Knowledge connectivity is driving digital innovation in ASEAN, enabling advances in areas together with real-time funds, and cross-border monetary providers. Nonetheless, companies trying to broaden throughout the area nonetheless face a fragmented panorama of knowledge regulation and rising restrictions on cross-border information transfers.

In accordance to a brand new report by the Singapore Fintech Affiliation (SFA), regional cooperation by means of initiatives just like the ASEAN Digital Economic system Framework Settlement (DEFA), is providing a pathway to harmonized, safe, and environment friendly information governance. DEFA may very well be a game-changer for regional enterprise development, effectivity, and innovation.

The report, based mostly on a survey of 109 organizations throughout ASEAN performed between November 2024 and March 2025, reveals that companies within the area are calling for authorized harmonization and seamless information flows, warning that with out these, corporations are struggling to scale, product launches are delayed, and operational prices are rising whereas revenues fall.

Specifically, the vast majority of respondents are endorsing DEFA, with 71% of respondents believing a sturdy DEFA might considerably improve income, effectivity, and enterprise development by making certain constant and predictable cross-border guidelines.

Presently beneath improvement, DEFA is a regional settlement that goals to create a unified framework selling seamless digital commerce, information stream, and cooperation amongst ASEAN member nations by 2025.

Limiting entry to key sources

Outcomes from the research reveal that restrictions on cross-border information transfers are limiting companies’ entry to important international tech sources.

73% of the ASEAN corporations surveyed consider that such restrictions hinder their entry to crucial instruments, similar to cloud platforms, improvement software program, software programming interface (APIs), all of that are important to stay aggressive. These corporations anticipate their operational prices to extend and productiveness to lower attributable to such guidelines.

One other 73% anticipate operational prices to extend beneath stringent information guidelines. Moreover, 73% foresee decline in productiveness, whereas 61% anticipate a direct detrimental influence on revenues, notably due to the necessity to duplicate techniques, and rent further compliance workers.

Limiting growth potential

Cross-border information restrictions are additionally hindering ASEAN companies’ skill to broaden throughout borders. 73% of respondents reported that such measures negatively influence their skill to function in restricted markets, with important detrimental influence on essential operational actions. Respondents cited buyer assist (74%), consolidated/aggregated reporting (71%), and new product improvement (70%), as probably the most impacted operational areas.

Hindering tech adoption and funding

Restrictions are additionally slowing know-how adoption, significantly in synthetic intelligence (AI). 70% of respondents stated that cross-border information switch restrictions have a detrimental influence on their creation and use of generative synthetic intelligence (AI).

It is because good high quality information in sufficiently massive quantity is crucial for AI mannequin coaching. Subsequently, limiting entry to such information impacts the adoption and improvement of latest applied sciences. This finally limits the expansion and productiveness of ASEAN companies and economies.

Such constraints additionally deter overseas traders, who search regulatory readability and scalability. Advanced information guidelines pressure companies to duplicate infrastructure and rent separate native groups in every nation, prompting many to reduce or opt-out fully because of the excessive compliance prices entails. This surroundings discourages traders from backing native companies, pushing crucial know-how funding towards extra built-in digital economies.

A fragmented regulatory panorama

Knowledge governance throughout ASEAN is very inconsistent, with some nations championing open information flows and regional integration, whereas others are emphasizing information sovereignty and introducing localization necessities.

For instance, a fintech firm in Cambodia could also be legally required to retailer buyer information inside nationwide borders. This limits their entry to cloud-based buyer relationship administration (CRM) instruments hosted overseas.

In the meantime, an Indonesian funds companies increasing to Thailand could must duplicate infrastructure, segregate person information, and navigate separate approval processes in every nation. This raises prices and delays entry.

ASEAN’s DEFA initiative

Recognizing these challenges, ASEAN governments are advancing DEFA as a regional resolution. First launched in 2023, DEFA goals to supply a complete roadmap to scale back friction in cross-border information transfers, and encourage the adoption of mechanisms which allow seamless cross-border connectivity.

Specifically, the initiative seeks to determine frequent requirements on information flows, privateness, cybersecurity, and digital commerce throughout member states, simplifying compliance, lowering prices, and accelerating regional integration.

Based on Boston Consulting Group (BCG), progressive DEFA provisions might assist double ASEAN’s digital financial system to US$2 trillion. ASEAN’s digital financial system is projected to triple between 2021 and 2030 by means of the pure adoption of digital applied sciences, rising from roughly US$300 billion to nearly US$1 trillion by 2030.

Following international tendencies

ASEAN’s DEFA initiative builds on a collection of worldwide precedents. The Digital Economic system Partnership Settlement (DEPA) was signed in 2020 by Singapore, Chile, and New Zealand, establishing shared guidelines on information flows, privateness, and digital commerce.

In North America, the United States-Mexico-Canada Settlement (USMCA), which requires the elimination of obstacles to cross-border information flows, entered into pressure in 2020.

In Asia-Pacific (APAC), the ASEAN-Australia-New Zealand Free Commerce Settlement (AANZFTA) includes guidelines that assist the free stream of knowledge throughout borders and prevents unjustified information localization necessities, whereas sustaining acceptable regulatory house in sure areas, together with for the safety of privateness. It first entered into pressure in 2010 for Australia.

Featured picture: Edited by Fintech Information Singapore, based mostly on picture by freepik by way of Freepik