How ASEAN is testing the concept of digital multilateralism

In May 2026, a group of 11 very different countries finished negotiating the world’s first and most comprehensive regional pact focused on the digital economy – the Association of South East Asian Nations' (ASEAN) Digital Economy Framework Agreement (DEFA).

Like bi- or trilateral digital agreements such as the Digital Economy Partnership Agreement (DEPA) between Chile, New Zealand and Singapore and the UK-Singapore Digital Economy Agreement, DEFA aims to harmonize digital trade, cross-border e-commerce, data governance, digital identity, e-payments, online safety and cybersecurity standards, and digital talent mobility across these 11 nations.

Once it’s signed at the ASEAN Summit in November 2026 and then ratified and implemented by these countries, it could lower compliance costs, make cross-border transactions easier and expand the market for companies that can digitally scale.

But DEFA is not just about trade. Negotiators added "emerging technologies including artificial intelligence" to future-proof the pact. This means ASEAN is pioneering its own approach to cross-border data flows and artificial intelligence (AI) governance at a time when other parts of the world lack uniform guidance. By forging common standards, DEFA could inform global debates on responsible AI, just like the EU’s AI Act.

ASEAN is building a $2 trillion economy with more than 680 million consumers, but its digital market remains fragmented. DEFA is an attempt to turn ASEAN’s 11 national markets into something closer to one regional digitally-savvy market. Uniquely, it was negotiated by members ranging from Singapore’s advanced economy to Vietnam’s one-party system, making it a compelling test of inclusive governance.

So, how did ASEAN develop its approach to digital regionalism?

Consensus has been built into the region’s DNA since the ASEAN Charter, signed in November 2007, codified the region’s diplomatic rules and listed the key principles and purposes of the group. But members can also opt out of certain commitments – ASEAN minus X – which allows countries to operate at different readiness levels. This flexibility may be criticized by some as a weakness, but it allows progress among countries with very different starting points.

Participants in DEFA negotiations may or may not use the ASEAN minus X formula, but its availability provides room for nations that need support and time. Consultative discussions and capacity-building are particularly important for smaller businesses seeking to reap DEFA’s benefits.

Inclusivity was also paramount during the DEFA negotiations. Since September 2023, the DEFA Negotiating Committee has convened at least 14 rounds of negotiations. ASEAN also sought broad stakeholder input from national and international technology companies, business groups and more than 2,000 small businesses through surveys.

In fact, DEFA has been framed as an integration and development tool for small businesses. “DEFA creates new pathways for women entrepreneurs, rural innovators and youth-led start-ups,” says ASEAN Secretary-General Kao Kim Hourn.

And the private sector supports the DEFA process because it matters to them too. The rapid integration of digital technologies by SMEs has been a cornerstone of Southeast Asia’s digital economy, which was expected to surpass $300 billion in gross merchandise value last year, according to a 2025 report from Bain & Company.

DEFA’s real benefits may emerge only after signing and enforcement. Each member must translate DEFA commitments into national law and regulations. Implementation will vary in speed – tech-savvy Singapore may move fast while others need more time.

ASEAN should set clear targets and track progress, by publishing annual digital-trade or SME-export metrics, for example. Transparent monitoring by international trade organizations and business councils could help governments achieve their integration targets. Regional and international technical support and training programmes could help lagging members.

DEFA could increase intra-ASEAN trade by up to 20%, according to the OECD Digital Trade Review. But for micro, small and medium enterprises (MSMEs), which comprise about 97% of ASEAN companies and account for roughly 85% of employment, the significance of DEFA should be measured less in trade statistics than in the marginal cost of entering its second, third or fourth ASEAN market. It must slash the costs that currently burden small exporters across these nations.

It is very difficult for ASEAN’s 71 million MSMEs to navigate conflicting national rules, but an online Indonesian batik maker, for example, could use a unified ASEAN e-invoicing and customs system under DEFA to sell across borders with minimal paperwork.

Multinational partners such as Mastercard and Google have already invested in the success of small businesses and digital talents in Southeast Asia. Successful implementation of DEFA could build on these efforts.

Besides the focus on trade benefits, DEFA has acknowledged the importance of online safety, cybersecurity and online consumer protection in advancing economic growth. Combined annual losses from scam offences across East Asia, South East Asia, Australia and New Zealand are estimated at between $88.3 billion and $114.1 billion for 2025.

Joint efforts among ASEAN governments and partners in combatting this scam epidemic through strong cybersecurity measures and digital identity are necessary. DEFA will give ASEAN the momentum to double-down on international cooperation in tackling cybercrime and safeguarding the growth of its digital economy.

DEFA will shape ASEAN businesses' commercial operating environment for decades. And the region’s inclusive efforts in welcoming stakeholders and partners to this process are commendable. Non-governmental organizations and business groups should continue supporting ASEAN’s implementation efforts and help hold leaders accountable to their DEFA commitments.

Ultimately, the real test for DEFA will be whether investors begin to see ASEAN as one scalable opportunity rather than 11 separate digital markets. This will be measured by whether an entrepreneur in Thailand can more easily scale its Thai iced tea business to Bali, for example.

DEFA demonstrates that very diverse countries can agree on a common digital rulebook. If ASEAN fully ratifies and implements DEFA, it could become a digital lighthouse for the world. In this sense, ASEAN’s DEFA rollout is a true test of digital multilateralism.