Malaysia’s plans as ASEAN Chair for South East Asia’s digital landscape

As Malaysia takes the helm of ASEAN this year, discourses about what it intends to do in the digital landscape have been emerging. With Prime Minister Anwar Ibrahim’s term reaching its likely midway point, coupled with the slew of data centre investments coming to the country recently, the country is well-positioned to drive its digital-heavy agenda at the ASEAN level. The fact that one of their four strategic thrusts as ASEAN chair is to build a digitally resilient ASEAN speaks volumes on the level of priority bestowed on this specific agenda. This blog post will elaborate on the deliverables that Malaysia has outlined for 2025, followed by an analysis of the challenges that ASEAN member states (AMS) must address first to benefit from these initiatives fully.

ASEAN’s Priority Economic Deliverable (PED) for the digital landscape

Briefly, there are four main PED’s under Malaysia strategic thrust to build a digitally resilient ASEAN:

1. Finalising the ASEAN Digital Economic Framework Agreement (DEFA) 

With the DEFA currently being negotiated, the general expectation is that substantial conclusions will be reached by the end of 2025[1], with formalisation following suit in 2025. DEFA aims to automate, facilitate and promote trade as much as possible, focusing on areas such as digital trade, cross-border e-commerce and data flows, cybersecurity, e-invoicing, as well as capacity building and competition policies. Upon formalization, DEFA is expected to supercharge digital trade in the region as it actively tries to address the most tangible barriers while safeguarding inclusive growth for all members.

1. ASEAN Technology Startup Ignite

With a goal to enhance science and technology-based innovation and entrepreneurship within the ASEAN region, the program is expected to accelerate technology startups growth and sustainability through access to crucial resources, such as programs like capacity building, business advisories, mentorship, and regional collaboration opportunities. Malaysia expects this to be a continuation of the ASEAN Startup Initiative they piloted in 2024[2], which is a one-stop ASEAN Startup Ecosystem Portal.

1. ASEAN AI Safety Network

Malaysia has proposed to form the ASEAN AI Safety Network[3], which is integral to institutionalise the AI governance and ethics principles endorsed by ASEAN Digital Ministers. This is expected to support the implementation of the forthcoming ASEAN AI Responsible Roadmap (2025-2030) and facilitate collaborations between governments, businesses, academia and civil society in ASEAN for the exchange of best practices and multi-stakeholder partnerships. This is key to ensure the safe and ethical development of AI across ASEAN member states.

1. ASEAN Instant Payment Network Connectivity 

With a view to continue the integration journey of e-wallet payment networks in the region[4] and riding on Project Nexus by the Bank of International Settlements (BIS), Malaysia aims to incorporate more ASEAN member states into the connected e-wallet systems in the region. In line with the aim to promote intra-ASEAN tourism, the incorporation of more countries in this framework is expected to reduce barriers in tourism and remittances, further integrating the region from a consumer perspective.

Malaysia is setting out an ambitious agenda as ASEAN Chairman, focusing on immediate needs to safeguard the region’s future amidst heightened global uncertainty. With support from the members, the Malaysian government is continuing the good work done by the previous chairs and find itself responsible to chart multiple medium-term plans for the region.

Significant challenges need to be addressed first to ensure all AMS benefit

Despite these lofty goals, there is recognition that there are many issues that need to be addressed adequately at each AMS level to enable the full benefits of these initiatives to be realised. These include:

1. The urban-rural digital divide remains a key barrier to digital adoption, not to mention the existing digital divide between countries. As initiatives like DEFA come into force, throwing down barriers to digital trade within ASEAN, AMS has a responsibility to ensure that its citizens have equal access to digital services to take advantage of this new framework. Without significant public digital infrastructure investments, AMS with unequal access will be left behind as trade in digital services becomes entrenched only in selected countries.
2. Talent shortages in emerging technologies such as Artificial Intelligence (AI) and cybersecurity continue to imperil the progress of AMS, which is striving to leverage digital advancements for economic growth. Discourse and cooperation on these matters at a regional level are key conditions that enable local businesses to flourish, but the lack of talent will hamper any agreed implementations. AMS must unlock meaningful value propositions to attract skilled workers so that any agreement can be supported by decisive action.
3. Improving access to funding for digital startups is a key priority to realise a country’s full economic potential, with certain AMS lagging in this respect compared to trendsetters like Singapore and Indonesia. A strong component of sustainable innovation is enabling the financial viability of small and medium enterprises (SME) to start and maintain their business, digital or otherwise. Funding ecosystems in AMS must be able to support the intent of companies capitalizing on developments in the ASEAN region to make these initiatives more meaningful.

While these challenges are significant, there are opportunities for businesses to capitalise on them, especially in infrastructure development, training and reskilling, and improving the financial ecosystem. Malaysia’s vision at the regional level encapsulates these aspirations to position regional cooperation as a catalyst for ASEAN’s digital economy, but AMS needs to play its part locally, too, for the initiatives to really bear fruit. There is hope that significant progress is achievable within the medium-term for all members for the benefit of the whole region.

[1] https://www.bernama.com/en/world/news.php?id=2383311

[2] https://technode.global/2024/12/19/malaysia-launches-asean-startup-initiative/

[3] https://w.media/malaysias-ambitious-digital-agenda-is-asean-ready-to-follow/

[4] https://www.greatermekong.org/g/asean-accelerates-cross-border-payment-implementation