ASEAN bloc starts work on Digital Economy Framework

Who needs India or China when ten booming economies form a gang?

The Association of South East Asian Nations – the ten-country trade bloc that houses over 600 million people and accounts for around 6.5 percent of global economic activity – has started work on a Digital Economy Framework Agreement (DEFA) it hopes will result in seamless trade and data flows.

ASEAN's members include Indonesia, Singapore, the Philippines, and Vietnam. Collectively the bloc represents the world's fifth-largest economy – and also some of its brightest growth prospects.

The DEFA is aimed at accelerating that growth by creating what members have described as "an open, secure, interoperable, competitive and inclusive regional digital economy" in which "seamless and secure flow of goods, services, and data is underpinned by enabling rules, regulation, infrastructure, and talent."

The decision to develop the DEFA was made at Tuesday's summit of ASEAN leaders, which produced a Leaders' Statement [PDF] that signaled agreement to develop the Framework, and set 2025 as the deadline to get it done.

Think tank The Economic Research Institute for ASEAN and East Asia (ERIA) considered the DEFA earlier in 2023 and described [PDF] it as having potential to "deepen existing digital economy cooperation and ensure the interoperability of digital economy systems" across the bloc.

That's not a bad thing. It would make for easier trade within the bloc, and could also equalize digital capability among member nations. While ASEAN members like Singapore already have advanced digital economies, others like Cambodia and Laos have some catching up to do.

But ERIA also worried that ASEAN already operates several initiatives with goals similar to the DEFA, creating potential for duplication. The think tank also noted that some member nations lack the laws needed to make DEFA work.

But the Institute's assessment also concludes that the DEFA, if signed, will "serve as the foundation for a secure and interconnected ASEAN digital economy, which will transform the region into a leading digital community and economic bloc."

That outcome would be welcome within ASEAN, which is flanked by larger neighbors in China and India.

It will likely also be appreciated elsewhere. DEFA would mean one set of rules prevails for those doing digital business throughout ASEAN, making it easier to tap into the bloc's growing economies. The European Union is already keen on doing that, in part by harmonizing customs software to ensure swift flow of goods between the two blocs. ®

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