A new regional agreement poised to simplify digital trade across Southeast Asia could significantly expand market access for Malaysia’s small and medium enterprises. The ASEAN Digital Economy Framework Agreement (DEFA), currently under discussion by economic ministers, aims to dismantle cross-border barriers that have historically hindered smaller businesses from tapping into regional e-commerce. By harmonising regulations and digital systems, the framework intends to make exporting as straightforward for a local entrepreneur as selling domestically.
Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz highlighted that the agreement will address practical challenges faced by SMEs, such as complex customs procedures and incompatible payment methods. He illustrated the issue with an example: a Malaysian vendor selling sambal via social media currently encounters difficulties when shipping to Indonesia or Thailand. DEFA is designed to resolve these friction points by standardising product classifications, simplifying approvals, and integrating payment platforms across ASEAN member states.
The minister emphasised that the initiative seeks to ensure the benefits of regional integration extend beyond large corporations to smaller businesses, which form the economic backbone of ASEAN. He noted that SMEs represent approximately 99 percent of all businesses in the region, yet often lack the resources to navigate international trade rules. By providing accessible digital trade tools, DEFA aims to foster a more inclusive economic environment where SMEs can compete effectively without needing extensive legal or logistical support.
In addition to facilitating trade in goods, the framework will also create opportunities for service providers, including professionals and freelancers, to operate across ASEAN. Minister Tengku Zafrul also pointed to other regional priorities, such as assisting SMEs in adapting to sustainability standards, which are increasingly important for market access. He explained that ASEAN has established support mechanisms to help smaller firms meet environmental requirements that might otherwise be financially challenging.
The 57th ASEAN Economic Ministers’ Meeting in Kuala Lumpur is set to advance discussions on DEFA, with a target to finalise the agreement by year’s end. Minister Tengku Zafrul underscored that Malaysia’s participation in the ASEAN bloc—a collective market of 680 million people with a combined GDP of US$3.8 trillion—enhances its attractiveness to global investors and creates more opportunities for local businesses and workers. This regional collaboration not only strengthens economic stability but also integrates member countries into global supply chains, generating sustained employment and growth.