ASEAN member states are set to soon establish the Digital Economy\nFramework Agreement (DEFA), which is planned to be signed this coming\nNovember during the ASEAN Summit in Manila, Philippines.<\/p>\n
DEFA represents the world\u2019s first regional-level digital economy\nframework agreement. Its primary objective is to unify digital trade\nrules across Southeast Asia to accelerate the region\u2019s digital economic\ngrowth.<\/p>\n
Through the Coordinating Ministry for Economic Affairs, the\nIndonesian government emphasised during the High-Level Task Force on\nASEAN Economic Integration (HLTF-EI) in Malaysia last August that DEFA\ncould serve as a breakthrough for ASEAN in responding to global\nchallenges. The completion of DEFA will signal the region\u2019s readiness to\nembrace an era of open digital economic collaboration, establishing a\nfoundation that is adaptive to future digital transformations.<\/p>\n
DEFA was initiated during Indonesia\u2019s ASEAN chairmanship in 2023 and\nis expected to be a primary driver of digital economic integration. The\nfinal concept of the agreement to be signed includes nine binding key\nelements: (1) cross-border electronic payments; (2) cross-border data\nflows; (3) personal data protection; (4) digital trade facilities and\npaperless transactions; (5) digital identity; (6) online and cyber\nsecurity; (7) cooperation on new technologies and artificial\nintelligence; (8) competition policy; and (9) digital talent mobility\nand source code protection.<\/p>\n
Although ASEAN nations are nearing the signing of the DEFA agreement,\na significant hurdle remains: the unequal digital capabilities across\nthe region. According to an article titled \u2018The Challenges of the\nDigital Divide in ASEAN and Its Impact on Digital Business Acceleration\u2019\nin the Journal of Economics, Management, and Business, only two\nnations\u2014Singapore and Malaysia\u2014are categorised as \u2018high-readiness\u2019\nnations, possessing mature digital economic competitiveness through\nsustained investment in infrastructure, digital education, and\ninnovation-oriented governance.<\/p>\n
Meanwhile, Indonesia, along with Thailand, Vietnam, and the\nPhilippines, is still struggling with gaps in digital literacy and\ntechnological access, which slows the transition to a fully realised\ndigital economy. The remaining ASEAN nations face barriers in\nconnectivity, human capital, and digital governance, leaving the\nregional digital and economic divide deep.<\/p>\n
For Indonesia, the significance of DEFA extends beyond being merely\nan initiator. Regarding the nine key elements of DEFA, Indonesia is most\nprepared in the area of cross-border electronic payments, thanks to Bank\nIndonesia\u2019s QRIS (QR Code Indonesia Standard), which is already\noperational and integrated with Thailand, Malaysia, and Singapore, as\nwell as non-ASEAN nations such as Japan, South Korea, and China.<\/p>\n
Indonesia is also preparing its digital trade and e-commerce pillars\nby strengthening domestic regulations through Minister of Trade\nRegulation (Permendag) Number 19 of 2026 concerning the Implementation\nof Trade Through Electronic Systems (PMSE), which replaces the previous\nregulation, Permendag Number 31 of 2023. This policy is designed to\nalign with modern digital economic standards.<\/p>\n
Permendag 19\/2026 has expanded the PMSE business model to include not\nonly marketplaces, online retail, and social commerce, but also\nride-hailing within the online transport ecosystem and online travel\nagents.<\/p>\n
However, Indonesia must address several concerns raised by economic\nobservers regarding DEFA. First, there is a risk of a digital trade\ndeficit if Indonesian MSME products fail to compete in terms of quality,\npackaging, and standardisation against other ASEAN products, given that\nIndonesia is the largest e-commerce market in ASEAN.<\/p>\n
Second, Indonesia still faces challenges with digital infrastructure\ninequality, which remains concentrated on Java, leading to high\nlogistics costs for supporting digital trade outside the island. Third,\nthere is a high volume of consumer complaints in Indonesia, dominated by\nthe e-commerce sector, necessitating the strengthening of cross-border\nconsumer dispute resolution mechanisms before DEFA is officially\nimplemented.<\/p>\n
Indonesia\u2019s readiness in other key DEFA elements\u2014specifically\ncross-border data flows, personal data protection, digital identity,\ncybersecurity, AI regulation, competition policy, and digital talent\nmobility\u2014must be progressively improved to optimise the potential of\nDEFA.<\/p>\n
DEFA plays a vital role in boosting Indonesia\u2019s digital economic\ngrowth. A study by Boston Consulting Group (BCG) suggests that without\nDEFA, ASEAN\u2019s digital economy would naturally grow from US$300 billion\nto US$1 trillion by 2030. From that projection, an estimated US$300\nbillion to US$360 billion of that growth would originate from\nIndonesia.<\/p>\n
With the full implementation of DEFA, the regional digital economy is\nprojected to grow to US$2 trillion by 2030.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/defa-and-indonesias-digital-economy-readiness-1789383473", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }