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The ASEAN eCommerce Pact: Good News for eCommerce Businesses

Benedict Leong

ASEAN eCommerce pact

On 12th November 2018, ASEAN member states signed ‘The ASEAN Agreement on Electronic-Commerce1.’ This pact aims to create a conducive environment for eCommerce in ASEAN, and encourage its adoption by small-to-medium enterprises and start-ups. This article covers:

  • Objectives of the eCommerce agreement

  • The eCommerce agreement’s business benefits

Objectives of the eCommerce agreement

The Southeast Asian (SEA) eCommerce market holds great potential for growth2, but also has numerous issues that make doing eCommerce in SEA challenging3. ASEAN member countries have realised these and have made bold steps to strengthen eCommerce in the region, which is great news for eCommerce merchants in ASEAN.

To support eCommerce in ASEAN, the objectives agreed by ASEAN members are to:

  • Facilitate cross-border eCommerce transactions;

  • Contribute to creating an environment of trust and confidence in the use of eCommerce; and

  • Deepen cooperation among ASEAN member states to further develop and intensify the use of eCommerce to drive economic growth and social development in the region.

The eCommerce Agreement’s Business Benefits

Ecommerce merchants in ASEAN can stand to gain benefits ranging from less red tape, faster transactions and improved logistics infrastructure, and even a larger market to tap on in the future. Here are some details on how they might gain these benefits:

Increased transparency in eCommerce regulations and increased transaction speed: eCommerce merchants can look forward to more clarity on eCommerce rules in each ASEAN country and transactions will be much faster in the ASEAN region. The ASEAN members have agreed to cooperate on legal & regulatory frameworks governing eCommerce in the region and also to promote paperless trading between businesses and governments. ASEAN members are also aiming to streamline regional eCommerce trade rules and improve the operating environment for businesses.

Increased trust and security for eCommerce shoppers: One big stumbling block for eCommerce shoppers in SEA is the lack of trust in online shopping and online payments. Many people worry that their personal data may be hacked or stolen if shared online with companies, preventing them from adopting online payment solutions.

Through this agreement, ASEAN members plan to cooperate on transaction security, cybersecurity, and personal data protection which could give shoppers more peace of mind.

Increasing shoppers’ trust in ePayment systems will result in more secure and faster payments and even more people trying online purchases.

As an example, ASEAN could beef up initiatives like the ASEAN Cyber Capacity Programme4, which aims to fund resources, expertise and training to help nations build their cybersecurity capabilities to safeguard user data in the region.

Improved logistics in ASEAN: Merchants can look forward to faster eCommerce deliveries in ASEAN in the future. ASEAN member states agreed that there is a need to lower costs and improve the speed and reliability of supply chains in cross-border eCommerce. Merchants may see an increase in policies similar to Thailand Post’s initiative to improve rural areas accessibility to online marketplaces5 and improvements to infrastructure.

Freer movement of data across SEA borders and less red tape when expanding eCommerce operations in SEA: The agreement aims to ensure companies and consumers can easily access and move data across borders, removing the need to have expensive data centres in each target ASEAN market.

Currently, some ASEAN countries have put varying barriers6 to the free flow of data, usually for national security or privacy purposes. For instance, in Malaysia7 personal data cannot be transferred out of the country without approval from the government. In Indonesia8, companies that provide internet services directly to consumers must locate their data centers within Indonesia. ASEAN could likely create harmonised data privacy legislation and cooperate to develop regulations that help bring down barriers to data movement in the region. This will help facilitate the free flow of information and data that can drive the internet and digital economy.

A larger, eCommerce ready market and more eCommerce talent in the future: The ASEAN members plan to focus on education and technology competency among their populace. These include public courses on how to use the internet safely which can boost their confidence and trust in using internet services.

This could lead to more consumers in the future who are willing to try online shopping as they trust and understand its benefits while being knowledgeable enough to safeguard themselves from fraud online.

Micro-small-to-medium enterprises will have access to government initiatives to educate them on best practices, tools and training on eCommerce. This also includes business management training and courses.

Region-wide accessibility of broadband infrastructure: In addition to more educated consumers, the ASEAN members plan to increase internet penetration and internet infrastructure in their countries. This includes providing broadband internet access to even rural areas of ASEAN countries and promoting affordable access to international roaming services in the region.

More people having faster and more reliable internet connections could encourage more people to try eCommerce purchases, which can be seen through Indonesia’s increasing mobile internet penetration giving it great eCommerce market potential9.

The signing of this agreement is the first step towards greatly improving eCommerce in ASEAN. These initiatives and goals are linked to ASEAN’s Work Programme on Electronic Commerce 2017 – 2025 and the ASEAN Economic Community Blueprint 2025 which aims to achieve the above goals by 202510.

You can find more details on planned initiatives and their ASEAN implementing bodies on the official ASEAN Work Programme on Electronic Commerce 2017 – 2025 site11 and also read the full list of benefits for eCommerce merchants on the official ASEAN Agreement on Electronic Commerce factsheet12.

To find more on the latest news on logistics and eCommerce in Southeast Asia, consider signing up for our Janio newsletter.

If you’d like to find out more about how we can solve your SEA eCommerce cross-border delivery needs, come and have a conversation with us.

References:

  1. Straits Times: E-Commerce pact aims to lower costs, power consumers 
  2. Think With Google: e-Conomy SEA 2018: Southeast Asia’s internet economy hits an inflection point
  3. Kearney: Lifting the barrier to eCommerce in ASEAN
  4. The Diplomat: Singapore Unveils New ASEAN Cyber Initiative
  5. Bangkok Post: Thailand Post targets community e-commerce
  6. ISEAS Yusof Ishak: ASEAN Business will do better without barriers to crossborder
  7. ITIF: Cross-Border Data Flows: Where Are the Barriers, and What Do They Cost?
  8. The Asean Post: Data localisation in Southeast Asia
  9. We Are Social: Digital in 2018 in Southeast Asia
  10. United Nations Conference in Trade and Development: Towards an ASEAN Agreement on E-Commerce
  11. ASEAN Work Programme on Electronic Commerce 2017-2025
  12.  Official ASEAN Agreement on Electronic Commerce factsheet
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