The Digital Economy Framework Agreement (DEFA) negotiations and discussions held at the ASEAN Economic Community Council (AECC) in Kuala Lumpur, Malaysia, Friday (24/10/2025) agreed to a substantial agreement on the 14th round of ASEAN DEFA negotiations. If it has been officially agreed, there will be a great opportunity for a single digital economy market in the ASEAN region that can be utilized by Indonesian entrepreneurs.
During the meeting, Indonesia committed to strengthening the new direction of integration and encouraging digital transformation for economic growth in the ASEAN region. A number of efforts were made and discussed in depth together with other countries in ASEAN to strengthen economic cooperation.
This was emphasized by the Coordinating Minister for Economic Affairs, Airlangga Hartarto, at the 2nd Special ASEAN Economic Community Council (AECC) Meeting on ASEAN Digital Economy Framework Agreement (DEFA) held in Kuala Lumpur, Malaysia, Friday (24/10/2025).
Since its launch on September 3, 2023, the DEFA negotiations have gone through fourteen rounds of intensive discussions, facilitated by Thailand as the Chair of the Negotiating Committee for DEFA, with active contributions from all ASEAN Member States, including Indonesia.
DEFA is a key initiative under the Bandar Seri Begawan Roadmap (BSBR), which was adopted in 2021 as ASEAN's digital transformation agenda to accelerate economic recovery post COVID-19.
The DEFA includes a number of strategic provisions that reflect ASEAN's advanced approach to the digital economy, among others:
- Cross-border data flows;
- Electronic Payments;
- Personal data protection;
- Digital identities;
- Digital talent mobility (Talent Mobility Cooperation);
- Cooperation in new technologies such as Artificial Intelligence (AI);
- Competition Policy;
- Online Safety & Cybersecurity
- Source code protection.
Through this cooperation, ASEAN is committed to deepening digital integration across countries, strengthening the region's economic competitiveness, and ensuring the benefits of digitalization can be felt equally by all people.
Benefits of DEFA for Indonesia and the Region DEFA is expected to contribute up to USD 366 Billion to ASEAN's GDP by 2030, which is equivalent to about 40% of the region's total digital economy potential.
For Indonesia, this agreement is in line with the implementation of the National Strategy for Digital Economy 2030, which includes strengthening digital infrastructure such as 5G networks and data centers, developing human resources in the digital field, transforming UMKM, and strengthening cybersecurity regulations.
Through DEFA, Indonesia can expand market access for UMKM players, attract more investment in the high-tech sector, strengthen national data sovereignty, and build an inclusive and competitive digital ecosystem.
This substantial agreement is an important milestone in ASEAN's digital transformation journey, affirming our shared commitment to accelerate inclusive, secure and sustainable digital economic integration.
The 26th AECC meeting strategically discussed the strategic plan for ASEAN economic cooperation in the next five years.
"This meeting is an important momentum for ASEAN to complete the implementation of the ASEAN Economic Community Blueprint (AEC Blueprint) 2025, which is projected to reach 87% by the end of 2025, and to prepare strategic steps towards the AEC Strategic Plan 2026-20230 as the main guide to the direction of economic cooperation in the ASEAN region post-2025," Airlangga said through his official statement.
Indonesia also expressed its support in the ratification of the Consolidated List of Activities and Key Outcome Indicators (KOIs) which will guide the implementation of ASEAN cooperation towards ASEAN 2045 "Our Shared Future".
Through DEFA, it is expected to establish a modern and integrated digital ecosystem in the ASEAN region for economic growth. This agreement is an important milestone in ASEAN's digital transformation journey, which is a joint commitment to accelerate the integration of an inclusive, secure and sustainable digital economy.
"Digital transformation should be a means to expand the economy, strengthen regional connectivity, and ensure the benefits are inclusively felt by all ASEAN peoples," he said.
DEFA since its launch in 2023 now covers a number of strategic provisions ranging from cross-border data flows, electronic payments, personal data protection, digital identity, digital talent mobility, cooperation in artificial intelligence, competition policy, online security, to source code protection.
