Rather than importing digital rulebooks from great powers, the Association of Southeast Asian Nations (ASEAN) needs a model shaped by its own needs – one that flexibly accommodates diverse economies and strengthens regional systems that already exist.
Southeast Asia stands at a digital turning point. From Vietnam’s fast-growing e-commerce platforms and Indonesia’s fintech surge to Singapore’s world-class innovation infrastructure, the region is rapidly moving online. Southeast Asia’s internet economy reached approximately US$263 billion in gross merchandise value (GMV) in 2024 – a 15 percent year-on-year increase driven largely by digital services and online retail. Yet behind this impressive headline figure lies a complex reality: wide disparities in regulatory readiness, data governance, and institutional capacity continue to limit the region’s ability to capture the benefits of digital trade fully. For ASEAN, the key question then is not which external model – US, European, or Chinese – to adopt, but which digital frameworks can realistically work for Southeast Asia’s developmental diversity and how to localize global norms to regional realities.
The Development Gap Beneath the Digital Boom
Despite the dynamism of the digital economy, the region’s developmental asymmetries are stark. There is significant variation among ASEAN member states in frameworks for cross-border data flows, e-payments, digital identity, and cybersecurity. While Singapore, Malaysia, and Thailand have relatively mature digital trade ecosystems, others, such as Cambodia, Laos, and Myanmar, still lack foundational infrastructure and harmonized data regimes.
The region’s rapidly expanding digital services trade is also constrained by regulatory fragmentation, limited SME readiness, and mismatched bilateral or regional rules. These structural obstacles reveal a sobering truth: adopting “high standard” digital trade agreements modeled on those of advanced economies will not automatically yield results. Without the infrastructure, interoperability, and institutional coherence to support them, such frameworks risk becoming symbolic rather than transformative.
Modularity, Regional Coherence, and Integration: Lessons from Within
Some Southeast Asian countries already have working models of flexible, modular integration with external partners, which could lay the groundwork for regional cooperation. For example, the Digital Economy Partnership Agreement (DEPA) – initially signed by Singapore, Chile, and New Zealand – pioneered a “modular architecture” that allows members to adopt specific policy modules (such as e-invoicing, digital identity, or AI ethics) as their systems mature.
This scalable approach is particularly suited to ASEAN’s context, enabling countries at different stages of digital readiness to engage meaningfully without overcommitting. DEPA’s strength also lies in its emphasis on interoperability and trust-based governance: it combines trade liberalization with forward-looking digital principles, such as data innovation, consumer protection, and ethical AI. By linking regulatory cooperation with digital inclusion goals, DEPA bridges the gap between innovation and governance, offering a realistic model for Southeast Asia’s evolving digital economy.
Building on this, the forthcoming ASEAN Digital Economy Framework Agreement (DEFA) – expected to be concluded and signed in 2026 – represents a transformational step toward regional digital integration. DEFA aims to establish legally binding, interoperable digital trade rules across all ASEAN member states, focusing on cross-border data flows, digital payments, consumer protection, cybersecurity, digital ID systems, and emerging technologies such as AI governance and 5G interoperability.
The World Economic Forum (May 2025) estimates that DEFA could double ASEAN’s digital economy to US$2 trillion by 2030 if these measures are effectively implemented. Taken together, DEFA and DEPA mark a turning point: ASEAN is evolving from a rule-taker in the digital economy to a rule-shaper, advancing a homegrown, pragmatic, and modular approach to digital trade that reflects the region’s diversity and development realities.
The ASEAN Single Window (ASW) exemplifies this emerging pragmatism. As an integrated digital platform connecting the National Single Windows (NSWs) of all ASEAN member states, the ASW facilitates real-time, paperless trade by enabling customs and traders to exchange electronic documents such as certificates of origin and customs declarations. This has shortened clearance times, reduced costs, and fostered transparency across borders.
Beyond efficiency gains, the ASW strengthens ASEAN’s bargaining power in global digital trade governance. Creating shared standards for data exchange, cybersecurity, and digital authentication allows the region to articulate collective positions on cross-border data flows and digital trust frameworks rather than negotiating as fragmented markets. The ASW’s success also serves as proof of concept for deeper regional integration, bolstering ASEAN’s credibility as an emerging “digital middle power” and positioning it to shape global norms toward interoperability rather than fragmentation.
