Asean to start negotiations on digital economy pact this third quarter

Asean economic growth is estimated at 4.7 percent in 2023 and is forecast to grow to 5 percent in 2024, making Asean “a bright spot on the dark horizon”.

Ruth Dea Juwita

Ruth Dea Juwita

The Jakarta Post


Indonesia's six unicorns shown on a screen on Tuesday, Aug. 3, 2021. The six are ride-hailing company Gojek, e-wallet OVO, online travel agency Traveloka, logistics company J&T Express and e-commerce platforms Tokopedia and Bukalapak.(JP/Norman Harsono)

May 10, 2023

JAKARTA – ASEAN countries have agreed to accelerate the start of ASEAN Digital Economy Framework Agreement (DEFA) negotiations in the third quarter 2023, according to Coordinating Economic Minister Airlangga Hartarto.

Initially, ASEAN countries planned to launch negotiations on DEFA in 2025 but the recent development would mean the process begins two years earlier.

“[Negotiations on] ASEAN DEFA are targeted to be launched this September 2023, and the first round of the discussion will be completed this year,” Airlangga said in a press conference after attending the 22nd ASEAN Economic Community Council (AECC) meeting on Sunday.

ASEAN economic growth is estimated at 4.7 percent in 2023 and is forecast to grow to 5 percent in 2024, making ASEAN “a bright spot on the dark horizon”.

Meanwhile, the region’s digital economy is projected to grow to US$330 billion as measured in gross merchandise value in 2025, from $194 billion last year.

The negotiations mark a step forward after the region concluded the ASEAN agreement on electronic commerce in 2018, which comprises only some parts of the digital economy

Jakarta-based think tank the Economic Research Institute for ASEAN and East Asia (ERIA) wrote this April that it expected DEFA to include no customs duties on electronic transmissions, unsolicited commercial electronic messages and nondiscrimination of digital products, among several other possible clauses.

ERIA suggests negotiations on DEFA include a concise dispute settlement mechanism, which it saw as a crucial element in the framework.

The AECC meeting, which was attended by economic ministers from all 10 ASEAN countries with the addition of Timor-Leste’s finance minister, was held in preparation ahead of the 42nd ASEAN Summit in Labuan Bajo this week.

According to Airlangga, Indonesia plans to play an important role in pushing the strategic agendas, which have also become Indonesia’s primary interests.

“Indonesia’s leadership has once again happened in the middle of the dynamics of global challenges,” Airlangga said, reflecting on the 2022 Group of 20 presidency.

He continued, “This year, Indonesia holds the ASEAN chairmanship at a time when the world is in facing a [political] crisis. However, such challenges will be an opportunity for Indonesia to assert its position once again as the region’s natural leader.”

The AECC also discussed the update of Indonesia’s 16 priority economic deliverables (PEDs) that will be raised in the summit.

Airlangga said ASEAN economic ministers had agreed to support two of Indonesia’s initiative documents, which will be adopted by ASEAN’s heads of state in the 2023 ASEAN Summit.

The first document is the ASEAN Leaders’ Declaration on Developing Regional Electric Vehicle Ecosystem, which serves as a guideline for cooperation and collaboration for ASEAN [countries] to develop the electric vehicles ecosystem.

The second initiative is the ASEAN Leaders’ Declaration on Advancing Regional Payment Connectivity and local currency transaction (LCT) mechanisms, which would allow payments between countries to be processed using their own currencies instead of having to use US dollars.

“Initiatives related to the development of payment systems and LCT in the region will support the strengthening of financial stability and enhance regional economic integration,” Airlangga said.

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