Nextrade Group founder and chief executive officer Kati Suominen
GENEVA: As Malaysia is set to assume the Asean chairmanship in 2025, a key event next year will be the expected conclusion of negotiations for the Asean Digital Economy Framework Agreement (DEFA).
A panel discussion at the World Trade Organisation’s (WTO) Public Forum 2024 highlighted that DEFA will help to reduce fragmentation of digital policies in the region.
One of the speakers, Nextrade Group founder and chief executive officer Kati Suominen also said a survey found that about 40% of businesses in Asean struggle with digital policy landscape, data privacy, consumer protection and others.
“DEFA would address the regulatory fragmentation.
“Also, about 70% of export-driven small businesses in Asean expect to gain at least 10% increase in revenue, thanks to DEFA,” according to Suominen.
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With the negotiations for DEFA already started last December among Asean member states, Suominen recommended that the agreement needs to lock in several key aspects such as data transfer, non-discrimination as well as moratorium on customs duties on electronic transmissions.
She also pointed out that DEFA can promote artificial intelligence (AI) adoption and use through common AI standards in the region.
It can also ease data transfers and promote strong cybersecurity protections.
“Post-negotiations, there must be a monitoring mechanism to ensure DEFA implementation,” she adds.
Another speaker, deputy permanent representative of Singapore to the WTO Seah Seow Chen expressed his optimism that DEFA will help connect Asean seamlessly with the rest of the world’s digital economy.
“With a more integrated regional digital economy that operates seamlessly across 10 Asean countries, it will reduce administrative burden by providing necessary regulatory levers to allow innovation and cross-border digital trade including via the use of sandboxes and use-case collaboration,” he said.
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Amid the DEFA negotiations, Seah said the agreement can take references from agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement to establish ambitious digital trade rules for the region.
For example, CPTPP’s e-commerce chapter has comprehensive and ambitious digital trade rules on data, measures prohibiting data localisation, safeguards for online customers and commitment to protect proprietary technology for businesses.
Meanwhile, Indonesia Services Dialogue Council executive director Devi Ariyani told the panel discussion that Asean’s digital economy is projected to grow to US$2 trillion by 2030.
“DEFA holds a significant relevance to Indonesia, being the largest digital economy in Asean.
“The potential impact of DEFA to businesses would also include opening up of investments, partnerships among businesses in the region, enhanced market access, a more efficient supply chain and a harmonised digital regulation across Asean states”.
She, however, noted that Asean must address several challenges such as the disparity of digital infrastructure in the region, gaps in digital literacy and regulatory issues.
