This November, the Association of Southeast Asian Nations is set to sign its landmark Digital Economy Framework Agreement, the region’s first legally binding agreement on the digital economy, transforming 11 fragmented national markets into a unified bloc and unlocking a digital economy set to reach $2 trillion by 2030. DEFA aims to harmonize rules across core areas of the digital economy: digital trade and identity, data privacy, and online safety. As ASEAN Secretary-General Kao Kim Hourn notes, DEFA “reduces regulatory divergence, lowers transaction costs and creates a seamless, interoperable digital ecosystem benefiting ASEAN and its partners.”

To understand the implications of DEFA, for ASEAN, businesses, and the year ahead, we sat down with Mario Masaya, vice president of research, technology, and financial services at the US‑ASEAN Business Council.

Question: ASEAN has multiple existing e-commerce and digital economy documents. How do you see these fitting together into a coherent regional digital strategy?

Mario Masaya:

There are several bilateral and multilateral digital agreements worldwide, such as the UK-Singapore Digital Economy Agreement and people treat those as a baseline. ASEAN also has its own frameworks, such as the ASEAN Guide on AI Governance and Ethics. But no regional agreement covers the digital economy as a whole. The EU has the AI Act and the Digital Markets Act, but those regulate AI and platforms specifically. That is why DEFA is significant to the world: nothing like it has existed before. It is the first attempt to turn 11 fragmented digital markets into one integrated digital economy.

Reports from Google, Temasek, and Bain project the region’s digital economy reaching about $1 trillion. Boston Consulting Group conducted a study on DEFA three or four years ago and found that, if it goes according to plan, DEFA could push that figure to $2 trillion by 2030. I truly believe DEFA will make a huge difference.

Outside of the digital economy, DEFA has implications for international security and geopolitics as well, amidst the ongoing tech war between the U.S. and China. ASEAN is where American and Chinese technology compete side by side. 

Question: Assuming DEFA is signed in November 2026, what does success look like for its implementation?

Mario Masaya:

ASEAN’s DEFA will be signed in November 2026. After meeting with several ASEAN senior officials and leaders, I have a good feeling that they will certainly move forward with the signing. Ratification is a different matter and may take more time, especially because DEFA includes many provisions.  Some countries will be faster than others. An ASEAN coordinating group on e-commerce and the digital economy has been involved in supporting the DEFA negotiations, which concluded in May 2026.

Even if ratification takes time, ASEAN leaders’ commitment to DEFA is an encouraging signal of the region’s determination to deepen digital economic integration. For that reason, I would measure success issue by issue. Next year, I expect DEFA to be on the agenda of every committee meeting, with a large matrix covering all the provisions and all the member states. Officials will go through  it country by country: Have you done your part on e-payments? What about the provision on AI? What about cybersecurity? Success will be judged by specific, targeted issues. Even if ratification takes a long time, the commitment from ASEAN leaders is positive.

Question: As ASEAN’s chairship moves from the Philippines to Singapore, what kinds of continuity can we expect in the areas relevant to DEFA? 

Mario Masaya:

Singapore has been very consistent in pushing AI and economic integration and has a National AI strategy roadmap. Singapore takes over the chairmanship in January 2027, so I think 2027 will be the best year for advancing DEFA implementation. Singapore will work with other ASEAN Member States (AMS), and I expect there to be many workshops, events, and activities across ASEAN.

Singapore will not do this alone. Indonesia and Thailand are also taking the lead in building support and commitment for DEFA, and Thailand is a big proponent. Both have work to do at home. Indonesia needs to consolidate internally so that all stakeholders benefit. 

Singapore may check every box, on data and on AI governance, for example, while a country like Timor-Leste may have completed very little so far. The more advanced members can then help bring the others along. I expect that dynamic to play out next year.

Question: As AI becomes central to digital economies, how might ASEAN approach regional AI governance? Do you think global digital standards and geopolitical competition influenced ASEAN’s choices?

Mario Masaya:

ASEAN already has the ASEAN Guide on AI Governance and Ethics, which Singapore drove. It is a guideline and a baseline. However, it is not a standard, and it is not legally binding as with other ASEAN agreements. That is typical of ASEAN: legally binding documents are not in ASEAN’s DNA. We have worked closely with Singapore since the guide was released to encourage more AI adoption in the region. When ratified by individual member states, DEFA would be the first legally binding step. The expectation is that DEFA will go beyond any agreement ASEAN has ever had, and I believe them. It builds on what countries have already agreed to, so the two are complementary.

The geopolitical context matters too. The tech war between the US and China plays out in ASEAN more than almost anywhere, because ASEAN is the middle ground where both American and Chinese technology are available. In some parts of the world, you can use American technology but not Chinese technology, or vice versa. In ASEAN, you can buy Apple and Huawei. That is why DEFA carries implications for international security and geopolitics as well as for the economy.

Follow-up: So DEFA will help harmonize or strengthen these lower-level frameworks, including on AI?

Mario Masaya:

Yes, and that includes cybersecurity and other areas. DEFA sits above the existing frameworks, and it strengthens them.

Question: USABC represents around 180 U.S. companies in the region. How has USABC approached the DEFA negotiations?

Mario Masaya:

For the past few years, we have worked with the negotiating committees, governments, and private sector officials to find issues, such as AI, that bring stakeholders together. We help both governments and businesses understand each other’s point of view on specific issues. Many of our member companies have supported us in organizing DEFA workshops and capacity-building sessions over the last three years, including helping both government officials and small and medium sized businesses (MSMEs) understand the implications of DEFA.

I believe DEFA can survive and thrive only if it benefits small and medium-sized businesses, which account for more than 97 percent of business establishments across ASEAN. Our companies understand this. Some people say DEFA benefits only certain types of companies. I disagree. Companies want Southeast Asian countries to grow. We want growth in each country and in each country’s economy. The more they grow, the more they can use our products. It is a symbiotic relationship between these countries and multinational companies.

Unfortunately, small and medium-sized businesses lack the time to think about DEFA, and maybe they do not have to. They are busy, and tomorrow they have to sell. What they want is a practical guide on how DEFA can help their business. A Malaysian batik seller who wants to sell in Thailand needs seamless customs, easier cross-border data flows, and a platform in Thailand to sell on. We want to help these businesses, because we expect them to use our companies’ tools to grow cross-border trade.