A new regional agreement focused on digital commerce is poised to significantly benefit small and medium enterprises throughout Southeast Asia. The ASEAN Digital Economy Framework Agreement (DEFA), currently under negotiation, aims to simplify cross-border trade for smaller businesses by addressing common logistical and regulatory hurdles. This initiative is set to be a central topic at the upcoming 57th ASEAN Economic Ministers’ Meeting in Kuala Lumpur.
Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz highlighted that DEFA is designed to dismantle barriers that currently impede small businesses. He illustrated the challenges with a practical example, noting the difficulties a Malaysian entrepreneur might face when trying to sell a product like sambal to neighboring countries due to customs and payment complications. The framework seeks to harmonize product classifications, expedite approval processes, and create integrated payment systems across member nations.
The minister emphasized that the agreement will democratize international trade, making it more accessible. He stated that SMEs will no longer require extensive resources or consultants to manage complex export documentation, as processes will be streamlined and moved online. This inclusive approach is vital because SMEs constitute approximately 99 percent of all businesses in ASEAN, forming the economic backbone of the region, whereas free trade agreements have historically favored larger corporations.
Beyond digital trade, the agenda also includes supporting SMEs in adapting to global sustainability standards. Minister Tengku Zafrul acknowledged that while large firms can invest heavily to meet environmental requirements, smaller enterprises need structured assistance. ASEAN has therefore established frameworks to help them comply with the growing demand for green and sustainable practices, which is increasingly important for market access.
The broader ASEAN economic integration continues to attract significant foreign investment from major technology firms, which value the region’s combined market and integrated supply chains. This creates substantial job opportunities within member countries like Malaysia. The minister concluded that while Malaysia alone is a mid-sized economy, its participation in the ASEAN bloc—a collective of 680 million people with a multi-trillion dollar GDP—grants it far greater scale and influence, ultimately generating more opportunities for local businesses and workers.