jonathan: from new york city, haslinda: within asean is a growing market house. >> just like india, we are maybe the two largest economies and it will make a lot of difference. it's 17,000 islands, the largest population on earth, talking about connectivity and evolution. indonesia is what asean could be without borders. >> they have to play the role to

make asean really strong and make the asean centrality a reality. haslinda: indonesia is home to an e-commerce revolution and plan to forge a path to asean: the next generation. haslinda: hello, welcome to the capital of indonesia, a country of 270 million people at the very forefront of asean. its economy accounts for more than one third of the gross gdp and it is on track to become the world's fourth-largest economy by 2050. haslinda: hello, welcome to the capital of indonesia, a country of 270 million people at the very forefront of asean. its economy accounts for more than one third of the gross gdp and it is on track to become the world's fourth-largest economy by 2050. >> i think more or less on and off throughout the course of the history of asean, indonesia has played a role and as the biggest country, it does need to play what you call a mutual role so

its neighbors do not feel threatened, but i think in the forthcoming next five years, 10 years, we do need to have a stronger leadership role from indonesia to make asean really strong and to make the asean centrality a reality. there is a very ambitious target on expanding financial evolution. we have a program on education, but also in creating banking and it resists through the digital economy because actually it is now moving very fast. with that, i think technology is going to be one of the solutions. but education and inclusion will be very critical. >> we do it now through digital. indonesia i think is one of the most advancing and amusing

technology in the digital. we can integrate the economy through connectivity. that is why we are looking at the payment system, to increase the financial inclusiveness. this is a lot of positives. haslinda: to understand indonesia, you have to understand its remoteness. it spans the distance from new york to alaska. the country plans to spend $350 billion over the next five years building roads, bridges, and

power plants to link some of its 17,000 islands. the president has already made significant progress. a similar thought during his first five-year term, so highways pop-up across the country. and their transit system, now operational, is a signal of that endeavor. but the capitol also has a new airport and budget airlines linking the major cities. asean's only trillion dollar economy has been growing at about 5% a year. >> it is not just about the physical connectivity, obviously, but there is a whole range of issues there about data flows, payments, taxation, privacy, security, and about talent, i would say. if we could actually address that freedom, which is

professional workers, if we could focus on digital, that might actually help a lot as we begin to have a wider professionalism, and it would help asean. if asean became one market in the digital and data market, i think we could give china competition. >> there are so many reforms required for the asean country to be able to design and develop deepening financial sector or financial system. then, also creating an instrument based on the local currency. with that, you are not going to be affected mostly either external or regional factors. so you are more or less in

charge for your own economy development. haslinda: financial inclusion is a key focus for the region, but financial literacy is still quite low across the region. how challenging is that, and how do you bring everybody on board? >> indonesia is one of the cases in which the financial inclusion we are still behind, just like india. we are maybe the two largest economies that if we make progress, it will make a lot of difference globally. >> asean's role in the global economy is a mathematical inevitability. we are now $8.3 trillion per year plus economy growing at more than 5% per year, so 14 years from now, we are going to grow to be an extra $7 trillion figure economy out of a roughly hundred trillion dollar per year world economy, so we are a significant chunk of the global economy now and are only going to increase our footprint 14 years, 18 years from now. haslinda: armed with size, scale and influence, asean has often been criticized for being unable empower change because of what has been called its soft consensus approach. >> in the increased world we are facing, we really need to be

stronger as asean and in the region because i think that is the answer to the greatest issue we are facing with multilateralism. it should be able to play a role in what we call a middle power because you have china, u.s., the big g2 countries. when they are fighting or when they are good friends, we will always have issues. so we need to be balancing it with japan, korea, and asean as a whole is the middle power. haslinda: where do you think asean will be in 10 years? what is the vision for asean for you? >> well, there is momentum if you look at the global economy business. it continues to be vibrant and perform well on the economy, both in policy and mathematics, as well as there is a competition with this, meaning you are in the region where if

