As the digital economy emerges as a new driver of regional growth, ASEAN has been intensifying efforts to develop cooperative frameworks aimed at promoting digital trade and cross-border e-commerce. A key initiative in this regard is the launch of negotiations on the ASEAN Digital Economy Framework Agreement (DEFA), which is expected to establish a comprehensive institutional foundation for the development of the regional digital economy. However, practical implementation reveals a significant gap between commitments made at the regional level and execution at the national level.

DEFA: ASEAN’s Ambition to Build a Unified Digital Market

DEFA is envisioned by ASEAN as a comprehensive framework agreement covering the core pillars of the digital economy, including e-commerce, cross-border data flows, digital payments, digital identity, online consumer protection, and cybersecurity. The long-term objective of DEFA is to create a unified digital economic space, reduce policy fragmentation, and facilitate cross-border digital trade for businesses—particularly micro, small, and medium-sized enterprises (MSMEs).

Compared with existing frameworks such as the ASEAN Agreement on Electronic Commerce (AETA) and various voluntary cooperation initiatives, DEFA is expected to have a higher level of commitment and to establish common principles on data governance and digital standards across the region. However, this very ambition also poses substantial challenges in both negotiation and implementation.

Scale and Potential of ASEAN’s Digital Trade

ASEAN is widely regarded as one of the fastest-growing digital regions in the world. Data from the World Economic Forum indicate that ASEAN is the world’s fastest-growing internet market, with approximately 125,000 new internet users every day, and the digital economy is projected to contribute up to USD 1 trillion to regional GDP over the next decade.

Other reports highlight the rapid expansion of ASEAN’s e-commerce market, which is expected to reach approximately USD 330 billion by 2025. According to analyses by Boston Consulting Group, the value of the digital economy could reach USD 1 trillion by 2030, and potentially USD 2 trillion if DEFA is fully implemented.
These figures underscore ASEAN’s vast digital economic potential, while also pointing to the urgent need for a more coherent and harmonized policy environment to ensure the smooth flow of data and digital trade across the region.

Cross-Border Data Flows: A Growth Driver Lacking Consensus

Data are widely regarded as a critical input for digital trade. Enabling cross-border data flows is a key prerequisite for the development of e-commerce, digital services, and platform-based business models. In practice, however, ASEAN has yet to reach full consensus on how this issue should be addressed.

Some Member States pursue relatively open models, allowing the free flow of data subject to appropriate safeguards, while others impose data localization requirements or apply stricter controls on data transfers due to concerns over national security and digital sovereignty. These divergences increase compliance costs for businesses and diminish the benefits of ASEAN’s digital market integration.

Data Protection and Digital Sovereignty: A New Policy Fault Line

Alongside efforts to promote trade, ASEAN countries are placing growing emphasis on personal data protection, cybersecurity, and digital sovereignty. Nevertheless, the level of legal and regulatory maturity varies significantly across Member States.

While some countries have enacted personal data protection laws that align closely with international standards, others remain in the process of developing or refining their legal frameworks. This lack of regulatory harmonization heightens the risk of digital fragmentation, running counter to DEFA’s objective of establishing a unified digital market.

Case Study: Singapore – A Pioneer in Openness and Standardization

Singapore is widely recognized as a regional leader in digital trade development and data governance within ASEAN. With a transparent regulatory framework, a risk-based policy approach, and deep engagement in next-generation digital economy agreements, Singapore has created a highly conducive environment for cross-border data flows and digital commerce.

Singapore’s experience demonstrates that combining conditional data openness, robust personal data protection, and international cooperation can simultaneously foster innovation while safeguarding national security and economic interests. This approach offers an important reference for the development of DEFA.
Case Study: Viet Nam – Balancing Integration and Regulation

In Viet Nam, e-commerce and digital services have grown rapidly, while the policy framework continues to evolve to keep pace with emerging business models. Viet Nam has adopted a more cautious approach to data governance, emphasizing regulatory oversight, cybersecurity, and digital sovereignty.
The key challenge lies in harmonizing domestic policies with regional commitments, thereby better leveraging the opportunities offered by DEFA while minimizing potential adverse impacts on the investment climate and the operations of digital businesses.

Bridging the Gap Between Commitments and Implementation

For DEFA to serve as a genuine catalyst for ASEAN’s digital trade, several policy priorities require attention: strengthening legal harmonization in data governance and e-commerce; adopting flexible, phased implementation approaches; enhancing institutional and technical capacity across Member States; and intensifying public–private dialogue throughout the policy design and implementation process.

The gap between commitments and implementation in ASEAN’s digital trade reflects the unique challenges of a region characterized by diverse levels of development and policy priorities. Bridging this gap will be decisive in determining ASEAN’s ability to realize its ambition of becoming a unified, dynamic, and resilient digital economic space in the years ahead.

Source: Compiled from the Multilateral Trade Policy Department – Ministry of Industry and Trade