to the region and the world.

Nguyen Xuan Phuc, then-Prime Minister (now President) of Viet Nam, unveiling the “Make in Viet Nam” strategy at the
National Forum on Developing Vietnamese Technology Companies, May 9, 2019

1. Chainalysis, "The 2021 Global Crypto Adoption Index: Worldwide Adoption Jumps Over 880% With P2P Platforms Driving Cryptocurrency Usage in Emerging Markets," accessed October 19, 2022
2. Vietnam Investment Review, "Make in Vietnam, by Vietnam for a fresh digital orientation," accessed October 19, 2022.
3. Vietnam Net Global, “Vietnam’s growth potential lies in the digital economy” accessed October 3, 2022.
4. Saigon Online, "One million people working in IT industry in Vietnam," accessed October 19, 2022.
5. Connect on Tech, "Vietnam: New Draft Law on e-Transactions Targeting Digital Platforms," accessed October 19, 2022.

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1

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Macroeconomic Determinants• Overall, Vietnam is a manufacturing and raw resource
economy, with the three largest sectoral contributors toVietnam's economy being manufacturing (18.5% of GVA),
followed by agriculture, forestry and fishing (16.5%), andwholesale and retail trade (12.9%). Phones and computers
are among the country’s top 10 main export products.
• Vietnam’s ICT sector currently only contributes 0.75% of
GVA, but this is expected to grow with Vietnam’s digital
ambitions and “Make in Vietnam” strategy.6• Vietnam is ranked 48th in the world on the Global
Innovation Index 2022 and 2nd among 34 lower-middle
income economies.
• Vietnam's GDP per capita stood at US$10,338 in 2020,
suggesting that affordability of required immersive hardware
on average may be a limiting factor on the economic impactof the metaverse.

VIETNAM IN NUMBERS

Potential 2035 economic impact of the metaverse:

US$9-17

B per year, 1.3-2.4% of GDP

2020 GDP:

259B

US$

Per capita(Constant 2017 US$):10,338US$(lower middle income)Population:

96M

6. Vietnam Investment Review, "Make in Vietnam, by Vietnam for a fresh digital orientation," accessed October 19, 2022.

37%

urban

37%

below 25

17%

with basic digital skills

Sources: World Bank World Development Indicators 2020, Our World in Data 2017, ITU Digital Development
Dataset 2019, World Bank Global Findex, UN Data

Key sectors:

Manufacturing

18.5
of GVA%ICT sector:

Agriculture,
forestry and fishing

16.5
of GVA%

Wholesale &Retail Trade

12.9
of GVA%

Globalinnovation index:#48/132

EIU businessenvironment ranking:#45/99

Digitalreadiness index:#70/1410.7
of GVA%

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Technology Fundamentals
5G Coverage (%)• Vietnam was one of the first developing countries to implement
5G trials in 2019 and rolled out 5G deployment in 2022.7• The Ministry of Information and Communications targets toachieve nationwide 5G coverage within 1 year, prioritizing
industrial and high-tech parks and dense urban centers.8 The
Ministry has already set up a steering committee to promote
6G R&D.

• Smartphone penetration is high at 68% with plans to increase
this to 85% by end 2022.9 Given affordability challenges,
mass smartphone ownership may provide an entry path tometaverse experiences, albeit limited immersivity.

International
Bandwidth perinternet user

Fixed Broadband
Subscriptions per
100 inhabitants
66• Vietnam has a high unbanked population, with only 70% of
adults having a bank account and nearly half without accessto credit.10 This has driven many to cryptocurrency markets.
Ironically, this breeds familiarity with the potential future
payment rails of the internet despite the low interaction withtraditional banking services.

0

39

17

80
31

ICT Goods
Exports (% ofmerchandise trade)

ICT Goods Imports(% of merchandise trade)
7. Techwire Asia, "Vietnam is ahead of the game with commercial 5G," accessed October 19, 2022.
8. Ministry of Information and Communications, "Vietnam ready for 5G commercialization," press release, December 31, 2021.
9. OpenGov Asia, "Vietnam Targets 85% Smartphone Usage by 2022-End," accessed October 19, 2022.
10. Vietnam Investment Review, "Vietnam faces a possible gap in financial accessibility and awareness," accessed October 19, 2022.

