by Linh Dang (Policy Intern at CELI)
Positioned close to the epicenter of US-China technological competition, the Association of Southeast Asian Nations (ASEAN) is facing intense pressure to respond to a volatile geopolitical and economic landscape. The trend has accelerated since the COVID-19 pandemic, providing an unprecedented boost to e-commerce and data-driven services, while simultaneously exposing substantial gaps in digital governance and regulation across individual member states and as a bloc. The Association’s future is increasingly vulnerable to external factors, underlining the question of maintaining ASEAN’s internal cohesion, strategic autonomy, and adaptability in the multipolar digital order.
The Bandar Seri Begawan Roadmap on ASEAN Digital Transformation Agenda to Accelerate ASEAN’s Economic Recovery and Digital Economy Integration (BSBR)is Southeast Asia’s collective answer to such challenges. The roadmap marks a strategic shift from a series of parallel, fragmented, and non-binding initiatives into a consolidated, legally binding blueprint on ASEAN’s digital economy strategies. Its three-phase framework for recovery and digital integration includes the adoption of the ASEAN Digital Economy Framework Agreement (DEFA) by 2025 as the key outcome. Even though the DEFA, the first regional agreement of its kind in the world, is yet to be signed into effect, it is estimated to boost the region’s dynamic digital economy to two trillion dollars by 2030.[1] This agreement’s flexible design also encapsulates the extension of the “ASEAN Third Way” into digital cooperation, allowing flexible engagement with global actors while upholding common governance standards and enabling countries falling behind to catch up with pioneers in developing regulations.
Integration of ASEAN’s Digital Economy: From Fragmented Initiatives to Binding Frameworks
Several past ASEAN initiatives serve as the launchpad for DEFA and digital integration in the region, such as the 2019-2025 ASEAN Digital Integration Framework Action Plan and the ASEAN Agreement on Electronic Commerce. The BSBR and the ASEAN DEFA themselves were conceived within the framework of the ASEAN Digital Masterplan 2025 (ADM 2025), which was adopted in early 2021 as a post-COVID-19 plan for ASEAN to become a “leading digital community and economic bloc, powered by secure and transformative digital services, technologies and ecosystem.”[2] In the masterplan, ASEAN defines three major contexts behind the paper’s framing: the COVID-19 pandemic, climate change, and global technology changes (including AI, Big Data and robotics).[3] Similar to the BSBR, the masterplan emphasizes the link between regional digital transformation and desirable actions to recover quickly from the pandemic, including enhancing digital inclusivity, improving digital services and infrastructure, and stimulating trade and economic growth.
Prior to the adoption of the ASEAN DEFA, many ASEAN countries were involved in digital economy governance via separate regional trade agreements (RTAs), such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and bilateral digital economy agreements (DEAs) with countries outside the bloc. According to the Asian Development Bank’s 2025 report on trends of digital economy agreements in the Asia-Pacific region, Southeast Asian countries are among the most active actors in negotiating and participating in digital trade deals, with Singapore leading among the ADB economies. Other developing, digitally expanding economies, such as Vietnam, are motivated to join RTAs and DEAs to improve internal governance capacity and expose domestic enterprises to healthy digital competition.[4] A sense of urgency to join forces in building collective digital regimes is shared among Southeast Asian countries, many of which have learned from lessons interacting with similar deals and are aiming to maintain local and regional digital competitiveness.
Participation in agreements with digital elements by ADB regional economies (Illustration from the ADB’s report “The Role and Future of Digital Economy Agreements in Developing Asia and the Pacific,” p. 11)
DEFA as Governance Foundation for the Regional Digital Economy
The future implementation of ASEAN DEFA reflects the bloc’s wider understanding of digital governance in fostering its digital economy. Many parallel workstreams outlined in the BSBR, such as the formation of the ASEAN Digital Integration Index (ADII),[5] are closely related to the execution of the DEFA, serving as a tracking tool for digital governance capacity and compatibility among member states. Another notable action in preparation for DEFA adoption is the launching of the ASEAN Unique Business Identification Number (UBIN)—a uniform and interoperable digital identity for companies in all member countries.[6] ASEAN nations offer significant development potential with their young and tech-savvy customer base, booming e-commerce and digital service usage, and generally strong economic growth. By boosting transnational trade, lowering transaction costs, fostering trust, and attracting more foreign capital, the UBIN alone is expected to add between 110 billion and 300 billion dollars to ASEAN’s economic value. This will not only benefit investors and the local economy but also the vast, youthful, and dynamic consumer markets of the region.
