ASEAN Digital Economy Framework Agreement

The world is witnessing an unprecedented era of digital transformation, where technology is becoming the cornerstone of economic growth and societal development. This shift is altering fundamentally how businesses operate, people connect, and governments function. As the digital revolution continues to shape our lives, it has also become a pivotal strategy for driving economic prosperity. One region that exemplifies the immense potential of the digital economy is the Association of Southeast Asian Nations (ASEAN).

First major regionwide digital economy agreement in the world

ASEAN´s rapid ascent as one of the fastest-growing internet markets in the world underscores the substantial economic opportunities digital transformation can yield. In recognition of this, on 3 September 2023, ASEAN’s leaders launched negotiations for what is said to become the first major regionwide digital economy agreement in the world, the ASEAN Digital Economy Framework Agreement (DEFA) in Jakarta, Indonesia. This agreement not only aims at strengthening regional digital integration, but also offers a pathway to double the potential of the ASEAN digital economy from USD 1 trillion to USD 2 trillion by 2030.

This article gives an overview of the objectives, scope, negotiation process and timeline of ASEAN DEFA, and concludes with some implications for multinational companies conducting business in the ASEAN region.

Objectives

ASEAN DEFA aims to establish a coherent, harmonized, collaborative, and rules-based approach to digital cooperation within the region. This approach is intended to foster an open, secure, inter-operable, competitive, and inclusive digital economy. The implementation of ASEAN EFA is expected to secure the region's position as a pivotal growth center in the global economy.

Scope

The negotiations for ASEAN DEFA will consider various elements, which may include:

Facilitating digital trade through electronic documents and inter-operable processes;
Creating a fair environment for cross-border e-commerce, digital goods, and services;
Promoting digital payments, electronic invoicing, and relevant regulation;
Developing a mutual recognizable digital identity and electronic authentication framework;
Enhancing cooperation in cybersecurity and creating a secure online environment;
Facilitating cross-border data flows and establishing data privacy frameworks;
Creating a competitive environment with consistent guidelines on enforcement;
Establishing mechanisms for regulatory cooperation in emerging topics such as AI;
Facilitating digital talent mobility and collaboration on talent development.

Negotiation Process and Timeline

The ASEAN Coordinating Committee on Electronic Commerce and Digital Economy (ACCED) will oversee the negotiation process, with support from relevant ASEAN sectoral bodies and the ASEAN Secretariat. Stakeholder consultations, including input from the private sector, will be integral to the process.

Negotiations are set to begin as soon as possible, with the objective of completing the agreement by the end of 2025.

Implications for Multinational Companies

Multinational companies conducting business in the ASEAN region should closely monitor the development of the negotiations on ASEAN DEFA. The agreement aims to create a more predictable, inclusive, and competitive digital economy within ASEAN, which can offer significant opportunities for businesses. By fostering an open and secure digital ecosystem, improving digital infrastructure, and promoting cross-border data flows, the DEFA is likely to enhance the ease of doing business and to unlock new growth potential in the region. However, companies will also need to adapt to the evolving regulatory landscape and align their strategies with the principles and elements outlined in the DEFA to capitalize on the anticipated benefits of this digital transformation within ASEAN.