top of page

Digital Trade Dialogues: Spotlighting ASEAN

ASEAN Policy Dialogue with the eTrade Alliance and The Asia Foundation

By Bonaly Phrasavath, Associate at Nextrade Group, and Michael Poor, Senior Manager at Nextrade Group

The eTrade Alliance has participated in several projects that promote micro, small, and medium-size enterprises’ (MSMEs) use of cross-border ecommerce, especially in the ASEAN region. On September 28, 2022, the U.S. Agency for International Development (USAID), The Asia Foundation, and the Alliance for eTrade Development (eTrade Alliance) co-hosted the ASEAN Digital Trade Dialogue: Toward an Interoperable and Inclusive Regional Ecommerce Market to promote dialogue on MSME ecommerce development in the ASEAN region, especially with respect to the ASEAN Digital Economy Framework Agreement (DEFA). 


 

The Dialogue included discussions on:

 

  • Key challenges to enabling MSMEs’ engagement in cross-border ecommerce in the ASEAN region

  • Policy and technology solutions to these challenges in areas such as interoperable digital trade policies, digital identity, end-to-end paperless trade and interoperable logistics, and digital payments and finance.

  • Ideas on how the envisioned ASEAN Digital Economy Framework Agreement would best promote an integrated, interoperable, and inclusive regional digital market conducive to MSME ecommerce

 

The following is an encapsulation of the event: 

 

Opening Remarks

 

The event was opened by Michael Poor, Senior Manager of Nextrade Group.

 

The Alliance was honored to hear opening remarks from Paul Fekete, Senior International Trade Advisor at USAID, who highlighted USAID’s work in promoting international trade and digitization through USAID’s Digital Strategy 2020-24 and how it is working toward a more inclusive ASEAN digital economy.

 

Robin Bush, Future Skills Alliance co-lead at The Asia Foundation, emphasized how governments and businesses need to work closely to align policy that will maximize the potential of digital trade for all ASEAN economies while simultaneously maintaining the privacy and security of its citizens.

 

Opening Keynote

 

  • H.E. Bun Chanthy, Undersecretary of State, Ministry of Commerce, Cambodia 

 

His Excellency opens the discussion with how ASEAN countries can benefit from digitalization, as well as how digital integration and interoperability can make a difference in productivity and efficiency with an appropriate regulatory framework. He also notes that through digitalization, consumers can benefit from quick and seamless transactions and access to more markets and services. 

 

Plenary Session 1

 

Introduction to the eTrade Alliance’s work and diagnostics on ASEAN ecommerce; challenges to MSME cross-border ecommerce in the region

 

Speakers:

  • Kati Suominen, Founder and CEO, Nextrade Group and Technical Director of eTrade Alliance

  • Pablo Che Leon Sarmiento, Head of Customer Success, VTEX

 

Ms. Suominen opened by presenting the work that the eTrade Alliance has done in the ASEAN region, specifically regarding increasing the number of MSMEs selling online, including on marketplaces, and increasing MSMEs’ sales volumes online. In partnership with The Asia Foundation, the eTrade Alliance has hosted dialogues with government officials, and private sector leaders, and is operationalizing programs on the ground with Alliance members like DHL and Mastercard. The goal of those programs is to enable more firms to grow into online sellers by improving an enabling environment for ecommerce and accelerating firms’ digital transformation. Key constraints were also highlighted, and Suominen showcased eTrade Alliance research that evidenced a primary concern for MSMEs selling online is compliance with foreign data privacy rules, and challenges in exporting due to regulatory fragmentation.

 

Mr. Sarmineto dove into alternative ecommerce technologies available in the market that can accelerate growth in the ASEAN region, such as interacting with consumers through live shopping and social media can increase sales. Omnichannel methods put the consumer at the center and allow for more touchpoints to connect with the consumer. Boosting engagement in additional ways can provide loyalty as well. Sarmiento also noted that allowing consumers to make purchases regardless of payment method across borders, from Singapore to Vietnam or even from the Philippines to Thailand, should be easier. There is also a logistics aspect to cross-border operations; goods and services need to be transported from manufacturers to warehouses and finally to the customer efficiently. Sarmiento recommended increasing interoperability, innovation, and utilizing multiple channels to improve cross-border ecommerce within ASEAN countries. 


 

Plenary Session 2

 

Toward the ASEAN Digital Economy Framework Agreement: status, challenges, and opportunities ahead

 

Speakers:

  • Mr. Sivaram Superamanian, Market Integration Directorate, ASEAN Secretariat

  • H.E. Marry Kong, Under-Secretary of State of the Ministry of Economy and Finance of Cambodia

  • Mahadhir Aziz, CEO, Malaysia Digital Economy Corporation

 

Mr. Superamanian discussed how the COVID-19 pandemic accelerated the pace of digital transformation - the number of internet users in ASEAN increased to 80 million within a period of two years, positioning ASEAN as the fastest-growing internet market in the world. Similarly, there has also been an increase of 60 million new ASEAN digital consumers within two years. Ecommerce is expected to lead the digital economy through its increased growth every year. ASEAN has entered a “digital decade” and has the potential for the digital economy to reach $1 trillion in gross merchandise value (GMV), with 2/3 of that figure expected to come from ecommerce. The ten ASEAN member states have begun developing their own digital economy strategies and masterplan that aim to: 1) digitalize government services, 2) identify the sectors that need to be digitalized, and 3) determine how to become a more digitally focused society.