The ASEAN DEFA, while being coined in the previous digital masterplan mandate, remains relevant to the construction of governance frameworks for emerging technologies, namely artificial intelligence (AI). ASEAN’s newly released Digital Masterplan 2030 (ADM 2030) frames its vision around addressing unbalanced multipolarity, economic competition, digital talent gaps, and emerging global technology trends such as mass investment in infrastructure & innovation, booming development of AI/GenAI, and increasing digital sovereignty.[7] Compared to its predecessor, the ADM 2030 decisively moves away from post-pandemic recovery targets and places heavy emphasis on sustainable, resilient digital infrastructure; digital skills for citizens and talent; and effective regional frameworks for AI governance. Per the updated Masterplan, the ASEAN DEFA will play a key role in facilitating “seamless cross-border digital trade, interoperable digital payment systems, and harmonized digital regulations,”[8] possibly influencing future regulation blueprints for e-commerce and online retail, which are increasingly driven by AI. The adopted declaration of the sixth ASEAN Digital Ministers’ Meeting, convened in Hanoi, Vietnam, in January 2026, further reinforces the importance of DEFA adoption.[9]
DEFA in ASEAN’s Digital Diplomacy: Opportunities and Institutional Constraints
The DEFA may also provide a common policy ground for ASEAN countries to negotiate digital partnership deals with key actors such as the US, China, and Australia. Great-power rivalry in the Asia-Pacific is shifting from traditional military and economic competition to technological competition. These shifts have potential ramifications for ASEAN’s “Third Way” diplomacy, characterized by noninterference, consensus, informal diplomacy, and geopolitical pragmatism regarding relations between major powers and their ambition to influence the digital infrastructure of the region.[10] Given the SEA countries’ diversity and heterogeneous foreign policies, hedging toward any power in the region poses strategic risks to ASEAN’s member states and its unity, including external dependency in rule-setting and a negative impact on intra-bloc political dynamics. Within such contexts, the DEFA may be viewed as a collective effort to formalize a balanced path for a regional digital regime, striking a compromise between digital trade, cross-border interoperability, and cybersecurity, trust, and responsible governance. Its conception, therefore, aligns with ASEAN’s gradual integration and aspiration for regional autonomy in the digital realm, as opposed to the EU’s far more pervasive approach to data regulation and user privacy.
It is worth noting, however, that ASEAN’s structural constraints may become significant barriers to the agreement’s potential to translate such ambitions into reality. Its consensus-based decision-making model and the overarching principle of noninterference may hinder the enforcement of effective compliance. This has acted as a stabilizing factor in maintaining the internal cohesion of this regional grouping, even during periods of serious conflicts between member states. Nevertheless, there is a considerable risk that the final wording and the implementation of DEFA will turn out diluted and compromised. In contrast, a more ambitious deal with stringent conditions may not be compatible with established norms and instead widen intra-regional digital and economic inequality. This tension points to a fundamental issue in ASEAN’s digital integration process: the bloc’s single digital market requires harmonization across legislatures and governance approaches, but ASEAN needs to close wide gaps in digital capacity among its member states. In addition, the binding and cooperative nature of DEFA does not necessarily mitigate intra- and extra-regional security and geopolitical tensions, such as maritime disputes and border conflicts between member states.
From Blueprint to Benchmark: How the DEFA Should Shape the Future of Southeast Asia’s Digital Economy
The long-term impact of DEFA, therefore, depends on its ability to balance ambitions with political sensibility and devise practical action packages that will proportionately benefit and empower less developed countries in the regional digital economy in the upcoming decades. The agreement should be treated as a foundational blueprint for a comprehensive digital economy partnership and not be reduced to a one-time symbolic signal. ASEAN’s initiatives to establish its own digital economy framework reflect its longstanding balanced approach to diplomacy, and are crucial to its members’ long-term autonomy and sovereignty amidst the multipolar pressure shaped by the US-China digital and AI rivalry. If successful, DEFA could reinforce ASEAN’s role as a key player in Asia-Pacific digital governance and act as a template for other regional groupings looking to navigate technological competition.
Bibliography
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“ASEAN Digital Masterplan 2025.” ASEAN Main Portal, January 22, 2021. https://asean.org/wp-content/uploads/2021/09/ASEAN-Digital-Masterplan-EDITED.pdf.
ASEAN Main Portal. “ASEAN Digital Masterplan 2030,” February 6, 2026. https://asean.org/wp-content/uploads/2026/01/ASEAN-Digital-Master-Plan-2030-final-2026.pdf.
Crivelli, Pramila, and Rolando Avendano, eds. The Role and Future of Digital Economy Agreements in Developing Asia and the Pacific. Asian Development Bank. Asian Development Bank, 2025. https://www.adb.org/publications/digital-economy-agreements-asia-pacific.
Feingold, Spencer, and Anne-Katrin Pfister. “ASEAN Takes Major Step toward Landmark Digital Economy Pact.” World Economic Forum, October 28, 2025. https://www.weforum.org/stories/2025/10/asean-defa-digital-economy-pact-negotiations/.
“Hanoi Digital Declaration – ‘Adaptive ASEAN: From Connectivity to Connected Intelligence,’” January 16, 2026. https://asean.org/wp-content/uploads/2026/01/ADOPTED-HANOI-DIGITAL-DECLARATION_14Jan2026-CLN.pdf.
Mahbubani, Kishore. “Asia’s Third Way: How ASEAN Survives—and Thrives—amid Great-Power Competition.” Foreign Affairs, February 28, 2023. https://www.foreignaffairs.com/southeast-asia/asias-third-way-asean-amid-great-power-competition.
Vietnam National Trade Repository. “Unlocking ASEAN’s Digital Trade with Digital Business Identity,” December 16, 2025. https://vntr.moit.gov.vn/news/unlocking-aseans-digital-trade-with-digital-business-identity.
[1] Feingold and Pfister, “ASEAN Takes Major Step toward Landmark Digital Economy Pact.”
[2] “ASEAN Digital Masterplan 2025,” 4.
[3] ibid, 8-15.
[4] Crivelli and Avendano, The Role and Future of Digital Economy Agreements in Developing Asia and the Pacific, 11.
[5] “ASEAN Digital Integration Index 2.0: Assessing the Progress of Digital Integration Measures over Time,” 15-16.
[6] “Unlocking ASEAN’s Digital Trade with Digital Business Identity.”” ASEAN
[7] “ASEAN Digital Masterplan 2030,” 20-25.
[8] ibid, 16.
[9] “Hanoi Digital Declaration—’Adaptive ASEAN: From Connectivity to Connected Intelligence.’”
[10] Mahbubani, “Asia’s Third Way: How ASEAN Survivesand Thrives—amid Great-Power Competition.”
