How data standards, ethical AI and diaspora are key to ASEAN's digital economy

Jun 26, 2024

Marina Bay Park photo: Engaging the ASEAN diaspora is critical for unlocking the region's digital economy potential.

Engaging the ASEAN diaspora is critical for unlocking the region's digital economy potential. Image: Unsplash/Victor

Mario Masaya

Senior Research Director for Digital Policy, US-ASEAN Business Council

The Association of Southeast Asian Nations (ASEAN) digital economy relies heavily on implementing ethical AI systems and robust cybersecurity measures.
Harmonizing data protection regulations and a regional framework for cross-border data flows will enhance trade efficiency and attract foreign investment.
Engaging the diaspora from ASEAN member countries is critical for unlocking the region's digital economy potential.

The ASEAN region, with 10 dynamic and diverse member states, stands at the forefront of a digital revolution. Digital trade and commerce have become critical drivers of economic growth, offering unprecedented opportunities for innovation, connectivity and prosperity.

To fully harness these benefits, ASEAN countries must prioritize implementing ethical and responsible artificial intelligence (AI) systems, facilitate free cross-border data flow and strengthen their cybersecurity capabilities and resilience. These steps are essential for the sustainable and secure development of digital infrastructure across the region.

However, to unlock its potential and navigate the complexities of the digital age, the ASEAN region needs a multi-pronged approach that prioritizes responsible innovation, seamless data flow, robust cybersecurity and strategic engagement with its diaspora communities. The highly anticipated ASEAN Digital Economy Framework Agreement (DEFA) is expected to help ASEAN achieve these goals.

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The engine of economic growth

Digital trade, encompassing e-commerce, digital services and data flows, is the engine that propels ASEAN's economic growth. The region hosts over 460 million digital consumers, with millions more joining online platforms yearly. This burgeoning digital market offers immense business opportunities, fosters entrepreneurship and drives job creation across the region.

AI is rapidly transforming industries, economies and societies. In ASEAN, AI adoption can advance various sectors, including healthcare, agriculture and finance. However, AI's potential benefits come with significant ethical considerations. Unregulated AI systems can exacerbate social inequalities, infringe on privacy rights and even perpetuate biases.

For example, algorithmic bias has been seen in recruitment and loan applications, where AI-powered recruitment tools might favour candidates with resumes containing certain keywords or specific universities, potentially overlooking qualified individuals from underprivileged backgrounds. Loan approval systems based on credit history could also disadvantage those who lack access to formal financial institutions, exacerbating financial exclusion. This is particularly relevant in Southeast Asia where unbanked populations are high.

ASEAN countries must establish a robust framework for ethical AI, ensuring that AI development and deployment are aligned with the principles of fairness, transparency and accountability. By implementing policies that promote ethical AI, ASEAN can build trust among its citizens and businesses, fostering an environment where innovation thrives while protecting human rights and societal values.

Moreover, while ASEAN has made great strides with robust AI guidelines – for example, advising on when to perform risk assessments for automated decision-making or stakeholder engagement in system design – there is no enforcement mechanism for compliance among member countries. Therefore, what legal remedy can the ASEAN Secretariat institute for non-compliance?

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How is the World Economic Forum advancing the digital economy in ASEAN countries?

South-East Asia, and its 10 member states comprising the Association of Southeast Asian Nations (ASEAN), is among the fastest growing internet markets in the world. Its digital economy is projected to triple by the end of the decade, growing from approximately $300 billion to almost $1 trillion by 2030. However, significant roadblocks stand in the way of realizing this potential including the region’s varying levels of development, regulatory capacity, infrastructure and digital skills.

