How ASEAN is building trust in its digital economy

The Association of Southeast Asian Nations’ (ASEAN) 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 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, estimated to grow from approximately $300 billion to almost $1 trillion by 2030.

ASEAN is one of the world’s fastest-growing regions, with average real gross domestic product growth forecast to reach 4.6% in 2023 and 4.8% in 2024. By 2030, it is expected to be the fourth-largest economy in the world. This dynamism is 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, especially its youth, integrating digital technologies into their everyday lives has changed how they consume information, buy goods and services, use financial services and interact with government. Positively, governments region-wide have recognized the importance of harnessing the ongoing digital transformation for good and deployed policies to foster a thriving regional digital economy.

Standing as a challenge to this are the region’s socio-economic differences, levels of development and disparate regulatory regimes.

Standard policy tools, regulations and legislation are critical means of addressing these challenges. The ASEAN Digital Masterplan 2025 and the Bandar Seri Begawan Roadmap are among these.

The master plan 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.

With the vision and plan, the framework can potentially transform the region. It’s the world’s first region-wide digital economy agreement, and as such, it could offer a blueprint for achieving harmonization among nations at different stages of digital integration. It also allows ASEAN to design an agreement that works for all ASEAN member states, considering different levels of socio-economic development rather than relying on models created in other parts of the world.

Among the topics for negotiation will be 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. ASEAN member states recognize the enormous economic potential that can be reaped from the digital economy and that digital transformation is a foundational strategy for economic growth and prosperity.

By engaging in the Digital Economy Framework Agreement negotiations, member states build trust for business and investors in an inclusive and sustainable ASEAN digital economy, paving the way for economic development, job creation and investment opportunities.

If planned inclusively, the ASEAN Digital Economy Framework Agreement 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 have already collaborated to facilitate digital technologies for cross-border payments. Thailand and Singapore have been at the forefront of this; their PromptPay and PayNow systems enable instant, low-cost mobile transfers using just a recipient’s phone number.

This progress shows what is possible, and as ASEAN embarks on negotiating the Digital Economy Framework Agreement, there must be an inclusive process of consultations to ensure everyone’s voice is heard. It will help build trust in an inclusive and sustainable ASEAN digital economy.

The World Economic Forum, in cooperation with the ASEAN-Korea Cooperation Fund, has launched the ASEAN Digital Economy Agreement Leadership to facilitate these moves. This project aims to support ASEAN member states in addressing preparedness, overcoming challenges and reaping the benefits of digital economy agreements.

Capacity-building activities, an online depository of digital economy agreements, annual business surveys and dialogue on digital economy topics will be key to success. 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 economy and provide greater opportunities for its citizens. A region-wide digital economy framework will require collaboration but will, in turn, engender higher levels of trust and, if successful, will foster the goal of a stronger, unified ASEAN.