By Shivangi Shrivastava
The Indo-Pacific region includes major countries such as China, India, ASEAN nations and Australia along with key stakeholders like the United States and Canada. It is home to 64 percent of world’s population and contributes about 62% of global GDP. The Indo-Pacific is advancing digital transformation by improving infrastructure, expanding e-commerce and fintech, enhancing digital skills, and strengthening cybersecurity. Key efforts include national strategies like Malaysia’s Digital Economy Blueprint, regional initiatives such as the QUAD’s secure connectivity projects, support from organizations like ADB and UNESCAP, and contributions from private companies like Google and Starlink. These efforts aim to bridge the digital divide and build resilient, inclusive, and sustainable digital economies.
ASEAN played a significant role in the region as a neutral and trusted group. Malaysian Foreign Minister Mohamad Hasan stated that ASEAN had acted to preserve peace and stability whenever regional tensions emerged. The 47th ASEAN Summit brought together leaders from major countries, including the United States, China, Italy, and BRICS nations. The summit focused on key initiatives such as the ASEAN Community Vision 2045 and the Digital Economy Framework Agreement. Experts indicated that ASEAN’s digital economy could reach between US$1 and US$2 trillion following the implementation of the agreement.
ASEAN’s Digital Goals: Turning Plans into Action
Southeast Asia is experiencing a rapid digital transformation that is changing business opportunities in the region. A 2023 study by Google, Temasek, and Bain & Company found that the digital economy in the six largest Southeast Asian countries exceeded USD 100 billion, eight times higher than eight years ago. For businesses, this growth depends on progress in three main areas. First, harmonisation of standards has helped reduce trade barriers and improve economic integration between ASEAN countries. Second, digital services are improving through coordinated systems for online transactions and electronic payments, supported by agreements like the Digital Economy Framework Agreement. Third, digital infrastructure is expanding rapidly, with more data centres, especially in Malaysia, strengthening the region’s hardware and connectivity.
DEFA: Driving Growth in ASEAN’s Digital Economy
ASEAN has achieved a key milestone in the Digital Economy Framework Agreement (DEFA) negotiations. After more than two years of talks, DEFA is expected to be the first region-wide agreement focused solely on the digital economy. The agreement sets common rules for digital trade, e-commerce, digital payments, cybersecurity, and cross-border data flows.
ASEAN’s digital economy is growing quickly. It is currently valued at around $300 billion and could reach $1 trillion by 2030, or even $2 trillion with DEFA. Indonesia, the largest market, could see its digital economy rise from $90 billion to $360 billion by 2030. In 2023, most venture capital deals in ASEAN were related to the digital economy. Investment in digital services has also increased sharply, from $777 million in 2015 to $4.4 billion in 2024.
Inclusion has been a central part of DEFA. Negotiations involved governments, businesses, academics, and micro, small, and medium enterprises (MSMEs). This is important because MSMEs make up at least 97% of ASEAN businesses and provide 85% of jobs. DEFA aims to help MSMEs grow across borders, join regional value chains, and compete internationally. The agreement also supports women entrepreneurs, rural innovators, and youth-led start-ups through skills development, talent mobility, and digital literacy programs.
Challenges and Risks
Southeast Asia’s digital economy faces challenges because each country has different rules and regulations. Differences in data laws, digital policies, and cross-border trade rules make it difficult for companies to operate smoothly across the region. Some countries require data to be stored locally, while others allow freer movement of data. These variations increase costs and take more time for start-ups and multinational businesses. Rising digital protectionism adds further challenges, limiting the benefits of digital investments and reducing opportunities for e-commerce and FinTech companies to expand across borders. Companies operating overseas may also face delays in transferring data and difficulties accessing new customers. Harmonizing regulations across ASEAN could create a more unified digital market, helping businesses operate efficiently, grow regionally, and compete globally.
Looking Ahead: ASEAN’s Opportunities and Regional Impact
ASEAN is working actively to strengthen its digital economy. In April 2025, senior officials and telecommunications leaders met in Jakarta to discuss the future of digital development in the region. The meeting focused on using technology, especially artificial intelligence (AI), to make the ASEAN digital economy stronger. It emphasized teamwork between governments, businesses, and local communities. The meeting also planned the ASEAN Digital Forum 2026 in Vietnam and the ASEAN Digital Outlook 2025. ASEAN is significant for promoting economic growth, stability, and cooperation among its member countries. It strengthens economic integration through trade agreements and supports a large and expanding consumer market. Its security frameworks encourage dialogue and peaceful engagement, contributing to regional peace. Connectivity and digital initiatives help advance modernization and competitiveness. It also supports social and cultural cooperation in areas such as education, public health, and sustainability, making it an important actor in regional and global affairs. ADM2030 will guide digital growth in the region over the next five years. Overall, ASEAN is committed to building a secure, innovative, and inclusive digital economy. These efforts will help member countries work together, support businesses, and ensure the region stays competitive in the global digital landscape.
Shivangi Shrivastava is a PhD Scholar at IIS University, Jaipur. The views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect the views of Kalinga Institute of Indo-Pacific Studies.
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