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Strengthening regulatory frameworks in ASEAN to enhance digital connectivity

This op-ed is part of AASYP’s Digital Dialogues 2021, which is a programme that aims to provide a platform and forum for future leaders from across the region to contribute to the policymaking and diplomacy sphere by engaging in issues relating to Gender and Diversity, Green Recovery, and Emerging Economies.

A report from the Asian Development Bank (ADB) in 2021 has shown that the digital economy has become the main driver of economic growth in Asia. In 2019, Asia’s digital platform targeting business-to-consumer revenues contributed to 6% of regional Gross Domestic Product (GDP) and is continuing to rise. A digital agenda is also predicted to add USD 1 trillion to regional GDP over the next 10 years. These huge economic opportunities can be maximised with the support of strong digital connectivity between countries. 

Various definitions of digital connectivity have been summed up by the Organisation for Economic Cooperation and Development (OECD) as “high quality access to communication networks and services that is made available at affordable prices for all people and firms no matter who they are or where they live”. As digital technologies become more embedded into all aspects of society, they will leverage digital connectivity that encourages higher amounts of data transmission across people and firms. This alone indicates the dire need of an adequate digital infrastructure. 

In Asia, there have been improvements on digital connectivity over the past 15 years. However, in the context of Southeast Asia, there are still disparities in the development of digital infrastructure, especially among ASEAN Member States. In particular, enabling equal and unimpeded improvement of infrastructure cannot be separated with adequate regulatory framework.

First, it is necessary for ASEAN Member States to have standardised national regulations on cybersecurity, data protection, and privacy. Currently, not all ASEAN Member States have regulations on data privacy protection in place, whereas existing international standards on cybercrime have not been well-adopted.. In addition, it is also necessary to operationalise the concept of Data Free Flow with Trust (DFFT) in ASEAN, such as through supporting the use of encryption in data flows among ASEAN Member States and providing a mechanism where firms can be held accountable in managing data. The creation of a regional plan in advancing DFFT in ASEAN can be modelled after G7’s Roadmap for Cooperation on DFFT, which outlines domestic scoping exercises to map domestic legal barriers for electronic transferable records, identify best practices, and consultation with other stakeholders on these matters. 

These national regulations can also adhere to the principles enshrined in the ASEAN Framework on Personal Data protection, which includes consent, notification, and purpose; accuracy of personal data; security safeguards; access and correction on data upon request by an individual; transfers to another country or territory; retention; and accountability. ASEAN can learn from Japan which already has a rigorous DFFT mechanism in place, and even included DFFT provisions in bilateral trade agreements, one of which is the UK – Japan Comprehensive Economic Partnership Agreement (CEPA) which was signed in 2020

Second, ASEAN Member States should also establish predictable regulations and procedures for investors wishing to invest in digital infrastructure in the region. According to the World Economic Forum (WEF)’s “Digital FDI” report, important regulatory elements consist of the ease of receiving licences for digital infrastructures, availability of skilled local engineers and other workers, the use of international standards and regional coordination for infrastructure investment.

ASEAN Member States, therefore, should ensure that their national regulations ensure the progressive and continuous efforts of both public and private sectors in bridging the gap in digital skills among the people of ASEAN, such as through building relevant skillsets of workers, regulators, government officials, and other stakeholders. Consistent steps to remove regulatory obstacles surrounding digital infrastructure in each ASEAN Member State will also give confidence to investors. 

There are certain elements to consider in removing regulatory obstacles for investment in digital infrastructure. According to an ITU report in 2019, these elements include procedures for obtaining permission from the relevant authority, timeline and supporting information on the application, supervision by relevant authority, and additional requirements according to  domestic  laws in the country. Individual ASEAN Member States can also consider transitioning towards a One-Stop Centre Approval (OSC) system to facilitate faster process of obtaining permits to build infrastructure, as recommended in the report.

Another avenue that ASEAN can explore is to foster digital Foreign Direct Investment (FDI) in the region through the Regional Comprehensive Economic Partnership (RCEP). Article 12.16 recognises the value of dialogue in discussing various digital issues, including cross-border data flow. This dialogue can be a platform to strengthen regulatory frameworks on digital connectivity as a catalyst in advancing digital economy in the region. Different responses on data localization provisions in RCEP should be further bridged with the creation of clear national regulations aimed to ensure data security itself.

Third, ASEAN needs to utilise its cooperation with other countries, including China through its Belt-and-Road Initiative (BRI) and Australia through the ASEAN-Australia Development Cooperation Program (AADCP) to reap benefits on digital connectivity improvements for ASEAN. These partnerships should result in a conducive regulatory framework that can encourage the rise of digital entrepreneurs in ASEAN and boost innovation, one of which is through provisions on intellectual property protection and easier access of digital services and infrastructure.

ASEAN is already on the right trajectory towards a more integrated region, especially in achieving the objectives of ASEAN Economic Community (AEC) and Master Plan on ASEAN Connectivity (MPAC). Our task in ensuring that the expansion of digital economy in the region through strengthening the regulatory frameworks may seem lengthy, however, it will only be a small hurdle compared to the benefits that ASEAN will receive in the future. 

This article was written by Dominique Tuapetel, edited by Dhini Hardiyanti, and reviewed by the AASYP Publications Team.

Note: The views and opinions expressed in this op-ed are solely those of the writer and in no way represent nor reflect the position of AASYP and members of the AASYP Publications Team. The AASYP Horizons Blog provides a platform for the free expression of opinions and intellectual discourse.

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