DEFA Could Position Malaysia As Hub For Regional Digital Economy — Don
By Linda Khoo
KUALA LUMPUR, Nov 11 (Bernama) -- The ASEAN Digital Economy Framework Agreement (DEFA) could potentially position Malaysia as a hub for the regional digital economy and give local firms easier access to ASEAN’s more than 680 million consumers, an economist said.
Malaysia University of Science and Technology (MUST) economist Professor Emeritus Dr Barjoyai Bardai said the country’s extensive fibre broadband network, growing use of digital payments and strengths in Islamic fintech, cloud services and semiconductor design position Malaysia to benefit from the agreement.
DEFA could make it easier for Malaysian firms to expand across ASEAN by aligning rules on digital trade, data flows, payments and e-commerce more closely, he said.
“DEFA is not just a trade agreement. It represents ASEAN’s attempt to build a regional digital common market.
“For Malaysia, it provides an opportunity to move from a manufacturing hub primarily to a leading exporter of digital services, AI solutions, fintech innovations, creative content and semiconductor design capabilities across Southeast Asia,” he told Bernama.
Citing an example, Barjoyai said a Malaysian fintech company entering Indonesia, Vietnam, Thailand and the Philippines could face different licensing, consumer protection and data governance rules in each market.
Greater alignment could lower compliance costs, making regional expansion more affordable, he said.
“In economic terms, ASEAN’s digital economy is projected to exceed US$1 trillion by 2030. If Malaysia captures even 10 to 15 per cent of the region’s digital services growth, digital exports could become one of the country’s most important foreign exchange sources, after manufacturing and commodities,” he said.
DEFA, the flagship region-wide digital economy pact, is slated for signing at the ASEAN Summit in Manila later this month, marking a milestone in the bloc’s digital integration.
Negotiations concluded after ASEAN senior economic officials resolved all outstanding issues at a May 27-29 meeting in Manila.
Barjoyai said readiness among small and medium enterprises (SMEs) remained uneven, with many lacking digital skills, cybersecurity capabilities and cross-border marketing expertise to leverage wider market access.
He urged the government to expand grants and incentives for artificial intelligence (AI), cloud computing and digital commerce adoption, and to set up programmes to help SMEs and startups enter other ASEAN markets.
He also called for closer links between ASEAN payment systems, consistent rules on data governance, cybersecurity and digital identity, and more training in AI, semiconductor design, cybersecurity and software engineering.
“Malaysia must move beyond simply digitising businesses toward building globally scalable digital enterprises,” he said.
Barjoyai said ASEAN should aim for annual double-digit growth in digital trade within the bloc over the next three to five years and help more SMEs sell online across borders.
Lower payment fees and faster settlement would also be practical measures of progress, he said.
“If, within five years, a Malaysian startup can expand into Indonesia, Vietnam, Thailand and the Philippines as easily as it expands into another Malaysian state, then DEFA can be considered a transformative success,” he said.
ASEAN leaders will gather in Manila from Nov 15-17 for the 49th ASEAN Summit and Related Summits, hosted by the Philippines under its 2026 chairmanship theme, “Navigating Our Future, Together”.
-- BERNAMA