New growth drivers for ASEAN

The impressive development of the digital economy is not only changing the structure of regional trade but could also shape ASEAN's competitive position in the next decade.

For decades, ASEAN's economic appeal has stemmed primarily from familiar advantages such as a young workforce, competitive costs, and deep integration into global manufacturing supply chains. From electronics and textiles to industrial assembly, the region has become one of the world's most important manufacturing hubs.

However, digital trade is emerging as a new growth engine for ASEAN, as the region gradually shifts from a cheap labor advantage to an economy based on technology, data, and innovation.

From factory to digital economic hub

The foundations that once built ASEAN's success are gradually changing. Labor costs are rising, competition among manufacturing hubs is intensifying, and new technologies are constantly transforming how the economy operates. In this context, the digital economy in Southeast Asia stands out with the fastest growth rate in the world, gradually replacing the role of traditional advantages.

The ASEAN Digital Trade Review report, published by the Organization for Economic Cooperation and Development (OECD) (May 2026), shows that this shift is happening at a significant pace. ASEAN's digital trade exports grew by nearly 10% annually between 2005 and 2022, exceeding the global average by almost 4 percentage points.

By 2022, ASEAN's digital trade exports reached US$387 billion, accounting for nearly 20% of total exports and 6% of global digital trade – a significant proportion for a region often perceived primarily as a manufacturing and export hub for goods.

The rapid development of digital infrastructure is a key factor driving this trend. Over the past decade, internet usage in ASEAN has more than doubled. Hundreds of millions of first-time users have accessed digital financial services, e-commerce, and online platforms. A growing digital consumer market is emerging within the region, creating new demand for businesses and investors.

Notably, the digital economy is not only creating new professions but is also reshaping traditional economic sectors. Agriculture is increasingly intertwined with data and technology. Logistics operations are running on digital platforms. Manufacturing businesses are using artificial intelligence to optimize their supply chains. Financial services are shifting to online environments at an unprecedented pace.

This transformation is taking place against the backdrop of ASEAN emerging as an attractive investment destination. Geopolitical shifts, supply chain diversification trends, and the "China +1" strategy of many international corporations are adding momentum to the region. However, unlike in previous periods, current capital flows are not only seeking ASEAN to take advantage of low labor costs but also to exploit the potential of its rapidly developing digital market.

From a long-term perspective, this is a structural shift. While ASEAN was previously seen as the "new factory of the world," in the next decade, the region has the opportunity to become one of the key growth centers of the global digital economy.

The race to shape the future.

If digital infrastructure is the foundation, then establishing common rules for the digital economy will determine the extent to which ASEAN can capitalize on this opportunity.

According to the OECD report, one of ASEAN's long-standing limitations has been policy fragmentation. While goods can move more easily thanks to Free Trade Agreements (FTAs), data, digital services, and technology platforms still face various barriers between member countries. This increases business costs and limits the scale of digital market development in the region.

Therefore, the ASEAN Digital Economy Framework Agreement (DEFA), also the world's first comprehensive regional digital economy agreement, is being assessed by many experts as a strategically significant initiative for the region's future.

Since its establishment in 1967, ASEAN has undergone several stages of economic integration with important milestones such as the ASEAN Free Trade Area (AFTA), the ASEAN Economic Community (AEC), and free trade agreements with major partners. DEFA is considered the next breakthrough step.

The DEFA is expected to be signed at the 47th ASEAN Summit in November 2026. If finalized and effectively implemented, the significance of DEFA lies not in creating another new cooperation document, but in its potential to build a common digital space for ASEAN.

When regulations on data, electronic payments, e-commerce, consumer protection, and cross-border transactions are more harmonized, businesses can access regional markets more easily, while also attracting more investment in technology and innovation.

Against this backdrop, four key areas are projected to shape ASEAN's growth over the next decade. Artificial intelligence (AI) will become a tool for enhancing the productivity and competitiveness of businesses and the economy as a whole. The ability to securely and efficiently transfer data between countries will play a role as crucial as capital flows in the traditional economy. Cross-border digital payment systems will further boost intra-regional financial, trade, and investment connectivity.

And finally, e-commerce in a market of over 680 million people, with a growing middle class, will make ASEAN one of the world's leading e-commerce markets. This is not only an opportunity for technology companies but also opens up new market access channels for millions of small and medium-sized enterprises.

According to the ASEAN Intelligence 2026 survey report, 63% of the 538 business leaders interviewed expressed confidence that the strongest economic opportunities in the next three years will lie within the ASEAN region. And in fact, ASEAN is already benefiting from the global AI investment wave, thanks to strong foreign direct investment (FDI) into data centers, a deep supplier base, and increasingly sophisticated chip manufacturing capabilities in the region.

Of course, promising prospects do not equate to guaranteed success. The development gap between member economies, the quality of digital infrastructure, cybersecurity issues, and the shortage of highly skilled technology personnel remain significant challenges for ASEAN.

However, overall, the shift in trend has become clear. The future of ASEAN will be driven by data mining capabilities, technology application, and the connectivity of digital economies in the region – new measures of competitiveness and growth rate in the next decade.

According to studies cited by ASEAN at the DEFA negotiations, full implementation of the Agreement could double the value of ASEAN's digital economy to US$2 trillion by 2030. In the race to shape the future, this means ASEAN has the opportunity to become one of the world's leading digital economic hubs.

Source: Vietnam.vn