 

He noted that the ASEAN leaders came together and set a vision for the ASEAN Digital Economy Framework Agreement Initiative and adopted the Bandar Seri Begawan Roadmap (BSBR). Its key objectives are to articulate a strong commitment to transform the ASEAN region into a leading digital economy; work with a single, coherent document to put an end to the silo approach in ASEAN digital cooperation and secure a more coordinated approach across sectoral bodies; and finally, setting the foundation for regional digital integration and paving the way for negotiations for an ASEAN Digital Economy Framework Agreement (DEFA) by 2025. The 3-prong approach includes: 1) digital transformation for ASEAN as a more holistic approach, 2) sector-level support, and 3) enterprise-level support. 

 

His Excellency Marry Kong highlighted Cambodia’s efforts to promote a stronger digital economy. Cambodia’s MSMEs have adopted newer technologies like Facebook to sell goods from their own homes. He also emphasized that digital transformation cannot be done without digital literacy, so Cambodia is working on training its citizens on how to use these services. The Council for Digital Economy and Society has various committees for business, government, and security working together to coordinate among all stakeholders in the country, so as to eliminate barriers caused by fragmentation. 

 

Mr. Aziz brought attention to Malaysia Digital Economy Corporation’s goal to Increase the contribution of their digital economy to Malaysia’s GDP, especially by promoting a few key sectors like digital trade. Malaysian MSMEs were given financial assistance to transition from offline to online sellers and to leverage social platforms. The lockdowns tied to the pandemic accelerated those efforts.

Watch opening remarks and plenary session speakers here:

Breakout panels on policy and technology solutions

 

Panel 1: Interoperable digital trade policies to enable MSME ecommerce

 

  • Emily Benson, Fellow, Scholl Chair in International Business, Center for Strategic and International Studies (CSIS) 

  • Allan Gepty, Assistant Secretary for Industry Development and Trade Policy, Department of Trade and Industry Philippines

  • Barbara Kotschwar, Executive Director, Visa Economic Empowerment Institute

  • Moderator: Kati Suominen, Founder and CEO, Nextrade Group and Technical Director of eTrade Alliance

 

Panel 1 highlighted digitalization after COVID-19, opening opportunities for women-led firms across different markets, reducing gender disparities, and catalyzing economic activities in emerging markets. There is still digital policy fragmentation because policies have not been implemented as well as they could have and there are also political economy challenges in some economies that complicate policy reforms for digital trade. International agreements like DEFA and CPTPP are essential drivers that create greater policy interoperability in the region. Payments and fintech regulations were also highlighted as important areas of interest and enablers for MSME trade. 

 

Panel 2: Scaling digital identity for interoperability

 

  • Adrian Ng, Representative, Global Legal Entity Identifier Foundation (GLEIF)

  • Tony Murphy, Vice President, Mastercard 

  • Rodrigo Balbontin, Program Manager, The Asia Foundation 

  • Utchen (Joe) Udomdejwatana, Regional Director, Element Inc. 

  • Moderator: Sofia Shakil, Director of Economic Programs, The Asia Foundation

 

Panel 2 discussed the importance of digital ID within trade, with specific implications for knowing your customer (KYC) compliance and risk management. There are a few challenges across the ASEAN region in relation to scaling digital identity for interoperability. For example, there are different digital ecosystems across different countries that make it difficult for integration. There is also a digital divide for smaller businesses, especially in rural areas where trust issues exist because smaller rural businesses are used to seeing transactions happen in person and in real time, and are unfamiliar with transacting through digital technologies. Also, while technology solutions can be provided by the private sector, a coordinated legal framework is also needed to utilize them. 

 

Panel 3: Promoting end-to-end paperless trade and interoperable logistics to enable MSME ecommerce

  • Abu Bakar Yusof, Deputy CEO (Exporters Development), MATRADE

  • Raymond Yee, Vice President for Customs and Regulatory Affairs, DHL Express 

  • Chu Kee Lim, Public Affairs Lead, SE Asia, New Zealand and Australia, UPS 

  • Jacqueline Rajuai, Geo Program Manager, Google Plus Codes

  • Moderator: Sam Chittick, Country Representative in the Philippines, The Asia Foundation

 

Panel 3 explained the importance of improving paperless trade. It benefits individuals, MSMEs, and the economy to create a more seamless and streamlined trade system, leading to higher efficiency. However, there are difficulties due to MSMEs’ capacity and scale. There is a need for organizations to help streamline those processes. There was also a recurring theme of the dual nature of this kind of trade,– a focus on imports and exports. 

 

Panel 4: Interoperable digital payments and finance in the ASEAN – where are we today, what remains to be done?

  • Yos Kimsawatde, Head of Payment Systems Office (PSO), Thai Bankers’ Association

  • Benjamin Gilbey, Senior Vice President, Digital Consumer Solutions, Asia Pacific, Mastercard

  • Rahul Advani, Policy Director for Asia Pacific at Ripple (via video recording)

  • David Cai, Head of Government Relations for Southeast Asia, PayPal

  • Matthew Wood, Head of Digital Partnerships, Asia Pacific, Visa

  • Moderator: Filip Graovac, Deputy Country Representative in Vietnam, The Asia Foundation

 

Finally, Panel 4 highlighted the struggle MSMEs face with cross-border payments because they are costly, slow, have little transparency, and include many intermediaries. Core challenges include the complexity of regulation, proprietary products, competition between different financial services, nationalism, contradictory local regulations, and data sharing. Standards, rules, and trust are needed to make digital payments and finance interoperable in the ASEAN region. Alternatively, the benefits include security, increased access to credit (especially for women), market access, business performance, and more.

 

Conclusion

 

The event concluded with summary remarks from each of the panelists. Each shared the key takeaways from their respective panels, as outlined above, and a consensus around the economic opportunities availed by digitalization and the challenges that remain. 

Watch panel summaries and closing remarks here:

bottom of page