A new regional trade agreement focused on the digital economy promises to reshape business opportunities for smaller enterprises across Southeast Asia. The upcoming ASEAN Digital Economy Framework Agreement (DEFA) aims to dismantle longstanding barriers that have traditionally hindered small and medium-sized enterprises from expanding beyond their national borders. This initiative is set to be a primary topic at the 57th ASEAN Economic Ministers’ Meeting being held in Kuala Lumpur this week.
Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz highlighted that DEFA is designed to simplify complex export processes for SMEs. He illustrated the current difficulties with a practical example, noting the complications a Malaysian entrepreneur might face when trying to sell a product like sambal to customers in Indonesia or Thailand due to differing customs and payment systems. The agreement seeks to harmonize product classifications, expedite regulatory approvals, and create integrated digital payment solutions across member nations.
The minister emphasized that the framework is intended to foster inclusivity, ensuring the benefits of regional trade extend beyond large corporations. He pointed out that SMEs constitute approximately 99 percent of all businesses within ASEAN, forming the economic backbone of the region. By reducing the need for expensive consultants or large administrative teams to handle cross-border trade, DEFA will empower these smaller entities to compete more effectively in the integrated market.
Beyond digital trade facilitation, the agreement also encompasses services, creating pathways for professionals and digital service providers to access new markets. Furthermore, ASEAN is prioritizing support for SMEs in adapting to green and sustainability standards, which are becoming critical for international market access. Minister Tengku Zafrul stressed that while large firms can invest heavily to meet these requirements, smaller businesses need collective regional support to navigate the transition.
The broader ASEAN economic integration continues to be a significant draw for foreign investment, with major multinationals establishing regional hubs due to the bloc’s combined market scale and integrated supply chains. This dynamic generates substantial employment opportunities within member states like Malaysia. Concluding the DEFA by year’s end is expected to solidify ASEAN’s position as a cohesive economic unit, amplifying its global influence and unlocking greater prosperity for its millions of citizens and businesses.