China’s Digital Trade Model: A Template with Tradeoffs
Although the US and EU digital frameworks are influential globally, China’s model is most directly comparable for ASEAN because it is the one ASEAN is actually integrated with, actively exposed to, and politically and economically closest to adopting in practice. China already has deep digital, supply chain, investment, and platform economy linkages with ASEAN: Chinese platforms (Alibaba, JD, TikTok, Tencent) are dominant players in Southeast Asia’s digital markets, and China is ASEAN’s largest trading partner and a major investor in digital infrastructure (cloud, data centres, 5G, cross-border payments). Because of this integration, ASEAN is subject to the Chinese digital governance model in its daily operations, not just at the treaty level.
Nonetheless, China’s digital governance model should serve as a caution to ASEAN as well. Beijing’s Cybersecurity Law (2017), Data Security Law (2021), and Personal Information Protection Law (2021) form a triad that enforces stringent data localization and cross-border transfer controls, giving authorities broad discretion over what data can leave China. These measures raise compliance costs for foreign firms and could embed state-centric digital norms globally. Through its Digital Silk Road initiative, Beijing is exporting these standards via infrastructure projects, telecom networks, and AI governance dialogues. This approach risks locking partner economies into Chinese technical ecosystems and regulatory dependencies.
For ASEAN, China’s model represents one pathway – particularly for members prioritizing security, state capacity, and sovereign control over sensitive digital assets. But it also highlights necessary trade-offs. Tighter controls can strengthen resilience and public trust, yet they may also pose challenges for interoperability, cross-border digital services, and the open data flows that ASEAN seeks to expand. As the region works to design frameworks that balance security with economic integration, China’s experience offers valuable insights into how different regulatory choices shape outcomes for innovation, governance, and international cooperation.
From Dependence to Co-Design
If ASEAN is to articulate a distinctive digital trade model, two interlocking design principles must anchor it: adaptability and interoperability. Adaptability recognizes the region’s markedly heterogeneous levels of development and institutional capacities. ASEAN comprises both digital frontrunners with advanced regulatory systems and high-speed infrastructure, and economies still in the early stages of digitization. A viable model must therefore accommodate different levels of commitment, allowing member states to sequence participation, adopt rules in modules, and expand engagement as readiness improves. Adaptability also means recognizing that political priorities shift – data governance regimes mature, cybersecurity risks evolve, and new technologies (AI, cross-border cloud, digital IDs) emerge. A flexible rulebook enables ASEAN states to upgrade commitments over time rather than be locked into rigid, one-size-fits-all obligations.
Interoperability ensures that national systems – ranging from privacy protection frameworks to digital payment rails and identity verification regimes – can speak to one another. Without it, digital trade remains fragmented and inefficient. Many ASEAN states are already investing in cross-border QR payment connectivity, real-time settlement linkages, e-trade documentation platforms, and data-sharing frameworks for trusted government-to-government and business-to-government exchanges. These emerging systems could form the technical backbone of a regionally coherent, globally connected digital architecture. Interoperability also extends to aligning ASEAN rules with international norms, enabling the region to plug into broader digital markets without sacrificing its autonomy.
From these principles, ASEAN could develop a Digital Partnership Toolkit – a practical, operational framework designed to help countries translate aspiration into action. Such a toolkit would provide a menu of modular policy options, allowing governments to adopt specific elements at their own pace; capacity-building roadmaps tailored to each country’s regulatory maturity; and sequencing strategies that show how states can progress from foundational reforms to more advanced commitments. Informed by DEPA’s modular approach, DEFA’s regional ambition, and national digital diagnostics, the toolkit would ensure that digital trade rules are doable, not dreamy – regionally owned, context-sensitive, and globally credible, offering a uniquely Southeast Asian pathway to digital economic integration.
A Future Built, Not Borrowed
Southeast Asia’s digital future will not be imported from Silicon Valley or Beijing – it will be built in Jakarta, Hanoi, Manila, and Bangkok, by regulators drafting pragmatic laws, startups scaling regionally, and institutions learning to govern technology in real time. The region’s goal is not technological rivalry but strategic self-definition: crafting a digital order that serves its people and reflects its diversity.
If ASEAN succeeds in consolidating its frameworks for digital trade – flexible, inclusive, and regionally coherent – it could emerge as a standard-setter from the middle, offering the world a model of digital governance that is both ambitious and achievable. In an era where the digital divide risks becoming a geopolitical fault line, Southeast Asia’s “built, not borrowed” approach offers a rare and realistic path toward a trusted, open, and equitable digital future.
Azira Ahimsa is the 2025 Rising Expert on Technology at Young Professionals in Foreign Policy (YPFP). She holds an MSc in Defence, Development and Diplomacy from Durham
University (2016), is ASEAN Co-Chair of the US ASEAN Young Professionals Association, and has served in digital trade roles at the Australian Trade and Investment Commission and the
UK Department for Business and Trade in Jakarta.
This article is published under a Creative Commons License and may be republished with attribution.
