Digital trade is a defining feature of modern economic interactions and a critical driver of economic development. As the cost of engaging in international trade falls due to accelerating digital transformation, new opportunities are emerging for consumers and firms of all sizes. The Association of Southeast Asian Nations (ASEAN) enters this digital transformation with clear strengths. Over the past decade, the region has more than doubled the average share of individuals using the internet. At the same time, the region has successfully harnessed trade as an engine for development over the past decades. Together, this provides a strong foundation for ASEAN Member States (AMS) to capture the benefits from expanding participation in digital trade.
ASEAN has also built an increasingly robust policy and institutional architecture for the digital economy since the late 1990s. The ASEAN Agreement on Electronic Commerce, and the planned Digital Economy Framework Agreement (DEFA), alongside broader regional strategies such as the ASEAN Economic Community 2026‑2030 Strategic Plan, form a multi-layered regulatory ecosystem intended to reduce trade costs, strengthen competitiveness and position ASEAN as a digital trade hub.
The aim of this Digital Trade Review is to help AMS harness emerging opportunities individually and collectively while also addressing the new challenges that the digital transformation raises for trade. It is aimed at helping support reforms that will allow for more seamless digital trade with gains that are more widely shared among firms, workers and consumers throughout ASEAN.
Digital trade is growing faster in ASEAN than in the rest of the world, but there are marked differences in participation across AMS
ASEAN’s exports of digital trade grew by almost 10% per annum between 2005 and 2022, almost 4 percentage points faster than the global average. By 2022, ASEAN’s digital trade had reached USD 387 billion, representing nearly 20% of total exports and 6% of global digital trade. Singapore accounted for almost two-thirds of this. The Philippines (9.5%), Malaysia (8%), Indonesia (7%), and Thailand (7%), together accounted for around one-third, while the CLMV countries (Cambodia, Lao PDR, Myanmar, and Viet Nam) together represented around 5% of total ASEAN digital trade.
Digitally deliverable services, including financial, insurance, or other business services, stand out as key drivers of ASEAN digital trade exports, with growth rates of 11% p.a., significantly outpacing non-digitally deliverable services and goods exports (which grew at 6% p.a. between 2005 and 2023). The lion’s share of exports goes to partners outside the region; intra-ASEAN trade represents 12% of digital trade, underscoring the importance of global markets for ASEAN’s digital trade.
ASEAN is also a key supplier of the hardware that powers the digital transformation. It is the world’s second largest exporter of ICT goods. In particular, Viet Nam has seen its global share of ICT goods export almost triple in the last decade.
Notwithstanding its overall strong performance, key domestic regulatory bottlenecks continue to hold back ASEAN’s digital trade
Although AMS have undergone important reform processes, the domestic regulatory environment for digital trade remains restrictive and fragmented. According to the OECD Digital Services Trade Restrictiveness Index, there is an almost 14-fold gap between the size of regulatory barriers in the least restrictive AMS (the Philippines) and the most restrictive (Lao PDR).
Beyond data governance issues, barriers span multiple areas: from deviations from international frameworks for electronic transactions in Brunei Darussalam, Cambodia, Indonesia, Lao PDR and Malaysia, to restrictions on payments in Lao PDR, Cambodia, and, to a lesser extent, Indonesia, Viet Nam, and Singapore. Evidence also points towards growing regulatory fragmentation within ASEAN and globally, raising compliance costs and discouraging firms from scaling regionally and globally.
Barriers also remain in services enabling the digital transformation. Telecommunications services, which form the backbone of network access, remain highly restrictive in Viet Nam, Lao PDR, Myanmar and Indonesia. Barriers in computer services, which enable access to productivity enhancing digital inputs, also remain high, especially in Lao PDR, Myanmar, Cambodia, Thailand, and Brunei Darussalam.
Trade facilitation reforms are underway but continued efforts are needed to move towards a paperless environment
A well-functioning trade facilitation environment is essential for the seamless movement of fast-growing trade in digitally ordered goods through customs. While ASEAN has made strong progress modernising trade facilitation, reflected in improved scores under the OECD Trade Facilitation Indicators, further efforts are needed to automate and streamline trade documents and procedures, particularly in Brunei Darussalam, Cambodia, Lao PDR and Myanmar.
