By: Noudhy Valdryno, Country Director for Public Policy and Business Development, Indonesia, Ant International

The ASEAN region stands at a pivotal crossroads, one that will determine its competitive edge in the global digital economy. Collectively, ASEAN has shown immense promise, with over 400 million internet users and a digital economy ecosystem that is growing exponentially. According to the ASEAN DEFA study, ASEAN’s digital economy is expected to grow to $1 trillion by 2030 due to the adoption of digital technologies. Implementing progressive ASEAN DEFA rules could double this growth, boosting the economy to $2 trillion. These rules would also significantly increase digital penetration in the region.

Yet, integrating these diverse markets remains essential to fully harnessing this potential. The ASEAN DEFA is a critical initiative, providing a structured approach to unify and elevate the region’s digital economy. As businesses play a central role in this grand plan, their commitment to supporting ASEAN DEFA’s ambitious goals is imperative.

The importance of a cohesive digital strategy for ASEAN cannot be overstated. In a rapidly evolving global market, regional integration is crucial for ASEAN to effectively compete with other economic blocs. ASEAN DEFA aims to create a robust framework that enhances digital trade, cross-border e-commerce, and secure digital payments. For Ant International, whose Alipay+ cross-border platform serves more than 1.5 billion users and 90 million merchants globally, supporting such an initiative aligns with its vision of a seamlessly connected digital world. For businesses, ASEAN DEFA’s emphasis on increasing security for consumers and facilitating cross-border trading will foster a more trustworthy and efficient digital environment.

Uplifting MSMEs Across ASEAN

One of the most exciting aspects of the ASEAN DEFA is its potential to uplift Micro, Small, and Medium Enterprises (MSMEs) across ASEAN, which now comprises 70 million establishments. MSMEs are the backbone of the region’s economy, accounting for nearly 99.9% of all enterprises and making significant contributions to employment and GDP. In ASEAN, MSMEs contribute 85% to employment and 44.8% to GDP. Yet, these businesses often face hurdles in accessing broader markets and leveraging digital tools effectively. The ASEAN DEFA promises to foster a more equal playing field, enabling MSMEs to participate in a more integrated digital economy. By improving digital infrastructure and regulatory coherence, MSMEs will find it easier to expand their reach and enhance their operations through digital solutions.

The digital transformation of MSMEs is not solely about economic growth; it is about inclusive growth. Digital tools empower small businesses in rural and underserved areas, enabling them to reach new customers and markets that were previously inaccessible. This inclusivity can foster more balanced economic development across ASEAN, reducing the urban-rural divide and promoting a more equitable distribution of economic opportunities.

Addressing Regulatory Diversity

Despite the optimism, we must acknowledge the challenges that lie ahead. One of the primary obstacles is the regulatory diversity across ASEAN member states. Varying regulations can create significant barriers to seamless business operations and digital integration. DEFA presents an opportunity to address these discrepancies, fostering a more harmonised regulatory environment. Such integration will not only facilitate smoother cross-border transactions but also ensure that businesses can operate with greater predictability and stability.

Furthermore, ASEAN DEFA’s Pillar 7, which focuses on cooperation on emerging topics, provides a vital platform for the exchange of ideas and best practices. This cooperative spirit is essential for navigating the complex landscape of digital transformation. By fostering dialogue between the business community and government representatives, the ASEAN DEFA can become a dynamic sandbox where innovative solutions are tested and refined. Ant International is particularly enthusiastic about this aspect, as it aligns with our commitment to driving forward-looking digital advancements.

Building a Future-Proof Digital Economy

The ASEAN market’s extraordinary potential makes this an opportune moment to create a synergistic digital economic framework. DEFA’s comprehensive approach, encompassing elements such as digital ID, cross-border data flow, and cybersecurity, will lay a solid foundation for sustained digital growth. According to a study by the Boston Consulting Group, progressive rules within DEFA could double the value contribution of the digital economy in ASEAN by 2030, unlocking up to $2 trillion and significantly boosting digital penetration across the region.

In addition to economic gains, the digital economy brings broader societal benefits. Enhanced digital infrastructure can lead to improved resilience, as evidenced during the COVID-19 pandemic when digital tools became essential for business and education continuity. The digital economy also promotes inclusivity and social mobility by providing new job opportunities and making information resources more accessible. Digital resilience extends beyond pandemic response; it encompasses climate impact mitigation, robust cybersecurity measures, and adaptive technologies that support continuous operation in the face of various disruptions. By integrating such resilience into the ASEAN DEFA, ASEAN can build a future-proof digital economy capable of withstanding and thriving amidst unforeseen challenges.

Ant International is committed to playing a pivotal role in this transformation. Alipay+, our cross-border payment and digitalisation platform connects leading e-wallets and payment apps around the world, to offline and online businesses in Asia and beyond, demonstrating our dedication to creating seamless digital experiences in the region. By enabling users from diverse backgrounds to access familiar e-wallet services, we are breaking down barriers and fostering greater digital inclusivity.

In conclusion, the ASEAN Digital Economy Framework Agreement represents a significant step forward for the region. By fostering integration, enhancing regulatory coherence, and supporting MSMEs, the ASEAN DEFA has the potential to unlock immense economic and social value. Ant International’s efforts show its readiness to support this initiative, leveraging its expertise and global reach to contribute to a thriving, inclusive, and secure digital economy in ASEAN. As the ASEAN DEFA moves forward, collaboration between the public and private sectors will be key to realising the full potential of the ASEAN DEFA and ensuring that ASEAN emerges as a leading force in the global digital landscape.

About the writer

Valdryno has over a decade of experience in tech policy, outreach, and political campaigns. Currently serving as the Director of Public Policy and Government Affairs, Indonesia at Ant International, one of the world’s leading fintech platforms, Valdryno leads engagements with government, civil society, and industry stakeholders to advocate for Ant Group’s vision and values.

Passionate about shaping Indonesia’s digital landscape, Valdryno previously served as a Digital Strategist in local and national elections, crafting innovative online communication and mobilisation strategies. Valdryno also consulted for regional public affairs firms, providing strategic insights on Southeast Asia’s political and regulatory environment.

Holding a Master of Public Policy from the Lee Kuan Yew School of Public Policy, Valdryno is dedicated to advancing Indonesian politics and tech policy, contributing to the region’s digital ecosystem development.

The views and recommendations expressed in this article are solely of the author/s and do not necessarily reflect the views and position of the Tech for Good Institute.