104

Sources: 'GSMA Mobile Connectivity Index 2021, ITU Digital Development Dashboard 2020, UNCTADStat 2019'

Active Mobile Broadband
Subscriptions per 100
inhabitants

Vietnam
Asia Average (Selectedeconomies)3

3

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Ecosystem Enablers
Competition within the metaverse
Overall, Vietnam is ranked 54th out of 100 countries by StartupBlink’s
Global Startup Ecosystem Index 2022, up 5 places from 2021. Vietnam
also ranks 5th in Southeast Asia. Targeted focus could help it develop aniche advantage. A Metaverse Village11 has been set up in Da Nang to build
the ecosystem for metaverse technologies including researchers, startups, funders and other individuals. The Vietnam Blockchain Association
is working with global cryptocurrency exchange leader, Binance, on
blockchain research and application in Vietnam. Vietnam can capitalize on
the success of tech unicorns like Sky Mavis to attract talent and investment.

Digital Regulations
Comprehensive legislative reform is underway to support Vietnam’s digitaltransformation and prepare for the digital age. In May 2022, the Ministry ofInformation and Communications released a Draft Law on E-Transaction,
which includes a new chapter to regulate digital platforms.12
Large platforms will have additional obligations to mitigate risks suchas negative impacts on personal lives, freedom of press, children’s
rights, national health and security. Dominant large platforms mustalso provide users with information and options to manage algorithmic
recommendations.13

Accessibility
To fully realize the economic and social benefits of the metaverse, digital
inclusion is a priority. With only about 70% of its population using theinternet, and 17% with basic digital skills, there is a significant number atrisk of being excluded from the metaverse economy. On the cost front,
the country has managed to keep its internet rates among the cheapest in
the world, with its fixed internet unit price per capita income at 41% of theworld’s average and mobile equivalent at one-third of the world average.15
This has contributed to the high level of mobile broadband subscriptions.
Nevertheless, gaps in digital and financial literacy will need to be closed formore to participate in Vietnam’s digital economy.

Other legislations that form the guardrails for the metaverse are also
under review, including data privacy, cyber security, consumer protection,and intellectual property.14 Regulatory reviews for specific sectors such as
telecommunication and digital technology industry are also expected in thenext 1-2 years. These regulations are anticipated to place Vietnam’s digital
economy on a firm foundation of clear laws that protect its citizens whileallowing new metaverse technologies to flourish.

11. Vietnam Net Global, "Metaverse Village set up, connecting startups in virtual reality," accessed October 19, 2022.
12. Tilleke & Gibbins, "Understanding Vietnam’s Draft Law on E-Transactions," accessed October 19, 2022.
13. Baker McKenzie, “Vietnam: New Draft Law on e-Transactions Targeting Digital Platforms,” Lexology, May 1, 2022.
14. These include the Draft Decree detailing the Law on Cybersecurity (“CSD“); the Draft Decree on Personal Data Protection (“PDPD“); the Draft Decree amending Decree No. 72/2013/ND-CP on the Management, Provision, and Use of Internet Services and Online Information(“Draft Decree 72“); the Draft Amendment of Law on Consumers’ Rights Protection (“LCRP“); and the Amended Intellectual Property Law. Source: Manh-Hung Tran “Rise of the metaverse in Vietnam – What’s happening?" July 1, 2022.
15. Ministry of Information and Communications of Vietnam, “Internet rates in Vietnam are among the world’s cheapest, “accessed October 3, 2022.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Sectors to Watch
GamingFive of the top 10 game publishers, based on worldwide downloads, in theSoutheast Asia, Australia and New Zealand region come from Vietnam. The
country accounted for 22% of all games downloaded in Southeast Asia,
second to Indonesia with 38%.16 With a high smartphone penetration rate,
mobile gaming forms the largest segment and is growing exponentially.
Average mobile gaming revenue per user grew at a compound annual
growth rate (CAGR) of 30% over the past 5 years.17

Education
Vietnam’s e-learning market is projected to reach US$3 billion by 2023.19
The country was ranked among the top 10 growing Edtech markets globally,
posting annual growth rates of 44%, according to the Vietnam Edtech
Report 2021. With a growing demand for skilled labor in the manufacturing
and tech sectors, the Vietnamese government has set a goal to make online
education available at 90% of universities and 80% of secondary schools
and vocational training facilities by 2030.20

With the support of the Ministry of Information and Communications, theVietnam Game Development Alliance was formed in June 2022 with 60
online video game companies and a 10-member Coordination Committee
including VNG, Vietnam Esports, and Viettel Media.18 With the success of
Sky Mavis, VNG and the fast-growing base of mobile gamers in Southeast
Asia, Vietnam could leverage these early advantages in designing usercentric experiences and applying the latest digital technologies to drive
progress in the country’s digital transformation.

FPT, a leading IT services provider in Vietnam, is capitalizing on theseopportunities, rolling out an AI-enabled education app that has garnered
3 million accounts across 40,000 schools so far.21 One of Vietnam’s top
prestigious schools, The High School for Gifted Students, Hanoi National
University of Education, has also forayed into the metaverse with a digital
cultural museum. The museum will contain 3D artifacts and contributions
from students across the generations.22

16. Data.AI, “Vietnam as one of the world’s most dynamic mobile gaming markets", accessed October 3, 2022.
17. Statista, “Video Games – Vietnam,” accessed September 19, 2022.
18. IT Zone, "Launching an alliance of online video game publishers and manufacturers in Vietnam," accessed October 19, 2022.
19. Vietnam+, "Vietnam’s e-learning market projected to hit 3 billion USD by 2023," accessed October 19, 2022.
20. NikkeiAsia, “Vietnam edtech market soars to $3bn on remote learning boom,” December 18, 2021.
21. Ibid.
22. Coincu, "One of Vietnam’s top prestigious schools enters the metaverse," accessed October 19, 2022.

106

Given Vietnam’s young population, delivering education using the latest
technologies will give students first-hand experience, which will have knockon effects on other sectors as these digitally-native students graduate.

Appendices

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Appendix A Metaverse
marketsizing research
The table below provides an overview
of research examples that haveattempted to estimate the market size(i.e., revenues) of the metaverse. Theseestimates range from US$678.8 billion(Grand View Research) up to US$13
trillion (Citi GPS) per year by 2030,
reflecting the inherent uncertainty inpredicting the potential impacts of themetaverse at this stage.
108

Research Paper

Market sizing (i.e., revenue) estimates“Metaverse and Money”,
Citi GPS, 2022.

The metaverse would be potentially an US$8 trillion-US$13 trillion opportunity per year by 2030.

“Framing the Future of Web 3.0”,
Goldman Sachs, 2021.

The size of the metaverse is highly dependent on how much of the digital market shifts to the metaverse.
Estimates for the size of the metaverse correspondingly range from US$2.6 trillion to US$12.5 trillion annually inroughly 20 years or more.

“Value creation in the metaverse”,
McKinsey & Co, 2022.

By 2030, the value of the metaverse could reach US$5 trillion per year.

“Market Research Report”, Fortune
Business Insights, 2022.

The global metaverse market is projected to grow from US$100 billion in 2022 to US$1.5 trillion per year by 2029,
exhibiting a CAGR of 47.6%.

“The Metaverse. Web 3.0 Virtual
Cloud Economies”, Grayscale
Research, 2021.

The market opportunity for bringing the metaverse to life may be worth over US$1 trillion in annual revenue.

“Metaverse may be US$800 billion
market, next tech platform”,
Bloomberg, 2021.

The metaverse market could grow by 13.1% annually in the near future, growing from US$478.7 billion in 2020 to
US$783.3 billion per year in 2024.

“Market Analysis Report”, Grand
View Research, 2022.

The metaverse could grow at an annual compound growth rate of 39.4% from 2022 to 2030 and generate
revenues worth US$678.8 billion per year in 2030

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Appendix B - Metaverse
Impact Estimation
Metaverse Impact Analysis
This paper adopts the methodology developed in Deloitte's report on "TheMetaverse and its Potential for Türkiye”.
The metaverse has the potential to be a breakthrough technology, which
could change how the economy functions. The impact could be sizeable
and across many sectors. Further, the impact could increase as thetechnology matures, adoption increases, and the number of use cases
grow. Given that the metaverse is still in its early stages of development,
the full scale of the economic opportunity remains unknown.
As noted within the S-curve literature, the impact will be mostly felt
after the first phase of technological innovation. As per Web2.0, theoverall cycle could take two or more decades to mature.1 In this way, its
impact is inherently difficult to forecast and will depend on a wide set ofsocioeconomic factors and enablers. Early estimates, however, suggestthat the potential impact of the metaverse could be significant bothregionally and globally. Wider literature that assess the metaverse does
so in different ways and correspondingly using different methods. Somestudies look to evaluate the potential size of the metaverse economy(contribution study), or Total Addressable Market (TAM).

Such estimations do not distinguish between GDP growth and thedisplacement of other economic activities, for example:• The potential global market size estimates of the metaverse (i.e.,revenue) range from US$678.8 billion (Grand View Research) up to
US$13 trillion (Citi GPS) per year by 2030.2

By using an alternate methodology, leveraging existing literature and data,
it is hoped that this analysis can complement existing studies and provide
another perspective onto the prospective impact of the metaverse.

