As ASEAN enters a new phase of integration and transformation, the ASEAN Economic Community (AEC) Strategic Plan 2026–2030 emerges as a key blueprint guiding the region’s future. The new plan comes at a time when ASEAN has become the fifth largest economy in the world, with a combined GDP of nearly USD 4 trillion. The region has grown into a global production and innovation hub, deeply embedded in international value chains. Digital transformation has been central to this progress: ASEAN’s digital economy has maintained double-digit growth since 2022, with e-commerce gross merchandise value (GMV) reaching USD 159 billion and digital payments hitting USD 1.13 billion in transaction value in 2024 alone.

However, challenges persist. While ASEAN’s economic integration has progressed over the last decade, the region still faces barriers to realizing its full potential as a truly interconnected, resilient, and inclusive economic bloc. Intra-ASEAN trade remains under 25% of total trade, indicating untapped regional potential. Non-tariff barriers, regulatory fragmentation, skills mismatches, and uneven digital infrastructure continue to constrain shared growth. Amid geopolitical uncertainty and shifting global supply chains, ASEAN must evolve from momentum to resilience thereby fostering the capacity to adapt, innovate, and lead.

Amidst this backdrop, the Tech for Good Institute (TFGI) had the honor of moderating a high-level panel on Redefining Economic Integration and Resilience in ASEAN. The session brought together a distinguished set of stakeholders from the government, industry, academia, and civil society. The panel aimed to unpack ASEAN’s economic prospects beyond 2025 and explore how digital transformation, regional cooperation, and inclusive innovation can be scaled to achieve the goals of the new AEC Plan.

Moderator and Panelists:

• Arifah Sharifuddin, Operations Director, Tech For Good Institute
• YB Liew Chin Tong, Deputy Minister of Investment, Trade, and Industry, Malaysia
• Attny. Allan B. Gepty, Undersecretary, Department of Trade and Industry of the Philippines
• Dinesh Nambiar, Co-Chair, Australia-ASEAN Chamber of Commerce
• Jasmine Begum, Regional Director, Legal and Government Affairs, ASEAN at Microsoft
• Jukhee Hong, Executive Director, ASEAN-BAC Malaysia
• Tham Siew Yean, Professor Emeritus & Visiting Senior Fellow, ISEAS- Yusoff Ishak Institute

Key takeaways

1. Policy Innovations are Needed to Build an Inclusive and Robust Regional Digital Economy

ASEAN’s digital growth story has been remarkable, but opportunities exist to update policies in light of modern technologies. Many of the region’s current regulations were designed for an analog world and may not be suited for today’s challenges. There is an urgent need for reform in areas such as cybersecurity, artificial intelligence governance, and digital infrastructure. Addressing the lack of interoperability and fragmented rules across ASEAN member states can further facilitate cross-border digital trade within the region.

Moreover, effective negotiation and implementation of the Digital Economy Framework Agreement (DEFA)—will be crucial in guiding action towards a competitive regional digital economy.  When concluded, DEFA is expected to become the world’s first regional agreement of its kind, enabling integration in areas such as digital payments, e-invoicing, online safety, and digital IDs. If negotiated effectively, DEFA can drive ASEAN’s transition into a truly digital, innovative, and future-ready region. Finally, policy frameworks must go hand-in-hand with institutional agility, transparency and private sector engagement to be effective.

2. SME transformation is crucial to fully unlock ASEAN’s economic potential

Small and medium-sized enterprises (SMEs) form the backbone of ASEAN’s economy, accounting for over 97% of businesses and 70% of employment in many member states. Yet despite their growing  scale, SMEs still have difficulties tapping into global and regional value chains. Access to finance, technology, and policy support continues to be limited, particularly for smaller firms and those operating outside urban centers.

Financing models such as Malaysia’s high-tech and green finance facility, can help support SME innovation and sustainability transitions. However, many SMEs still struggle to access such programmes due to bureaucratic hurdles, limited awareness, and capacity gaps. Given these hurdles, intermediary institutions including chambers of commerce, industry associations, and incubators play a crucial role in  bridging the gap between policy and practice.

SME inclusion must be a cornerstone of ASEAN’s integration agenda, particularly as the region aspires to lead in future-facing sectors like AI, clean tech, and smart manufacturing. Empowering SMEs with the tools, financing, and skills needed to innovate is not just an economic imperative, it is a strategy for inclusive growth and resilience.

3. Investments in human capital must be prioritised alongside technological advancements

There is an urgent need to future-proof ASEAN’s workforce. As technology reshapes labor markets, the region must respond with agility by upskilling workers in digital skills needed for the future of work. Investments in education and training must be fully maximised to leverage the region’s young and dynamic population.  Public-private partnerships are important initiatives in this effort. For instance, Microsoft has pledged to train 2.5 million ASEAN citizens by 2025 in artificial technologies, as a concrete example of industry stepping up to bridge the skills gap. Technical and vocational education and training (TVET) also have a role in supporting lifelong learning. Finally there is a need to further streamline regional talent mobility frameworks to allow skills to flow across borders in support of regional industries.

Ultimately, ASEAN’s ability to remain competitive in a fast-changing global economy will depend not just on technology adoption, but on its capacity to equip its people to drive, manage, and innovate with these technologies.

4. Cross-Sectoral Cooperation and Institutional Innovation are Vital for a Digital and Future-Ready ASEAN

To remain competitive and responsive, ASEAN must move beyond passive stakeholder engagement and institutionalize cross-sectoral co-creation with the private sector, academia, and civil society.

There is a need for more structured, transparent, and iterative policymaking processes that allow businesses to actively shape policy outcomes. This includes practical reforms such as the creation of a public registry for policy submissions, clear feedback loops, and the use of regulatory sandboxes to pilot innovations. For instance, Malaysia’s New Industrial Masterplan 2030 initiative and Singapore’s ongoing AI governance consultations are models of multi-stakeholder frameworks that could be replicated regionally.

These principles collectively emphasise the critical need to transition ASEAN’s integration journey from a realm of political aspiration to one of tangible, quantifiable, and inclusive achievements.. By embedding collaborative mechanisms into the policy process, ASEAN can improve regulatory agility, build public-private trust, and better align regional policies with the fast-moving realities of the digital economy.