ASEAN’s Path to Resilient Growth: Trade, Digitalisation, and Connectivity

Issues around climate change and competition in frontier technology are increasingly viewed as fundamental national security concerns. To address these challenges, the Association of Southeast Asian Nations (ASEAN) must work collectively towards securing a prosperous future and safeguarding national interests. This requires meticulous focus on specific areas such as trade, digitalisation, and connectivity.

The Importance of Trade in Services

With global goods trade showing signs of slowdown, trade in services has emerged as a key growth driver for ASEAN. It encompasses various sectors including finance, telecom, travel, transport, and professional services. Each sector is integral to the creation of jobs and economic expansion within ASEAN countries.

Travel services, in particular, present significant potential. Boosting tourism not only highlights ASEAN’s attractiveness as a destination but also strengthens the region’s economic resilience. By enhancing tourism-related infrastructure and talent development, increasing intra-regional travel could exceed 40% of ASEAN’s total international tourism.

The Rapid Growth of the Digital Economy

The digital economy within ASEAN is experiencing explosive growth, projected to rise from $300 billion to nearly $1 trillion by 2030. With further regional cooperation, this figure could double to reach $2 trillion. Key sectors include e-commerce, e-health, e-payments, and customs automation.

This growth will yield substantial benefits, such as environmental sustainability savings of between $12-30 billion and the creation of new job opportunities. Moreover, it will enhance accessibility to education and healthcare resources for regional residents.

Strengthening Connectivity: A Core Strategy

Both physical and digital connectivity are critical for enhancing ASEAN’s economic competitiveness. This includes investment in sustainable infrastructure like clean energy, low-carbon transport, and improved urban energy efficiency. Seamless cross-border logistics, supply chains, and the movement of goods, services, and people are also essential.

ASEAN’s pledge to achieve net-zero CO2 emissions by 2050 and net-zero greenhouse gas emissions by 2065 underscores the importance of sustainable infrastructure. This aligns with the goals of the Paris Agreement, which seeks to limit global temperature increase to no more than 1.5°C.

The Role of Digital Cooperation

The Digital Economy Framework Agreement (DEFA) is a pivotal element in regional cooperation. It emphasizes digital standards, data flow, cybersecurity, digital trade, and talent mobility. These elements form the backbone of digital public infrastructure, fostering regional growth and resilience.

Additional benefits of digital cooperation extend beyond economic and environmental gains, including the enhancement of social resilience and the creation of new employment opportunities.

Challenges and Opportunities Ahead

A global trend toward economic fragmentation poses challenges, but it also offers opportunities for ASEAN to leverage cross-border cooperation. Economic independence has grown within the region, but mismanaged interdependence could result in economic setbacks.

For the next term of ASEAN regional cooperation, extending to 2045, member countries should prioritize regional public goods. By focusing on trade, travel, digitalisation, and connectivity, they can achieve sustainable and resilient economic outcomes for their peoples.

Sanchita Basu-Das, Economist, Regional Cooperation and Integration Division, Asian Development Bank