• The potential GDP impact estimates of the metaverse globallyrange from US$1.5 trillion per year by 2030 (PwC) and US$3 trillion(Analysis Group) per year by 2031.3

Context and wider literature
For digital innovations such as the metaverse to develop and become
available to enterprises and consumers on an international scale,investments will be required across a number of domains. This could
include investments across various forms of ICT capital such as
metaverse-specific hardware, computing and computing networks,
supporting infrastructure and in less tangible assets such as software,
databases and content creation. Therefore, to assess the potential
impact of the metaverse, a wider review of the literature relating theimpact of ICT capital to economic growth was undertaken.

Each estimation, and estimation approach, is accompanied by strengths
and weaknesses. This is underscored by the uncertainty surrounding how
the metaverse will develop, the adjacent assumptions required in such
estimations, and the validity of such assumptions, which cannot be tested.
Therefore, the aim of this analysis was to complement existing literature bydeveloping estimates to understand the potential impact of the metaverseon global economic activity.

A number of studies have attempted to quantify the relationship between
various forms of ICT and economic output or growth to observe howchanges in ICT impact economic growth. In this context, a large bodyof literature focuses on more discrete forms of ICT, digital technologies
and connectivity, such as internet access, broadband penetration andmobile connectivity, consistently finding a positive relation with economic
growth.4 For example, looking at 21 OECD countries from 1970-1990,

Other studies look to the potential impact on global- and country-level
GDP growth, aiming to evaluate how GDP may change as a consequenceof metaverse adoption and estimating the value of new output generated.
For example:

1. See a summary of the S-Curve literature by Analysis Group, The Potential Global Economic Impact of the Metaverse, 2022
2. Grand View Research, "Metaverse Market Size, Share & Trends Report, 2030," accessed September 28, 2022; Citi GPS, "Metaverse and Money”, accessed September 28, 2022.
3. PwC, "Seeing is believing”, accessed September 28, 2022; Analysis Group, "The Potential Global Economic Impact of the Metaverse," accessed September 28, 2022.
4. Banerjee, Rappoport & Alleman, “A Cross-Country Analysis of ICT Diffusion, Economic Growth, and Global Competitiveness," accessed September 28, 022.

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Roller and Waverman (2001) assessed the impact of telecommunication
infrastructure on economic growth, finding elasticities ranging from 0.0340.154%, indicating a 1% increase in telecommunication infrastructure wasassociated with a 0.034-0.154% increase in economic growth.5 Similarly,
in an analysis of broadband infrastructure and economic growth across
25 OECD countries in 1996-2007, Czernich et al. (2019) find a 1% increasein broadband penetration is associated with growth in annual GDP per
capita in the region of 0.09-0.15%.6 Katz & Callorda (2018) assessed the link
between mobile broadband penetration and changes in GDP per capita
across 139 countries between 2004-2017, estimating a per capita output
elasticity of 0.150%.7 The same study also constructed a digital index,
consisting of indicators measuring connectivity, infrastructure reliability
and affordability. Using this index within their analysis, they found that a
1% increase in the digital ecosystem index was associated with a 0.133%
growth in per capita output.

Other papers have looked at output elasticities of ICT capital, focusing on
the role of ICT capital’s role as a factor of production, alongside labourand non-ICT capital inputs. These studies have consistently found that ICT
has a positive impact on output and further has a considerable excess
return compared to the income share of ICT. Academic literature assessing
the link between ICT capital stocks or services have been conductedprimarily focussing on the US, EU and across OECD countries. Such papers
have found that a 1% increase in ICT capital is typically estimated to be
associated with between a 0.03-0.14% increase in economic growth.
Analysing a sample of 59 countries over the period 1995-2010, Niebel(2014) estimates output elasticities of ICT capital services in the range of
0.066-0.100% employing a regression of an augmented Cobb-Douglas
production function.8 Similarly, Tsachtsiris et al. (2022) attempt to estimate
the elasticity of ICT investments with economic growth across 27 countries
within the European Union over 1996-2006, produced elasticities ranging
from 0.087-0.139% depending on the model employed.9

5. Roller and Waverman, "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," American Economic Review 91, no. 4 (2001), p. 909-923
6. Czernich et al., "Broadband infrastructure and economic growth," CESifo Working Paper 2861, 2011.
7. ITU Publications, "The economic contribution of broadband, digitization and ICT regulation," accessed September 28, 2022
8. Niebel, "ICT and economic growth – Comparing developing, emerging and developed countries," World Development 104, 2018, p. 197-211.
9. Tsacgtsiris, Magoutas & Papadogonas, "ICT and Economic Growth in EU: A macro Level Comparison of Estimated ICT Output Elasticities," Journal of Global Information Technology Management 25, no. 3 (2022), p. 202-216.
10. Venturini, "The long-run impact of ICT," Empiricial Economics 37, no. 3 (2006), p. 497-515
11. Hanclova et al., "Does ICT capital affect economic growth in the EU-15 and EU-12 countries?," Journal of Business Economics and Management 16, no. 2 (2015), p. 387-406.

