The recently published report by Google, Temasek, and Bain highlights that the total gross merchandise value (GMV) of ASEAN’s digital economy continues to maintain double-digit growth.

By 2024, the region’s digital economy is projected to achieve $263 billion in GMV, generating $11 billion in profit. The compound annual growth rate (CAGR) of GMV and profit is anticipated to reach 15% and 24%, respectively, from 2023. E-commerce is the primary growth driver, with GMV expected to hit $159 billion in 2024, marking a 15% increase from the previous year. Projections suggest e-commerce GMV could climb to $370 billion by 2030.

ASEAN’s Strategic Preparation

To achieve these promising outcomes, ASEAN has proactively developed strategies to foster e-commerce and digital economy growth. Member states are actively engaging in free trade agreements (FTAs) that include provisions on e-commerce, such as the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA), the Regional Comprehensive Economic Partnership (RCEP), the ASEAN Agreement on E-Commerce, and the ASEAN Framework Agreement on Digital Economy (DEFA).

The ASEAN Agreement on E-Commerce is the bloc’s first dedicated e-commerce agreement. AANZFTA was the first agreement with a chapter on e-commerce. RCEP is the most recent agreement with an e-commerce chapter that has come into effect, while DEFA is ASEAN’s first regional-level digital economy agreement, currently under negotiation.

AANZFTA and the ASEAN Agreement on E-Commerce have relatively narrow commitments, with limited scope to address emerging challenges in the fast-evolving digital environment. Over time, AANZFTA has been upgraded alongside newer-generation agreements with broader commitments. These include not only traditional elements such as cooperation, paperless transactions, electronic authentication and signatures, consumer protection, and dispute resolution but also newer elements like cross-border data flows, data localization, cybersecurity, e-payments, logistics, and non-discriminatory treatment of digital products.

These expanded commitments aim to adapt to rapid changes in ASEAN’s e-commerce and digital economy sectors and align with evolving practices in other agreements. For instance, digital commitments now encompass not only market access but also regulatory measures to manage the cross-border movement of digital goods and services, alongside trade facilitation mechanisms.

Challenges and Opportunities

Disparities within ASEAN, combined with differing national ambitions and policies for digital economy development, may hinder the pace of implementation. ASEAN must find common ground, focusing on collecting and sharing best practices and conducting capacity-building activities to reliably analyze the costs and benefits of these commitments.

Viet Nam’s Digital Economy

According to Marc Woo, Managing Director for Vietnam at Google Asia-Pacific, Vietnam’s digital economy has witnessed robust and consistent growth over the past five years: “Driven by e-commerce, the national digital economy has sustained double-digit growth despite global economic uncertainties.”

The report also shows optimistic signs for Viet Nam, where double-digit growth is fueled primarily by e-commerce and online travel. In 2024, Viet Nam’s e-commerce sector is expected to grow 18% year-over-year, reaching $22 billion in GMV, cementing its role as the key growth driver of the country’s digital economy.

Online travel also reported a 16% growth year-over-year, reaching $5 billion in GMV to date, contributing significantly to total GMV. This sector continues to generate revenue through increased commission rates on flights, while direct retail channels remain the largest contributors to total revenue.

Vietnamese consumers are increasingly adapting to and embracing new solutions and services. Interest in artificial intelligence (AI) among the region’s digital consumers, especially in major cities, is growing. Ho Chi Minh City and Da Nang lead the country in AI interest and demand. Education, marketing, and healthcare are the top three industries generating the highest search volume for AI in Vietnam.

AI is also playing a transformative role in the creative economy. Over 22% of mobile app downloads by Vietnamese users include AI-powered features such as photo effects, content creation, and video editing.

Over the past year, the Vietnamese government has unveiled an ambitious digital roadmap emphasizing AI and semiconductors alongside economic growth and public service improvements. This proactive approach is paving the way for Viet Nam to make significant strides in digital technology despite previous infrastructure investment limitations.