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Indonesia through DEFA is able to expand market access for micro, small and medium enterprisesUMKM) to attract investors, and strengthen the competitiveness of the digital ecosystem.
"Indonesia highlighted the importance of digital transformation as the main pillar of new economic growth in the ASEAN region. Indonesia welcomes the progress of the ASEAN Digital Economy Framework Agreement (DEFA) which has reached a substantial conclusion, as well as the achievement of the implementation of the Bandar Seri Begawan Roadmap (BSBR) with a completion rate of 92%, including on cross-border payment connectivity, the ASEAN Single Window system, and capacity building for digital UMKM ," Airlangga explained.
For information, the Economic Performance and Outlook in the ASEAN region in 2024 on trade in goods reached up to USD 3.8 trillion or an increase of up to 8.9%, which is much higher than the global increase of 2.1%. Meanwhile, Foreign Direct Investment (FDI) in the same year recorded an increase of 8.5% or equivalent to USD 226 billion, which is higher than the global increase in FDI of 4.0%.
ASEAN digital economy integration
Head of the Digital Ecosystem Agency of the Chamber of Commerce and Industry (Kadin), Firlie Ganinduto, added that Indonesia itself has shown a consistent commitment to strengthening ASEAN digital economic integration. However, there are several challenges faced by Indonesian businesses in accelerating digital transformation.
The main challenges are structural, ranging from governance standards, information disclosure, funding cycles, shifting investor interest to B2B models with strong unit economics , talent readiness, to cybersecurity.
"To summarize, investors now not only look at ideas or growth, but also how neatly and reliably the company is run," said Firlie, Sunday (26/10/2025).
Therefore, Kadin is also encouraging the strengthening of quality through various efforts that have been made so that Indonesian startups can attract investors and have competitiveness.
Kadin sees that Indonesia has enormous digital investment potential, compared to other countries in the ASEAN region. Opportunities from regional market access, co-investment and deal-sharing forums with venture capital, and regulatory sandboxes need to be utilized properly.
"The focus is on increasing the value of Indonesia's deals while maintaining integrity and accountability," he said.
The progress of digital infrastructure in ASEAN, especially Indonesia, is also considered tangible, although it is not yet evenly distributed. The problem of equity must be resolved immediately, especially in connectivity and affordable computing, frameworks and interoperability, to strengthening talent and cybersecurity.
"Digital transformation is proven to boost productivity across sectors such as manufacturing, agribusiness, financial services and payments, healthcare, and energy and environment through automation, operational analytics, energy efficiency, reduction of production defects, and improved service quality," said Firlie.
The year 2025 is seen as a momentum to improve the quality of the ecosystem, not just to increase the number of initiatives. Therefore, Firlie emphasized that Kadin is ready to become a government partner to help expand cross-country collaboration.
"Kadin's focus is to help businesses pursue the quality and scale of transactions through advocating standardization of best practices such as term sheets and disclosures, facilitating regional market access and deal sharing with regional VS and LPs, and supporting the use of regulatory sandboxes for new business models," he continued.
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On the one hand, Director of Digital Economy at the Center of Economic and Law Studies (Celios) Nailul Huda said that Indonesia, despite being one of the countries with great digital power in the ASEAN region, is still eyeing the domestic market in terms of market share.
"So we don't need to be grandiose about our products being able to export, but focusing on the domestic market is also very important. That's why the policy focuses on the domestic market which must be utilized as optimally as possible by our local producers," said Huda, Sunday (26/10/2025).
Huda also highlighted the challenges related to the inequality that occurs in Indonesia and also other countries in ASEAN, which are still lagging behind in terms of digital infrastructure or regulation.
"There are still many countries in ASEAN that are still behind in digital infrastructure, including Indonesia where there are still many internet blind spots ," he said.
There is also a gap in regulation, especially according to Huda, which is related to the digital business climate as well as consumer protection.
"Regulations related to personal data protection, for example, only 5 countries in ASEAN have personal data protection regulations. As a result, the development of the digital economy can be unequal," he concluded.
