This article is part of:Centre for Regions, Trade and Geopolitics

• Southeast Asian nations have come a step closer to cementing the world's first regional agreement on digital economy governance.
• The ASEAN Digital Economy Framework Agreement (DEFA), due to be concluded and signed in 2026, aims to bolster a digital economy that could reach $2 trillion by 2030.
• The World Economic Forum's ASEAN Digital Economy Agreement Leadership project has supported the DEFA negotiation process since its inception.

Southeast Asian nations have reached a critical milestone in negotiations for the world's first comprehensive regional digital economy agreement, setting the stage for digital integration across a market of nearly 680 million people.

At a gathering in Kuala Lumpur, Malaysia, the Association of Southeast Asian Nations (ASEAN) announced it reached the "substantial conclusion" in negotiations for the region’s Digital Economy Framework Agreement (DEFA). The announcement marks a major step in more than two years of talks, which included 14 rounds of negotiations.

ASEAN DEFA is now poised to become the world's first region-wide agreement focused exclusively on digital economy governance. Unlike digital provisions embedded in broader trade agreements, the pact stands out as a dedicated framework designed to harmonize digital trade rules, enable trusted cross-border data flows and establish coherent regulations for paperless trading, e-commerce, cybersecurity and digital payments across ASEAN.

A $2 trillion digital future

The economic stakes involved are significant as ASEAN's digital economy continues to grow rapidly. Currently valued at around $300 billion, it is projected to reach $1 trillion by 2030, a figure that could potentially double to $2 trillion with DEFA's successful implementation.

Indonesia, which leads the region's digital economy with a $90 billion valuation in 2024, could reportedly see its digital economy triple to $360 billion by 2030, with e-commerce contributing $150 billion.​

In 2023, 71% of all venture capital deals across ASEAN were digital economy-related, 11% higher than the global average. Meanwhile, annual announced investments in communication, data processing and hosting services have increased nearly sixfold in the past ten years, from $777 million in 2015 to $4.4 billion in 2024.

From fragmentation to integration

ASEAN DEFA seeks to bridge the region's diverse digital landscape, uniting economies to advance digital finance and infrastructure collectively.

"Without common digital rules and standards, this diversity risks creating fragmentation," ASEAN Secretary-General Kao Kim Hourn wrote in Forum Stories article in May. "This comprehensive approach reduces regulatory divergence, lowers transaction costs and creates a seamless, interoperable digital ecosystem benefiting ASEAN and its partners."

Inclusion has been central to ASEAN DEFA with talks including extensive consultation with governments, business leaders, academics, and micro, small and medium enterprises (MSMEs). The participatory approach, officials say, is critical given that MSMEs comprise at least 97% of ASEAN businesses and provide 85% of employment.

Through streamlined digital regulations and improved e-commerce access, ASEAN DEFA aims to enable MSMEs to expand across borders, integrate into regional value chains and compete globally. The agreement also creates pathways for women entrepreneurs, rural innovators and youth-led start-ups, with provisions supporting skills development, talent mobility and digital literacy.

"[DEFA's] provisions represent collective commitments of ASEAN to deepening cooperation and enhance our competitiveness while ensuring that the benefits of digitalization are accessible to all," the bloc said in the official statement. "Through DEFA, ASEAN will be able to unlock the benefits of cross-border digital integration and interoperability across the region."

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A model for the digital age

The World Economic Forum has supported the ASEAN DEFA negotiation process since its inception through its ASEAN Digital Economy Agreement Leadership (DEAL) project.

The initiative created an online depository that provides centralized, clause-by-clause access to dozens of digital economy and free trade agreements that have substantive commitments on e-commerce and digital trade. The platform, which details the agreements' relevance for ASEAN countries, has enabled detailed legal mapping and comparative analysis, facilitating evidence-based decision-making for negotiators.​

Furthermore, the Forum has hosted multiple business dialogues and stakeholder consultations, ensuring ASEAN DEFA reflects not only policy-makers' priorities but also the perspectives of businesses and consumers who drive regional economic growth. Through annual business surveys on ASEAN's digital economy, the Forum has also helped to provide insights and first-hand data to inform member state negotiators on key topics and trends related to the digital economy.​

In its statement, ASEAN said it expects ASEAN DEFA to be signed by the end of 2026, noting that the pact's "real benefits will be realized only upon its full conclusion, timely signing, and effective implementation."

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

The Centre for Regions, Trade and Geopolitics at the World Economic Forum, with support from the ASEAN Korea Cooperation Fund and in collaboration with the ASEAN Secretariat and ASEAN Member States, is supporting ASEAN’s Digital Economy Framework Agreement (DEFA) through the ASEAN Digital Economy Agreement Leadership (ASEAN DEAL) project.

As one of the world’s fastest-growing internet markets, Southeast Asia’s digital economy is projected to nearly triply by 2030, expanding from $300 billion to close to $1 trillion. However, achieving this growth faces challenges due to differences in development levels, regulatory capacity, infrastructure, and digital skills across the region. ASEAN DEFA aims to overcome these barriers and set a path towards a more inclusive and sustainable digital economy in ASEAN.

Through ASEAN DEAL, the World Economic Forum is supporting ASEAN DEFA with the following key activities:

• Online Depository of Digital Economy Agreements: An interactive online depository of digital economy agreements and free trade agreements relevant to the digital economy, designed to allow comparison and analysis of relevant provisions. It aims to simplify complex digital economy agreements and enable informed policy decisions and negotiations.
• Annual Business Survey and Dialogue: An annual survey collects insights from business leaders on key areas including digital trade, electronic transactions, electronic authentication, digital payments, intellectual property rights and competition policy in ASEAN. The key findings from the survey are presented and discussed at annual dialogues with ASEAN policymakers, business leaders, academia and civil society.
• Capacity Building for ASEAN DEFA Negotiators: Workshops and roundtables for ASEAN DEFA negotiators provide insights on current digital economy agreements and best practices from various jurisdictions, helping negotiators strengthen their knowledge and stay updated on global developments.

For more information and updates, visit www.asean-deal.org