110

Further, Venturini (2009) attempts to estimate the impacts of ICT capitalfrom a long-run perspective across the US and 13 EU member states from1980-2004 using a panel co-integration methodology. Elasticities varied
according to the estimation model used returning elasticities from 0.0560.138%.10 Some studies have found more moderate estimates, however.
Hanclova et al. (2015) assess 14 older EU member countries and 7 newer
members across two time periods 1994-2000 and 2001-2008.11 They findthat the impact of ICT capital services was significantly higher (0.086%)
amongst newer member states compared to older ones (0.031%).

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Method overview
A high-level outline of the methodology is given below, which puts together
the economic literature on ICT and metaverse capital investment data,
illustrated by Figure 1. Quantitative assumptions are noted within asubsequent section within Table 3, with each step detailed in greater depth
in the following sub-sections.
• For economic impacts to materialize, sustained investment intodeveloping and operationalizing the metaverse will be needed.
Therefore, investment scenarios were developed from Goldman
Sachs estimates.
• Assuming this investment contributes directly to the maintained
net ICT capital stock (i.e., metaverse related IT hardware andequipment, software, databases etc.), the change in net ICT capitalstocks can be calculated, with the total net ICT capital stock
estimated using evidence from the OECD that this is c.7.3% of GDP
on average.12• Using the relationship between ICT capital and GDP from theliterature, an elasticity of 0.1 used to find the resulting change
in GDP can be derived from the calculated change in ICT capitalstock. When calculating the impact of investment on GDP for agiven year, the new uplifted GDP total from the previous year is fed
in. This allows for the compounding of growth over time from theinvestments. A full derivation is given on page 119.
• Over the time period assessed, we assume this growth is additional
to the existing growth path of the economy. Here, GDP growth infuture years, in the absence of metaverse investment, is based on
IMF forecasts until 2027 and then a fixed growth rate thereafter
based on average historic growth rates using World Bank data,
shown within Table 2.13
• Impacts are assessed up to and including 2035 at a global level.
This was done to appreciate both short-run and medium-term
impacts of short-term investments. A longer time horizon is notconsidered given uncertainty into the persistence of initial capital
investments and whether this investment will be sustained, and at
what level, over a decade from now.
• Economy-level estimates were generated by apportioning impacts
across economies based on their share of global GDP, adjusted toaccount for changes in the composition of global GDP up until theend of the investment period in 2029.

Figure 1: Illustration of methodology

Key

Input

Key
Assumption

OutputInvestment Scenarios

Global ICT Capital Stock
Estimate% Change in Global
ICT Capital Stock

Elasticity of ICT Capitaland Output

Change in Global
Output by 2035

Apportionment by
future GDP shares

Economy-Level
Estimates

12. OECD, "STAN Database," accessed September 28, 2022. Then, for each year, the annual percentage change in the ICT stock resulting from Metaverse investments can be estimated.
13. Real GDP growth in future years, in the absence of the Metaverse-investment, is based on IMF forecasts until 2027 and then a fixed growth rate thereafter based on average historic compound annual growth rates (CAGR) over the period from 2009-2019 World Bank data on global GDP (measured in constant 2015 US dollars).

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The Metaverse in Asia | Strategies for Accelerating Economic Impact

Investment Scenarios
In market research conducted by Goldman Sachs in 2021, illustrative scenario
analysis of the likely spend on metaverse-related activities was undertaken.14
This research estimated that investment in developing the metaverse could
range from US$135 billion - US$1.35 trillion ‘in the coming years’, with thelikelier scenario falling between US$135bn - US$700bn.15 Subsequently in
2022, a report issued by McKinsey indicated investment in the metaverse
was around US$57 billion in 2021 and in the first six months of 2022 had
exceeded US$122 billion, suggesting that investment may be closer to theupper end of the prior Goldman Sachs estimates.16 Using this information,
two potential investment scenarios were investigated, shown in Table 1, withuniform investment profiles over the period of 2022-2029 assumed
for simplicity.
Table 1: Investment Scenarios for the development of the metaverse

Base Case

US$700B over
5 years

US$140.0B

Cumulative
Investment if
Sustained Until
2029
US$1,120B

Upside Potential

US$1,350B over
5 years

US$270.0B

US$2,160B

Annualised
Investment

Scenario

As investment figures were developed based upon public company
investment in the metaverse and private market funding, these investment
scenarios form a narrow view of metaverse-related spending. These figures
do not consider investments such as public and private expenditure on
infrastructure and connectivity. While these investments may support
the development of the metaverse, they are not specific and unique tothe metaverse. Thus, though such investments are likely, it is difficult toestimate what proportion of future ICT investment will contribute to
the metaverse.

