Home Framework A regional framework is needed to facilitate digital trade among ASEAN members

A regional framework is needed to facilitate digital trade among ASEAN members


Countries must tackle cross-border issues and mitigate setbacks in cross-border flows


ASEAN countries need to establish a regional digitization framework to tackle cross-border issues and mitigate slowdowns in cross-border flows.

ISEAS-Yusof Ishak Institute CEO and Director Choi Shing Kwok said the relevant factors to focus on, especially for the e-commerce sector, is the high penetration rate of the Internet connection, the adoption of smartphones, a strong financial infrastructure, a good logistics ecosystem, an e- trade legislation, as well as transaction protection laws.

“Some key questions that deserve special attention is given to managing the surge in digital services, taxes on the cross-border delivery of digital goods and services, addressing cybersecurity and data protection issues, as well as sovereignty management digital and data.

“A collective action by ASEAN is necessary at the regional level to establish and implement a coherent legal framework which improves digital trade in the region”, he declared yesterday during the NIKKEI-ISEAS virtual forum: trade in Southeast Asia and Asean.

He added that without the collective regional efforts, there would be a series of standards and digitization requirements that would prevent the smooth running of cross-border transactions.

“Without regional effort, individual member states tend to develop different trade rules that meet their own immediate national needs and this can lead to a variety of digital business standards and requirements.

“A variety of rules will hamper cross-border flows in the Asean market and this complexity increases uncertainty among customers.

“As a result, ASEAN would not be able to unleash its full potential in regional digital commerce, as companies are unable to increase their customer base,” he said.

Choi said digitization could help tech companies reduce trading costs and connect supply and demand, as well as overcome information constraints related to different markets.

He added that by reducing trade costs and increasing the productivity of digital technologies such as the Internet of Things, artificial intelligence and 3D printing, it can increase the growth rate of trade in developing countries, including those in the ASEAN region, by about 2.5% per year or 22.5% from this year to 2030.

“The World Trade Organization has predicted that growth in the volume of merchandise trade in Asia will rise from 0.3% in 2020 to 8.4% in 2021, and then fall back to 3.5% in 2022.

“This positive short-term commercial recovery, however, depends on reducing the risk of the Covid-19 epidemic by Asean and improving the resilience of the regional value chain.

“Digital commerce is a promising driver for Asean commerce during the pandemic and we expect it to be prevalent throughout the pandemic,” he said.

Although economic activities in Asean declined during the pandemic due to movement restrictions and customer anxiety about interaction, Choi said businesses with an established online presence or those that quickly took to the Internet have been in a better position to take advantage of consumer demands.

“While research during the pandemic has reinforced the importance of digital commerce and strengthened the recovery of digital commerce, the benefits of digitization for businesses are not automatic.

“Businesses are required to invest in technology and learn new skills to take advantage of new data-driven innovations.

“Thus, ASEAN governments are required to provide an enabling national environment and a nationally regulated operational framework, as an enabling business environment is essential for the e-commerce sector,” Choi added.

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