A new regional agreement poised to reshape Southeast Asia’s digital economy is set to unlock significant cross-border opportunities for small and medium enterprises. The ASEAN Digital Economy Framework Agreement (DEFA), currently under negotiation, aims to dismantle trade barriers and simplify digital commerce for businesses across member nations. Malaysian SMEs in particular are expected to benefit from streamlined export procedures and integrated payment systems, making regional expansion more accessible than ever before.
During a media briefing ahead of the 57th ASEAN Economic Ministers’ Meeting in Kuala Lumpur, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz highlighted the practical advantages of the framework. He illustrated how a Malaysian entrepreneur selling products like sambal via platforms such as TikTok currently faces complications with customs and international payments when exporting to Indonesia or Thailand. DEFA intends to harmonize product classifications, expedite approvals, and unify payment mechanisms across ASEAN, allowing small businesses to manage exports online without needing extensive administrative support.
The minister emphasized that the agreement is designed to ensure inclusivity, preventing free trade benefits from being concentrated only among large corporations. SMEs constitute approximately 99 percent of all businesses in ASEAN, forming the backbone of the regional economy. By simplifying digital trade in both goods and services, DEFA will enable freelancers, professionals, and digital service providers to access new markets, fostering broader economic participation.
Beyond digital trade, ASEAN is also focusing on preparing SMEs for the transition to a green economy. Tengku Zafrul noted that meeting environmental and sustainability standards is increasingly important for exporters. While large firms can invest heavily in compliance, smaller enterprises require structured support, which ASEAN is developing through dedicated assistance frameworks. This dual focus on digital and green readiness aims to strengthen SME resilience and competitiveness.
Regional integration through initiatives like DEFA also enhances ASEAN’s appeal as an investment destination. The minister pointed out that multinational companies such as Microsoft and Google establish regional hubs not only for access to individual markets like Malaysia, but also to leverage the integrated ASEAN supply chain. This creates employment and stimulates local economies. With a combined population of 680 million and a collective GDP of US$3.8 trillion, ASEAN’s scale attracts global investor interest, translating into more opportunities for SMEs and workers throughout the region.