These findings are also subject to model specification, and if investment in
the metaverse is higher or lower than assumed here, metaverse-related
GDP growth would also be affected.
Estimating global net ICT capital
Data and literature pertaining to net ICT capital stocks is typicallyconstrained given difficulties in measurement. However, datasets havebeen developed across selected country groups, such as EU and OECD
countries. Using the OECD ISTAN Structural Analysis database, estimates
for the ICT capital stock were developed with net ICT capital stocks
equivalent to ~7.3% across available OECD countries from 2005-2017.17
Extrapolating this estimate across global GDP, an estimate of global net
capital stocks could be derived, taking 7.3% of global GDP, and estimatedat around US$7,016 billion in 2021, for example.18

Global GDP, in the absence of metaverse investment, was calculatedusing IMF forecasts of real GDP growth from 2022 to 2027 and then afixed growth rate thereafter based on average historic compound annual
growth rates, shown within Table 2.19 Similarly, counterfactual global net
ICT capital stocks were assumed to follow a similar path, comprising 7.3%
of GDP in each year of analysis.
Table 2: Counterfactual real GDP growth assumptions
GDP Growth2022
Assumption
Year-on-year
growth

3.6%

2023

2024

2025

2026

2027

20282035

3.4%

3.4%

3.3%

3.3%

3.3%

3.16%

Note: Input assumptions used in this estimation such as GDP growth and metaverse investment scenarios are based on point intime forecasts from the literature. As such, these are subject to changes in the macroeconomic environment which may occur overtime, and thus final metaverse impact estimates may be larger or smaller.

14. Goldman Sachs, Framing the Future of Web 3.0: Metaverse Edition, 2021.
15. Estimates were based on the market capitalisation rates of large technology firms, such as Meta, Google and Nvidia etc, and Meta’s forecasted expenditures over the next 3 years (which is expected to form the largest source of investment).
16. McKinsey & Company, “Meet the metaverse: Creating real value in a virtual world,” accessed September 28, 2022.
17. OECD, "STAN Database," accessed September 28, 2022.
18. Note Net ICT capital stocks were used as this gives an indication of the current value of ICT capital accounting for depreciation over time. Gross ICT capital stocks denote the current replacement value of ICT capital, equivalent in value if all ICT capital were to be bought again as new, which would likely give an inflated view of working capital stock value in comparison.
19. Real GDP growth in future years, in the absence of metaverse investment, is based on IMF forecasts until 2027 and then a fixed growth rate thereafter based on average historic compound annual growth rates (CAGR) over the period from 2009-2019 World Bank data on global GDP (measured in constant 2015 US dollars).

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Calculating the impact of metaverse investment on global output
To analyze the impact of metaverse investment, an ICT capital-output is used
given the broad nature of investments across different types of ICT capital.
For our investigation, an ICT capital-output elasticity of 0.1 is taken, withthis point estimate forming the midpoint of elasticity estimates produced
by Venturini (2009) looking at the long-run return of ICT capital. Whilst the
precise impact of metaverse investments cannot be determined given newer
technologies being capitalized, this literature gives the best indication of therelationship between ICT capital and economic growth, to date.
The percentage change to global net ICT capital stock was estimated using
annualized investments across both investment scenarios. It was assumed
that spending in the metaverse would contribute directly to global net ICT
capital stocks. Accordingly, the contemporaneous impact on global output
could be derived through multiplication with the elasticity for each yearof investment, assumed to take place from 2022-2029 (forming δ_t in
Equation 1 and Equation 2, below).
The impact of subsequent investments was calculated using the ‘new’ levelof net ICT capital stocks, equivalent to the sum of counterfactual capitalstocks in a given year and additions to the stock of capital arising fromprior years’ investment less depreciation of metaverse-related capital.
By viewing investments on an annualized basis, subsequent investments
serve to compound changes to GDP from prior years’ investments. Growtharising from the additions to the capital stock are assumed to be additive
to the existing growth path of the economy.

