Cambodia urged to fully tap DEFA potential

Cambodia urged to fully tap DEFA potential

Beyond economic gains, DEFA is expected to deepen regional integration by narrowing development gaps among ASEAN member states and promoting a more inclusive digital economy.

Economic experts in Cambodia have urged the Royal Government to fully tap the potential of ASEAN’s landmark Digital Economy Framework Agreement (DEFA), which is to be signed in November this year.

Negotiations on the agreement were successfully concluded in Manila last week, clearing the way for its formal signing at the ASEAN Summit. The pact is the region’s first comprehensive digital economy agreement and is widely regarded as one of ASEAN’s most ambitious economic integration initiatives to date.

It is poised to reshape trade across Southeast Asia by creating a unified set of digital rules that will make cross-border commerce faster, cheaper and more secure for businesses and consumers alike.

DEFA is designed to address many of the regulatory barriers that currently hinder digital trade among ASEAN member states. The agreement covers a broad range of areas, including digital trade, e-commerce, cross-border data flows, digital identity systems, electronic payments, cybersecurity cooperation, online consumer protection, competition policy, artificial intelligence and digital talent mobility. By harmonising rules and standards across the region, ASEAN hopes to create a more seamless digital marketplace for nearly 680 million people.

The ASEAN DEFA forms part of ASEAN’s broader and rapidly evolving digital architecture that is shaping the future of trade, investment, and innovation in the region. More than a digital trade agreement, the ASEAN DEFA seeks to make it easier, safer, and more seamless for business and consumers to participate in the digital economy across ASEAN.

The agreement provides a regional framework for ASEAN’s digital economy ecosystem, covering areas such as digital trade, cross-border e-commerce, data governance and privacy, digital identity, electronic payments, online safety and cybersecurity cooperation, competition policy, emerging technologies such as artificial intelligence, and digital talent mobility.

For businesses, particularly micro, small and medium-sized enterprises (MSMEs), the agreement is expected to reduce compliance costs and simplify access to regional markets. Companies will be able to conduct transactions more efficiently through interoperable digital payment systems, paperless trade procedures and trusted digital identities. This could significantly lower barriers for smaller firms seeking to expand beyond their domestic markets.

The economic potential is substantial. ASEAN studies indicate that implementation of DEFA could double the value of the region’s digital economy to as much as $2 trillion by 2030, up from current projections of around $1 trillion. The agreement is expected to attract investment, stimulate innovation, create jobs and strengthen ASEAN’s position as one of the world’s fastest-growing digital hubs.

According to Thong Mengdavid, Deputy Director at China-ASEAN Studies Centre, CamTech University, for Cambodia, DEFA is more than a trade agreement but a development opportunity to help local business access regional markets, attract more digital investment and development and improve cross-border payment.

“However, Cambodia needs to be ready and enhance more digital infrastructure development, skills, and regulatory frameworks to fully capitalise on DEFA,” he told Khmer Times.

Economist Duch Darin said that DEFA will be a catalyst to promote trade because it lowers digital obstacles, harmonizes regulations for e-commerce, and facilitates digital payments. “Thus, it will be able to reduce transaction costs, enhance connectivity among ASEAN member states, and generate new opportunities for SMEs. In Cambodia, I think DEFA can support digital transformation and possibly attract digital investment, thereby stimulating inclusive economic growth,” he said.

Economist Ky Sereyvath of the Royal Academy of Cambodia said that DEFA will transform trade in the region by harmonising digital trade rules and enabling cross-border data flows. “The agreement will empower ASEAN-based businesses, including MSMEs, to connect with regional and global markets, thus enhancing economic competitiveness and resilience. It will help ASEAN member countries, including Cambodia, to improve economic growth through digital platforms and digital frameworks, especially through cooperation with China, which has a much-advanced digital economy,” he said.

Analysts also view DEFA as a strategic response to the increasing fragmentation of global digital regulations. By establishing common regional standards for data governance, digital trade facilitation and emerging technologies, ASEAN aims to provide businesses with greater certainty and confidence when operating across borders.

Beyond economic gains, DEFA is expected to deepen regional integration by narrowing development gaps among member states and promoting a more inclusive digital economy. ASEAN officials have described the agreement as more than a trade pact, calling it a framework that will shape the future of commerce, investment and innovation in Southeast Asia for years to come.

khmertimeskh