A new regional trade agreement focused on the digital economy is set to transform business prospects for small and medium-sized enterprises throughout Southeast Asia. The upcoming ASEAN Digital Economy Framework Agreement (DEFA) aims to dismantle long-standing barriers to cross-border commerce, offering streamlined processes for online trade. This initiative promises to level the playing field, enabling smaller businesses to compete more effectively across the region.
Malaysia’s Investment, Trade and Industry Minister, Tengku Datuk Seri Zafrul Abdul Aziz, highlighted the practical benefits for local entrepreneurs. He explained that current challenges, such as differing customs procedures and incompatible payment systems, often hinder SMEs from expanding beyond their home markets. Once implemented, DEFA will harmonise product classifications, simplify approvals, and integrate digital payment platforms, making it far easier for a Malaysian business, for example, to sell goods in Indonesia or Thailand.
The agreement is not limited to physical goods but also encompasses digital services, creating avenues for professionals, freelancers, and tech firms to access new ASEAN markets. Minister Tengku Zafrul stressed the importance of inclusivity, noting that SMEs constitute 99 percent of all businesses in the region and are the true backbone of its economy. He affirmed that DEFA is designed to ensure these smaller players reap the rewards of regional integration, rather than just large multinational corporations.
In addition to digital trade, ASEAN is prioritising support for SMEs in adapting to green and sustainability standards, which are becoming critical for international market access. The minister acknowledged that while large firms can invest heavily to meet these requirements, smaller enterprises need coordinated assistance. A regional framework is therefore being established to help them navigate the transition toward more sustainable operations.
The 57th ASEAN Economic Ministers’ Meeting in Kuala Lumpur will serve as a key platform for advancing the DEFA negotiations, with a target for conclusion by year-end. Minister Tengku Zafrul underscored the collective strength of ASEAN, describing it as an economic bloc that commands global investor attention due to its scale and integrated supply chains. This regional cohesion, he concluded, ultimately translates into greater stability, more investment, and expanded opportunities for Malaysian businesses and workers.