ASEAN and the Digital Economy


ASEAN or the Association of Southeast Asian Nations is a regional intergovernmental organization that promotes economic, political, and security cooperation among its member countries. The organization consists of ten member countries, including Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. The digital economy, on the other hand, refers to the economic activity resulting from billions of everyday online connections between people, businesses, devices, data, and processes. The digital economy covers various activities, including e-commerce, digital payments, and online services. The importance of the digital economy for ASEAN cannot be overstated, because it has the potential to significantly increase the region’s ability to compete in the global market.

The digital economy presents many opportunities for ASEAN member countries to transform their economies and increase their competitiveness. For example, market share Indonesian digital economy already has a 40% share of the Southeast Asian market, making it a key player in the region’s digital economy. In 2030, ASEAN’s digital economy is projected to reach USD 2 trillion and contribute around 28% of the region’s GDP. This shows the enormous potential of the digital economy for ASEAN member countries.

To take advantage of digitalization, ASEAN economic integration is needed to turn the region into a digital region. This involves promoting trade and investment cooperation between member countries and creating an enabling environment for the growth of the digital economy. For example, Indonesia is considered to have a fairly promising market for the digital economy because of its large population and access to technology. In addition, cooperation between member countries, such as trade and investment cooperation between Indonesia and Vietnam, can help realize the potential of the digital economy in the region. As Southeast Asia continues to experience rapid digital economic growth, ASEAN member countries must work together to harness the potential of the digital economy and ensure sustainable economic development.

Opportunities presented by the Digital Economy for ASEAN

The digital economy presents significant opportunities for ASEAN, particularly in terms of increasing connectivity and accessibility. Developments in connectivity in areas such as energy, transport, and logistics support increased trade and investment within the region. Through digitization, ASEAN can lead cross-border payment connectivity, support the economy and enhance regional integration and collaboration. As Indonesia has shown, ASEAN has the potential to become a beacon of hope in digital transformation and regional economic growth. Thus, the digital economy provides a platform for ASEAN to grow into a major power capable of competing in the global market.

The digital economy is also driving the development of new industries and job opportunities in ASEAN. In 2030, ASEAN’s digital economy is projected to reach USD 2 trillion, demonstrating the huge potential for growth and job creation. The ASEAN economic community and free trade agreements provide a framework for economic cooperation and integration, enabling ASEAN to take advantage of various economic opportunities in the region. Startups and the digital economy is a drivers of growth in the region, with Indonesia’s main strategy being to increase economic integration and strengthen competitiveness in realizing ASEAN as a growth center in its chairmanship which is being assumed this year. ASEAN’s transformation into a digital region is critical for the region to reap the benefits of economic integration.          

Initiative Regional Payment Connectivity (RPC) It is a significant step towards integrating ASEAN’s digital economy and finance, which represents ASEAN’s potential to become a regional and world economic growth center. As such, the digital economy presents significant opportunities for ASEAN to enhance its economic growth and competitiveness, while promoting regional integration and collaboration.

In addition, ASEAN has enormous opportunities in developing the digital economy in the region. According to a report issued by International Monetary Fund (IMF) stated that the total population of the ASEAN community in 2023 is estimated to reach 679.79 million people, of the total population 36% of whom are youth or productive age under 35 years. For this reason, the empowerment of youth or the younger generation by the government in particular must be carried out, so that the youth can be prepared as a superior generation to face changes so fast including the digital economy in it.

With all the sweet opportunities that can be achieved from the digital economy, we need to carefully remember that ASEAN still has many challenges and problems. For these opportunities to be put to good use, existing challenges must be solved hand in hand without feeling competitive.

Challenges Facing ASEAN in the Digital Economy

One of the main challenges facing ASEAN in the digital economy is the need for digital infrastructure and connectivity. Building digital infrastructure to facilitate connectivity is essential to enable people to make transactions between countries. ASEAN has recognized the importance of digital connectivity and has taken steps to support the creation of an ASEAN digital community through strategic planning and cooperation. However, there is still a long way to go to improve infrastructure and digital connectivity in the region. Nonetheless, the digital economy in ASEAN is growing, particularly in the start-up and e-commerce sectors.

Significant challenge Another challenge for ASEAN in the digital economy is the need for digital skills and education. Improving digital literacy skills is very important in supporting progress and contributing to the successful transformation of the digital economy. The development of digital skills is an important pillar in creating a single market base as technology, industry, and demand evolve in ASEAN. However, there are still significant gaps in digital skills across the region, with some countries struggling to keep pace with digital transformation.

Problem cyber security and data privacy is also a big challenge for ASEAN in the digital economy. Cybersecurity threats are becoming increasingly sophisticated and complex, and ASEAN countries need to take steps to protect their citizens from these threats. Besides that, personal data protection is a crucial issue that needs attention in the digital economy era. Cell phone carriers, for example, need to ensure they protect consumers’ data while still providing a valuable service. Overall, addressing these critical challenges is critical for ASEAN to fully realize the potential of the digital economy and ensure that all citizens can take advantage of its opportunities.

Furthermore, a challenge that is no less important is to provide opportunities for the younger generation to develop various innovations by making inclusive policies policymakers. As we know, currently ASEAN has 52 unicorns, this breakthrough should be supported and enhanced so that more digital companies are born in ASEAN countries.

With a few challenges that have been described previously. Then, is ASEAN able to get sweet results from the digital economy? Especially with the demographic bonus in the form of an abundance of young people. Of course, dreams can come true. Therefore, once again this big dream will not be realized without the synergy of various parties, both from the community and from the policymakers themselves. Both have a central role that cannot be separated.

Kemal Mabruri
Kemal Mabruri
Kemal Al Kautsar Mabruri is a student in the Department of International Relations at Universitas Islam Indonesia. He has an interest in development issues, which include international economics, empowerment, migration, and refugees with a focus on studies in the Southeast Asia region as well as the Asia Pacific and Oceania.


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