Using this methodology, the impact of metaverse investments acrossyears can be calculated accordingly. Letting r_t equal the natural assumed
growth rate of real GDP in year t, δ_t equal the additive growth arising frommetaverse investment in year t (equal to the percentage change in capitalstock multiplied by the elasticity of ICT capital and output).20 Therefore, theshare of GDP attributable to the metaverse can be expressed as:21
Equation 1: Derivation of GDP impact as a percentage of GDP23
GDP impact by end of 2035 (%) =This could also be expressed in today’s money. If GDP_2022 represents thevalue of GDP in 2022, the first year of investment, the dollar contribution to
GDP of the metaverse by the end of 2035 can be expressed as:
Equation 2: Derivation of GDP impact in dollars, in a given year
GDP impact by end of 2035 ($) =Note that this is equivalent to calculating the difference between the
counterfactual GDP (GDP in the absence of metaverse investment) and
GDP calculated with metaverse investment, at the end of 2035.

Generating economy-level estimates
The prospective impact of metaverse impacts on GDP were apportioned
to economies using re-weighted shares in total global GDP. Reweightingof global GDP shares was achieved by using the compound annual growthrate (CAGR) of respective economies' real GDP over the 2009-2019 period.
This was done to appreciate likely changes in the composition of global
GDP by the end of the investment period under investigation (up to 2029),
due to the faster growth of middle- and lower-income economies that will
likely grow in contribution to GDP over time.
Discussion
Under the two investment scenarios investigated, estimates suggest thatby the end of 2035, the metaverse could contribute US$1.90 trillionUS$3.59 trillion to global GDP. This is estimated to be between 1.3-2.4% of
global GDP in 2035 This is relating to a cumulative impact of US$26 trillionUS$50 trillion when summed up across years from 2022.
It should be noted that the scenarios considered also take a conservative
view of the likely investment in the metaverse by looking at spending that is
likely to arise from large technology firms in the development of metaverse
platforms and technologies. As a result, such scenarios are useful toconsider potential additions to the capital stock and the corresponding
impact on economic growth, but does not necessarily consider wider,or longer term, investment that may take place across a number ofwider domains such as in communications, connectivity and underlying
infrastructure (e.g. investment in 5G network infrastructure).

20. Additive growth is equal to 0 after 2029, the final year of investment in each scenario assessed.
21. This follows the accounting approach followed within the Analysis Group estimates.
22. Note the share of GDP, as a percentage, after a given number of years, does not depend on the precise year of when investment begins. World Bank, World Development Indicators

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The Metaverse in Asia Pacific | Strategies for Accelerating Economic Impact

Whilst an attempt has been made to estimate economy-level results, such impacts should be treated as illustrative of the potential impacts based
upon the size and contribution of that economy to global GDP. The total impact of the metaverse will be highly dependent on several factors ranging
of socioeconomic determinants and enablers. For example, the extent a given economy's infrastructure enables the adoption and integration of themetaverse will determine how the metaverse will be used across sectors. In addition, the affordability and accessibility of the metaverse to inhabitants
within that economy are important factors to consider.
Table 3: Overview of key quantitative assumptions used within the economic modelling

Image Credits: StarryAI

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Assumption

Value

SourceGlobal GDP in 2021

US$96T

World Bank, World Development Indicators 23

Global GDP shares, real GDP growth rates-

World Bank, World Development Indicators

ICT Investment Scenarios

US$135B-US$1,350B

Goldman Sachs 24

Global Net ICT Capital Stock

7.30%

Analysis of OECD countries using the OECD ISTAN
Database25

Elasticity of ICT Capital and Economic Output

0.1

Venturini (2009);
Tsachtsiris, Magoutas & Papadogonas (2022).26

23. World Bank, "World Development Indicators," accessed September 28, 2022.
24. Goldman Sachs, Framing the Future of Web 3.0: Metaverse Edition, 2021.
25. OECD, "STAN Database," accessed September 28, 2022.
26. Venturini, "The long-run impact of ICT," Empiricial Economics 37, no. 3 (2006), p. 497-515; Tsacgtsiris, Magoutas & Papadogonas, "ICT and Economic Growth in EU: A macro Level Comparison of Estimated ICT Output Elasticities," Journal of Global Information Technology
Management 25, no. 3 (2022), p. 202-216