you only grow by 5%, you are not performing. >> i believe it is an african origin, a belief that says if you want to go fast, go alone, if you want to go far, go together. there is a lot to be said for a large amount of consensus for what is the beauty of asean is, it is flexible. there are a lot of policy spaces for individual countries or subregions to do what they think is best. you don't have to conform to a straitjacket of an asean-wide policy. haslinda: indonesia's president has promised to create 100 million jobs, to bring the workforce to new scales for revolution. this is asean: the next generation. ♪

haslinda: when you travel around asean, you see lots of young people. the average age of its population is 29 years old. compare that to their leaders at 70 and you get the idea of the leadership gap. >> when you take a look at south asia, asean, what excites you the most when you look into the next 10 years? >> i would have to say it is the next generation of young leaders and politics and business, like e-commerce and the economy. there is a next generation of young political leaders, young business leaders, young leaders in media entertainment, fashions, culinary, and they are waiting in the wings.

that is what you are going to see across asia, asean, eight years to 12 years from now, and eight years, 12 years goes by in the snap of a finger. haslinda: what will the new leaders bring? how will they shape the face of asean going forward? >> there will be more of a southeast asian identity eight years or 12 years from now versus an indonesian identity, a thai identity, a filipino identity. we will see the emergence of southeast asia in the asean identity. >> i think young people, even though they don't think asean, in a way, they are really aseanized with the identification of being part of our region. i think the youth is the future of the region. each of us have our own identity, but we also identify ourselves as being part of southeast asia i think because of travel, because of

connectivity with budget airline, and digital information. we are connected in a digital connectivity that has boosted the information that young people have about each other. haslinda: the president has plans for what he says will be 100 million new jobs over the next five years, and while asean's biggest economy has been growing soft, many young people find it hard to get work. so now the focus is shifting from traditional industries to education and the revolution. >> with digital technology, everybody can become an entrepreneur, even in a case like indonesia, the entrepreneur can be as young as primary school, which they actually have a way to put it online and the demand is there. so i think technology will provide more opportunities in asean and the world that they

can have an excess of markets in a more efficient and cheap way. the problem is how you are going to understand this ecosystem of the digital economy so everybody gets a fair share. it is one of the most challenging policies we are discussing at this moment, and the digital technology creating jobs, access, new opportunities -- >> there was a number of programs already advancing the financial inclusiveness. there is the transfer of social program of the government through electronics. last year, we are already in more than 15 million families. all of them through electronics. we also look at mode of transportation and operation. so that is why indonesia jumps from 40% to 60%, and we are

growing in indonesia. >> there is a lot of nervousness. and there is the question of how do you deal with the skilled labor, the unskilled labor? unskilled labor, probably that is better dealt with and it is already been dealt with laterally, but i think if we could focus on the skilled labor, as well as the possibility for training and education because i think if we are going to be going to the next stage of each of our

country's development, as well as the future of economic integration, it is timely that we address that particular component of the economic integration. haslinda: financial inclusion and connectivity has been the big story in indonesia, and here is why, according to the oecd, sme's account for 70% of domestic employment and 56% of total investments. programs grow them, and nurture them, and the economy, almost 70% of indonesian adults have mobile phones. >> they enjoy the ability to access the markets cheaply. for example, we have go pay. this is now connecting the 500,000, and i think may be now

close to one million. they are expanding in indonesia, meaning that those merchandise, as well as sme, in the past, they cannot access the market because of logistical information. they are now actually becoming the player who enjoys the benefit. >> the economy and sme are nearing the capacity, and we have done that. we do a lot of things that support sme. especially with the digital economy and finance. there is one story, for example, with sme selling a product in the streets, but through

e-commerce, they are now already exporting. >> the future is the technological revolution. it means we will be called the fifth freedom. the four freedoms are already in the communities with free trading groups and investment in people. the fifth freedom is data flows. if asean is to become a meaningful economic integration region, then we have to address data flows. the whole rationale of asean's is a training ground for us to connect with each other with neighbors as a practice before we open up more globally. i still think that rationale is very important. haslinda: and also very important to asean by the indonesian unicorns. >> i think we are only scraping the surface of how big it could be because our mission, our addressable market is the entire