Regional initiatives (e.g. the ASEAN Customs Transit System and the ASEAN Single Window) have contributed to more seamless transactions but their full impact requires closing remaining rollout gaps, strengthening technological and regulatory interoperability and improving inter-agency coordination and cross-border data exchange, including with external partners.
Cross-border data flows underpin digital trade, but the regulatory landscape in ASEAN is complex, fragmented and, in some AMS, overly restrictive
The Philippines, Singapore, Malaysia and Thailand have domestic regulations aligned with the principle of Data Free Flows with Trust (DFFT), enabling safeguarded and open transfers of data across borders. However, Brunei Darussalam, Indonesia and Viet Nam have adopted more restrictive, ad-hoc, approaches to cross-border data flows. Cambodia, Myanmar and Lao PDR have yet to adopt regulation in this area.
Greater efforts are needed to increase interoperability and coherence across regimes. Multiple opportunities exist, from continued domestic reform efforts, to making greater use of data flow provisions in trade agreements (including, potentially, through the Digital Economy Framework Agreement), and wider participation in intergovernmental arrangements, including the APEC Global Cross Border Privacy Regulation (CBPR).
AMS have also increasingly put in place data localisation measures of the most restrictive type. To avoid negative economic impacts, including rising costs for consumers and firms but also in the context of cybersecurity risks, considerations could be given to the use of less trade restrictive alternatives. This is particularly the case for Indonesia and Viet Nam, which have the highest number of restrictive measures in place.
The ASEAN region is a global leader in digital trade commitments in trade agreements, but continued efforts are needed for AMS to remain at the forefront of digital trade integration
The ASEAN region is one of the most integrated in terms of digital trade commitments in trade agreements. Singapore is the global top performer, and 7 other AMS (Viet Nam, Thailand, Indonesia, Lao PDR, Brunei Darussalam, Malaysia and Cambodia) are ranked in the top 20.
Deepening ASEAN digital trade integration through the implementation of the Digital Economy Framework Agreement (DEFA) is a critical milestone for ASEAN integration and could increase regional trade by between 13% and 20% depending on the level of ambition.
In turn, the WTO Agreement on E-commerce is an opportunity to broaden digital trade integration beyond the region, potentially increasing participating AMS’ total trade by between 0.3% and 6.5%. There are particular opportunities for Viet Nam, Thailand, Indonesia and Cambodia to support and participate in this agreement with a view to benefitting from its trade enhancing effects.
The WTO e-commerce Moratorium has provided a stable and duty-free environment that has enabled AMS digital trade to thrive. The potential foregone revenue of the Moratorium for AMS is small, below 1.1% of total customs revenue. Continued commitment to the moratorium, particularly in the context of it no being renewed at MC14, would ensure lower frictions on digitally deliverable services, a critical growth area for AMS.
AI offers new opportunities for ASEAN Member States, but it also raises new challenges
To fully reap the benefits that AI has to offer, AMS need to put in place a trade policy that is conducive towards greater AI adoption and diffusion. This means lower tariffs on critical ‘AI goods’, including semiconductors and devices (especially in Cambodia, Myanmar, Lao PDR, Indonesia and Viet Nam), reduced frictions on services (in Lao PDR, Myanmar, Viet Nam and Cambodia), easing the movement of people (in Lao PDR, Myanmar, Cambodia and Brunei Darussalam) and enabling data flows (in Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Myanmar and Viet Nam).
Continued discussion about AI frameworks, domestically and regionally is also needed, given that AMS are currently at different stages on AI. While some have only just started internal discussions (Brunei Darussalam, Cambodia, Lao, Myanmar), others are well advanced or have already adopted full AI frameworks (Singapore, Viet Nam and Malaysia).
Now is the time to push on digital trade reforms
ASEAN has the scale, policy momentum, experience of integration efforts and export performance to consolidate its position as a leading digital trade hub. However, realising the full gains from digital trade will depend on the ability of individual AMS to reduce policy frictions and provide an environment more conducive for digital trade transactions; and the ability of AMS to collectively address issues of common interest and to build bridges across different regional and global regulatory approaches.
With sustained domestic reform and shared commitment to coherence, interoperability and coordination through regional frameworks like DEFA, ASEAN can strengthen competitiveness, boost trust, and unlock substantial gains in trade and inclusion across the region.