The Metaverse in Asia | Strategies for Accelerating Economic Impact

Appendix C - Glossary of Terms for the Three
Enabling Pillars of the Metaverse
Macroeconomic determinants. The maximum opportunity offered by the metaverse will vary acrossregions depending on the structure of the economy and the level of development.
Sectoral Structure: An economy characterised by advanced, digital sectors that can benefit from andengage in the metaverse, will likely reap a bigger economic opportunity following the development of
the metaverse. On the other hand, economies which are characterised by primary sectors will likely see
limited economic impact brought about by the metaverse in the shorter term. Economies which are
manufacturing-dependent will likely be impacted in the longer-term but the extent is currently unknown.
Innovation Environment: The propensity for innovation within an economy indicates the extent to which
the metaverse can add value in novel ways and will be built upon, impacting the upper bound of thepotential opportunity. In this case, innovation is taken as an inherent characteristic of a country. However,adoption of the metaverse may impact on the culture of innovation.
Income and Distribution Level: The economic development, income level and income distribution of aregion could determine the impact of the metaverse. High-income economies where the majority of the
population can afford the hardware required to access the metaverse and with relatively even income
distribution will likely experience a significant economic impact. In contrast, low-income regions or regions
where income inequality is relatively high and the relative cost of accessing the metaverse is much higher
will likely see a much lower impact on the economy.

Technology fundamentals. It consists of factors that are required for the metaverse to exist and operate.
Notably, these fundamental factors do not necessarily guarantee or contribute to the success of themetaverse, but their totality presents a minimum set of requirements that will allow the metaverse to exist
in a given economy or region. As expected, some proxies for these fundamentals include compute power,
connectivity, and number of user devices. Other markers include the prevalence of digital payments which
provide a sensing of the ability for the digital economy to flourish.
Compute Power: Computing power to support diverse and demanding functions such as data
reconciliation and synchronization, motion capture, rendering, calculations etc. is considered essential forthe metaverse to function.
Connectivity: Reliable and constant connectivity such as 5G/6G or WiFi networks and fast fixed
broadband are essential to allowing real-time interactions and transactions and in facilitating fast, highvolume and low latency data exchange across different settings.
User Devices: The development of physical technologies and devices such as VR headsets, mobile phones,
sensors, long lasting batteries, etc., that are used to access and interact with the metaverse.
Transactions: The availability of digital payment processes, platforms and operations including digitalcurrencies based on blockchain technology such as bitcoin, is essential in order to support financialtransactions in the metaverse. The possibility to participate in a financial transaction and own a digitalasset such as NFTs would help the platform replicate the real economy and the incentives thatencourage transactions.

Ecosystem enablers: Factors where an economy can invest in or develop to build a supportive ecosystem
to promote the development of metaverse technologies. As the metaverse develops in an economy, its
success will depend on the actions of various ecosystem stakeholders including businesses (startups andindustry), government (regulators and policymakers), researchers, telecom operators/ technology sector
and users and the general public.
Security and Privacy: The metaverse will involve the transfer of large amounts of data, including
confidential and personal data. Appropriate systems and regulations should be in place to provide users
with protection as increased risk of data breach, identity theft or storing of data without consent could
discourage consumers from using the metaverse. Nevertheless, existing regulatory frameworks might
have not been designed for the metaverse specifically, therefore might not cover the metaverse in full.
Competition within the metaverse: A thriving metaverse is one that includes many players competingin the product, service or experience they offer to consumers or other businesses/platforms engaged in
the metaverse. With the arrival of the metaverse, this competition may be driven by new start-ups andenterprises developing products, services and experiences. Therefore, the existing start-up ecosystem canbe used as a proxy for the level of competition that may potentially be expected in the metaverse at an
economy level.
Technological Readiness of Business: A strong digital business culture where businesses are open
to technological change and have the capacity to absorb technologies could accelerate the uptake oftechnologies supporting the metaverse and therefore improve efficiency and encourage engagement.
Digital Skills: Engagement in the metaverse requires users to have the necessary digital skills in order tobenefit from the applications and the various functions offered in the metaverse. If a large portion of the
population is digitally illiterate, the full potential of the metaverse might not be realized.
Interoperability: Interoperability in the metaverse would allow users to move seamlessly to different
settings and transfer real time data so that their experience is optimized and resembles a real-life setting.
The interoperability of the platform would make the metaverse more efficient and potentially enhance theimpact and could encourage wide adoption by both businesses and consumers.
Accessibility: The metaverse aims to be a widely accessible and inclusive space, connecting people fromaround the world. Accessibility could be facilitated through lowering barriers to entry such as the cost ofequipment and hardware relative to income levels, limited access to the internet and and level of digital skills.
Social Acceptance: High social acceptance and willingness to try the metaverse may encourage
widespread adoption by businesses and consumers, creating strong network effects that could accelerate
adoption and innovation.

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