Asean: Building trust in its digital economy

Asean’s outlook is of oneness—one vision, one identity, and one community. But it is a vision that the turbulence caused by the Fourth Industrial Revolution, rapid digital transformation, and challenging geopolitics and economics is shaking.

Engendering greater trust among Asean member states (AMS) in its policy tools and vision is paramount to its progress and aspiration of developing a community of opportunities for all. One such huge opportunity is its digital economy, which is estimated to grow from its current size of approximately $300 billion to almost $1 trillion by 2030.

Asean is one of the world’s fastest growing regions, with average real GDP growth seen to reach 4.6 percent in 2023 and 4.8 percent in 2024. By 2030, it is expected to be the fourth largest economy in the world, its dynamism driven by a population of 700 million composed of young, educated, increasingly online individuals, and a growing middle-class.

For many people in the region, the integration of digital technologies into their everyday life has changed the way they consume information, buy goods and services, use financial services, and interact with government. Governments regionwide have recognized the importance of harnessing the ongoing digital transformation for good, and deployed policies to foster a thriving digital economy. A challenge to this are the region’s socioeconomic differences, levels of development, and disparate regulatory regimes.

Common policy tools, regulation, and legislation are key means to address these challenges. Among these is the Asean Digital Masterplan 2025 and the Bandar Seri Begawan Roadmap. The masterplan is designed to provide a vision of what Asean’s digital society and economy will look like, while the roadmap offers a plan for the region’s digital transformation agenda to accelerate its digital economy integration through the adoption of the Asean Digital Economy Framework Agreement (Defa).

The Asean Defa is the world’s first region-wide digital economy agreement and as such, could offer a blueprint for how to achieve harmonization among nations that are at different stages of digital integration. It also allows Asean to design an agreement that works for all AMS, taking into consideration their different levels of socioeconomic development.

Among the topics for negotiation are digital trade, cross-border e-commerce, cybersecurity and online safety, digital ID, digital payments, data flows, competition policy, digital skills, and talent mobility as well as emerging topics such as artificial intelligence.

By engaging in the Defa negotiations, AMS are building trust for business in an inclusive and sustainable Asean digital economy, paving the way for economic development, job creation, and investment opportunities.

If planned out in an inclusive way, the Asean Defa will create an environment designed to empower and connect micro-, small-, and medium-sized enterprises to regional and global markets, facilitate digital skills development and generate quality employment (including for women, youth, and rural communities), as well as strengthen collective and individual economic competitiveness and resilience.

Early progress is heartening. Countries at the subregional level already collaborate to facilitate the use of digital technologies for cross-border payments, with Thailand and Singapore being at the forefront.

To facilitate these moves, the World Economic Forum, in cooperation with the Asean-Korea Cooperation Fund, has launched the Asean Digital Economy Agreement Leadership project to help AMS address preparedness, overcome challenges, and reap the benefits of digital economy agreements.

This is achieved through the provision of capacity building activities, an online depository of digital economy agreements, and annual business surveys and dialogue on digital economy topics. The project also offers inputs to negotiations from stakeholders in academia, civil society, the private sector, and other regions where the implementation of digital policies has shown positive results.

Creating a strong integrated digital economy will enable Asean to compete more effectively in the global market and provide greater opportunities for its citizens. A region-wide digital economy framework will require collaboration that will, in turn, engender greater levels of trust. If successful, it will foster the goal of a stronger, unified, one Asean.

This article was published as part of the World Economic Forum Annual Meeting 2024 discussions. Asia News Network

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Joo-Ok Lee is head of the Regional Agenda, Asia-Pacific, World Economic Forum.

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The Philippine Daily Inquirer is a member of the Asia News Network, an alliance of 22 media titles in the region.