DEFA is expected to make it easier, safer, and more seamless for businesses and consumers to participate in the digital economy. Photo credit: ADB.
A landmark deal set to be signed in November to bolster ASEAN’s digital economy promises to be a game changer for BIMP-EAGA. Touted to be the first major regionwide digital economy agreement in the world, the Digital Economy Framework Agreement (DEFA) is expected to make it easier, safer, and more seamless for businesses and consumers to participate in the digital economy.
If successfully implemented, the deal could unlock the full potential of ASEAN’s digital economy, which is projected to grow to $2 trillion by 2030, according to a study from the Boston Consulting Group.
BIMP-EAGA Vision 2035 (BEV 2035), which was adopted last May, recognizes the opportunities digitalization presents. The strategic roadmap notes the need to strengthen subregional cooperation in advancing seamless digital connectivity to sustain growth, enhance resilience, and safeguard development gains across the subregion.
To advance digital transformation, BIMP-EAGA aims to adopt emerging technologies, enhance cross-border digital infrastructure, strengthen cybersecurity and data governance frameworks, and promote interoperable digital systems.
What DEFA Can Do
ASEAN’s senior economic officials concluded negotiations over DEFA in May. According to a statement from senior economic officials, the DEFA would include the following areas:
- digital trade,
- cross-border e-commerce,
- data governance and privacy,
- digital identity,
- online safety and cybersecurity cooperation,
- competition policy,
- emerging technologies (e.g., artificial intelligence), and
- digital talent mobility.
The Boston Consulting Group report identified the same priorities for DEFA based on consolidated inputs from ASEAN member countries, sectoral bodies, and the private sector.
According to the report, DEFA will lower the cost of cross-border trade, with the deal expected to facilitate the creation of a seamless trade experience through electronic documents, interoperable processes, and digital payments systems. It will make cross-border transactions easier and safer through the adoption of mutually recognizable and interoperable digital identity and electronic authentication frameworks. It is expected to establish frameworks on cybersecurity, data privacy, and online safety.
Businesses and consumers also stand to benefit. DEFA will establish mechanisms for regulatory cooperation for relevant standards and regulations to keep up with technological innovations in emerging technologies, such as artificial intelligence. The deal will also facilitate digital talent mobility between countries and foster collaboration on talent building. DEFA is also expected to create a fair and non-discriminatory, transparent competitive environment with consistent guidelines on enforcement and better choice for consumers.
Challenges
While BIMP-EAGA has reaped gains from digitalization, digital development across the subregion remains uneven. Internet access and speeds and digital readiness vary across the subregion, with rural and remote communities still facing connectivity gaps. Digital literacy is another challenge, while fragmented regulatory frameworks and growing concerns over data privacy, cybersecurity, automation, and AI are creating new risks.
Noting similar disparities across ASEAN, a policy brief from the Economic Research Institute for ASEAN and East Asia said DEFA can help address these constraints by harmonizing policies, aligning national and regional priorities, and supporting capacity building. It recommends that DEFA take a development-oriented approach, by supporting ASEAN members at earlier stages of digital development and enabling micro, small, and medium-sized enterprises (MSMEs) and underserved groups to participate more fully in digital trade.
Subregional initiatives
Digitalization initiatives detailed in Vision 2035 already align with DEFA’s objectives.
The roadmap for instance proposes to maximize the benefits and mitigate the risks of AI by exploring collaborative frameworks for governance of AI and related emerging technologies. This is also in line with the ASEAN Responsible AI Roadmap 2025–2030.
According to BEV 2035, BIMP-EAGA will ensure digital talent mobility within the subregion, accelerate the adoption of digital solutions to advance the priorities of key sectors, and identify practical and scalable climate-smart technologies that will enable smallholders to adapt to climate change and maximize productivity.
The subregion will also work on developing a digital wallet to minimize frictions in cross-border payments and transactions with MSMEs.
To make travel to the subregion more seamless, BIMP-EAGA will look at developing digital arrival cards, like the BIMP-EAGA Connect Card, to streamline entry processes of business and trade representatives, government officials, medical travelers, and students. The subregion will also engage with the private sector to explore the use of immersive digital tools that can improve visitor experiences.
BIMP-EAGA also wants to deploy digital tools in the implementation of green city action plans, particularly in monitoring, reporting, and verification to track carbon emissions, as well as early warning systems for climate resilience.