middle-class of southeast asia. haslinda: next, companies connecting asean: the next generation. ♪

haslinda: southeast asian unicorns, three companies, connecting the country. the internet and mobile phones are giving tens of millions of sme's and millions of people access to markets and finance. indonesia has more than 75 million motorcycles. so the idea to rideshare them through the notorious traffic

was good, good enough for it to now be valued at $10 million. go-jek's influence in asean is huge because it is not just ridesharing but also logistics, food, and it is expanding fast. >> we are already at about 30%, 35% in vietnam after two months to three months, so we were shocked to see the uptake so quickly, so we covered that but a lot of it will also be to expand new verticals and further increasing the penetration of our services in indonesia, which is the largest market where we are the market leader. you can see we have google, gic, and a variety of other heavy hitter financial institutions. you really see the world's best at all the key verticals we are

trying to execute on in order to create this first in the world, our super app that encompasses all your daily transactional needs. >> technology is also going to facilitate this even more. if you see unicorns in the digital economy in asean, they are becoming one of the factors creating this kind of integration factor. you talk about go-jek, they are already playing on the regional level, and they become the example for the economy. >> the saturation point of the consumers versus a china is very small. there is still so much more to grow across transport, food delivery, payments, logistics and digital. our market is the entire middle-class of southeast asia.

>> happily for us, it is extremely acute to the millennials and the next generation in the televised debates, raising things like e-sports and mobile legends, tournaments, and also e-commerce and digital economy and unicorns. i am optimistic that the aspirations of the millennials will come much more to fruition in the hands of the next generation leadership across asean. haslinda: china is asean's largest trading partner and has been for the past 10 years.

how it plots a course between beijing and washington given the current trade difficulties is just one of many foreign policy challenges. >> the south china issue is pulling us apart, tpp is tearing us down the middle, but somehow asean has been resilient and maintained its progress even though in some years, you could say it was slow, but i think there is always an effort to say, what is the next challenge we have? >> we literally sit at the crossroads of global trade. 90% of the oil and gas from the middle east heading to the far east passes through indonesia. it has made us very open to international traffic, if you will, trade, tourism, investment, and it has also made is extremely tolerant of diversity of cultures from

around the world. >> if you talk about 10 years from now, you have to see the dynamic of the asean, what is the dynamic of all this country in east asia, have the influence on the acceleration of integration or even it could be also slower in the region because you have each country able to connect. >> i guess i'm a half-full glass person. i am optimistic asean will continue to be resilient and will hopefully beat crisis in the global trading system and market should be a good sign or opportunity. let's look at it as a positive. it is an opportunity for asean to become stronger again. to become the balance in this increasingly market-ruled world.

and you have a strong, regional presence to be able to have a voice in what is happening in this very uncertain multilateral, as well as regional, uncertainties. haslinda: what is the biggest change we will see in asean? >> it is potentially unlike anything you have seen because it is happening just when industry 4.0, cloud computing, and all these next generation technologies are taking off. i think the people of southeast asia and asean have proven to be uniquely gadget friendly. uniquely social media friendly. arguably more so than any other region in the world. haslinda: these fishermen spend up to three months at sea, returning with a catch worth about $70,000. traditional businesses like these have been the lifeblood of indonesia, but generational change is coming. a new future. thanks for watching asean: the next generation.

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jonathan: from new york city, i'm jonathan ferro. bloomberg "real yield" starts right now. jonathan: coming up, payrolls friday delivering a big downside surprise, feeding growth anxiety. uncertainty lingering over the administration's next trade mode. the president arrives back in washington. pressure building on the federal reserve to cut rates. the treasury market rally continues. we begin with a big issue, some constructive advice after a big downside surprise. >> overreacting to one number can be dangerous. >> i concur.