From 2023 to 2026, the Centre for Regions, Trade and Geopolitics of the World Economic Forum, with support from the ASEAN Korea Cooperation Fund and in collaboration with the ASEAN Secretariat and ASEAN member states, will facilitate ASEAN’s transformation into an inclusive and sustainable digital economy through the following activities:

ASEAN Digital Economy Agreements Leadership (ASEAN DEAL) depository: This interactive depository contains digital economy agreements and free trade agreements of relevance to the digital economy, allowing comparison and analysis of relevant provisions. It aims to reduce the complexity of existing digital economy agreements (DEAs) and enable informed policy decisions and negotiations.
Annual business survey and dialogue: The survey will draw insights from business leaders’ perceptions on the various aspects of the digital economy, including digital trade, electronic transactions, electronic authentication, digital payments, intellectual property rights and competition policy in ASEAN. The key findings from the survey will be presented and discussed at annual dialogues with ASEAN policy-makers, business, academia and civil society.
Capacity-building: Workshops and roundtables targeting ASEAN Digital Economy Framework Agreement (DEFA) negotiators will be convened to increase participants’ understanding of existing DEAs and their commitments and share updates on the implementation of DEAs in various jurisdictions.

Among other impact areas, the project aims to promote multistakeholder collaboration and industry action in ASEAN, incubate ideas and thought leadership on DEAs and promote data-driven policy-making in the region.

For more information, please contact: ASEANDEAL@weforum.org

Standardizing data governance

Data is crucial for the digital economy. Free cross-border data flow enables seamless trade and commerce but data localization and regulatory fragmentation hinder this process. ASEAN countries should harmonize data protection regulations and establish a regional framework that allows free data flow while ensuring privacy and security.

A standardized data governance approach will enhance trade efficiency, attract foreign investment and foster regional integration. By prioritizing data flow, ASEAN can become a competitive and attractive destination for digital businesses and global investors.

DEFA plays a crucial role in promoting a standardized and beneficial framework for the region. Its key focus includes cross-border data flows, digital payments, cybersecurity and AI. The ultimate goal of DEFA is to unleash ASEAN's full digital potential by aligning with international standards, fostering collaboration between public and private sectors and improving digital infrastructure and governance.

However, for this agreement to be effective, member countries must strictly adhere to it, and a mechanism must be in place for enforcing compliance. Without this, DEFA would lose its significance.

The role of diaspora

To truly unlock the potential of the ASEAN digital economy, engaging its talented and resource-abundant diaspora can act as a force multiplier to support a $2 trillion digital economy by 2030.

Here's how ASEAN countries can leverage their diaspora for digital development:

Skills and knowledge transfer: The diaspora harbours a significant pool of professionals in tech, e-commerce, and digital entrepreneurship. ASEAN countries can establish programmes for knowledge exchange, mentorship, and training. This will inject fresh ideas and best practices and bridge the digital skills gap within the region.
Investment and funding: The diaspora often holds significant financial resources. ASEAN can fuel innovation and growth by creating a welcoming environment for diaspora investment in digital startups and ventures. DEFA can play a role by promoting investment-friendly regulations and streamlined procedures.
Networking and collaboration: The diaspora acts as a bridge between ASEAN and the global digital ecosystem. Facilitating connections between ASEAN businesses and diaspora-led companies abroad fosters international partnerships and market access.

DEFA's focus on harmonizing digital regulations across ASEAN presents a golden opportunity to engage the diaspora. Here's how:

Reduced uncertainty: A standardized regulatory framework through DEFA reduces the complexities and risks associated with investing or operating in the region.
Improved transparency: DEFA's emphasis on transparency fosters trust and facilitates communication between governments, businesses and the diaspora.
Collaboration platforms: DEFA can act as a platform for collaboration between ASEAN governments and diaspora communities. This can involve joint initiatives, knowledge-sharing workshops and mentorship programmes.

Unlocking ASEAN's digital economy

By harnessing the potential of its diaspora and leveraging DEFA as a framework for engagement, ASEAN can unlock a new wave of innovation and propel its digital economy to new heights.

The significance of digital trade and commerce in ASEAN cannot be overstated. As the region embraces the digital economy, it must address critical challenges related to ethical AI, data flow and cybersecurity. By implementing responsible and forward-thinking policies, ASEAN can unlock the full potential of digital trade, ensuring sustainable and inclusive growth.

Engaging with the ASEAN diaspora can boost technical capabilities and foster innovation. Tapping into their expertise will strengthen ASEAN's digital infrastructure. By involving the diaspora community, ASEAN will appear closer to achieving its vision of becoming a people-centered community and the benefits may be more widespread.

Collaboration and a shared vision are essential for an ethical, secure and globally competitive digital ASEAN.

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