As ASEAN’s digital economy accelerates at breakneck speed, the region finds itself at a crossroads where opportunity and challenge intertwine. The promise of innovation, lower costs for consumers, and an ever-expanding selection of products and services are undeniably enticing.
Yet, this digital wave also brings with it a pressing need to safeguard a level playing field, lest the very forces of growth end up stifling competition.
This delicate balance is explored in depth in a recent policy brief, Promoting Fair Competition in ASEAN’s Digital Economy: Strengthening Policies for a Level Playing Field, penned by Manager for Digital Innovation and Sustainable Economy at the Economic Research Institute for ASEAN and East Asia (ERIA) Mahirah Mahusin, and ERIA Research Assistant Hilmy Prilliadi.
The paper outlines the precarious situation faced by the region, where dominant digital platforms could, if left unchecked, exert undue influence over markets – pushing out smaller players, particularly micro, small, and medium enterprises (MSMEs).
One of the cornerstones of the region’s efforts to combat this challenge is the ASEAN Competition Action Plan (ACAP) 2025.
This strategic framework seeks to bolster the competition policies of member states, enabling them to adapt to the rapid pace of digital transformation while maintaining fair market conditions.
Underpinning the plan is a strong emphasis on regional cooperation, with tools like the ASEAN Guidelines for Sharing Merger Cases facilitating cross-border collaboration on competition issues.
However, the devil is in the detail. The digital economy is in many ways defined by its dynamism – an environment where market trends evolve faster than regulatory frameworks can keep up.
The juggernauts of the tech world, such as Google and Amazon, alongside regional heavyweights like Shopee and Grab, are not just competitors but market makers.
These platforms, with their vast reserves of consumer data and powerful algorithms, have the ability to tilt the scales in their favour.
When algorithms, which often operate behind the scenes, dominate the market, they can distort pricing structures and create barriers that prevent new entrants from competing on equal terms.
ERIA’s research highlights the risks associated with such imbalances. When algorithms begin to dictate the terms of competition, they can drive prices to levels that no longer reflect actual market conditions.
This, in turn, can harm consumers and create inefficiencies that undermine the entire economic ecosystem. It’s a stark reminder that as much as technology can drive progress, it can also be wielded in ways that harm the very consumers and businesses it is supposed to benefit.
To address these challenges, ASEAN has also introduced the Digital Economy Framework Agreement (DEFA), which aims to align digital competition standards with both regional and global best practices.
The intention is to create policies that are flexible enough to adapt to the ever-changing nature of the digital economy while remaining rigorous enough to prevent monopolistic behaviours.
In the policy brief released in 2024, ERIA emphasises that fairness in competition is not merely a nice-to-have – it is essential for the health of the digital economy.
A competitive market fosters lower prices, higher-quality products, and more innovation.
But maintaining such an environment requires continuous effort. The policy brief suggests several actionable steps, including greater transparency from digital platforms regarding their algorithms and data usage, initiatives to educate consumers about their rights, and stronger enforcement mechanisms between ASEAN member states (AMS).
Among the key initiatives driving this agenda is the ERIA Digital Innovation and Sustainable Economy Centre (E-DISC), a think tank dedicated to fostering innovation in digital policy.
E-DISC supports research and cross-border knowledge-sharing to help ASEAN member countries collectively address the challenges posed by the digital economy.
By acting as a resource hub, the centre aims to equip member states with the tools they need to tackle anti-competitive behaviour and ensure that digital growth is sustainable and inclusive.
Yet, creating a unified approach to competition in the digital age is no small task. While some ASEAN member countries have developed sophisticated, tech-neutral competition laws, others still face significant challenges due to limited resources or less developed regulatory frameworks.
This is why regional cooperation is so critical – by coming together, member states can share expertise, harmonise their approaches, and support each other in overcoming the gaps in their individual capacities.
One of the greatest hurdles to fostering fair competition is the cross-border nature of many digital markets.
Issues such as data accessibility, platform regulation, and the legal complexities of sharing sensitive information between countries can create significant barriers to effective enforcement.
ERIA’s findings suggest that strengthening international cooperation with external competition authorities and promoting informal data-sharing agreements could help overcome these obstacles.
Education, too, plays a pivotal role in this complex puzzle. While regulatory frameworks can do much to create a level playing field, empowering consumers to understand their rights and recognise when anti-competitive practices are at play is just as important.
Public campaigns aimed at demystifying digital rights and educating consumers on their ability to navigate the marketplace can make a huge difference in fostering fairer, more transparent market dynamics.
Looking ahead, the vision for ASEAN’s digital economy is one of inclusivity and resilience.
The opportunities for MSMEs to harness the power of the digital economy will only be realised if policies are crafted to level the playing field and ensure that monopolistic forces don’t crowd them out.
With stronger regulations, improved cooperation, and a focus on consumer education, ASEAN can build a digital economy that not only grows but thrives.
As ERIA’s research suggests, the evolution of technology demands that policy evolve in tandem.
The future of ASEAN’s digital economy hinges on its ability to strike the right balance between innovation and regulation, ensuring that the benefits of growth are shared fairly among all players – large and small, local and global.
The challenge is clear, but so is the opportunity: to create a digital economy that is open, fair, and poised for long-term prosperity. – Features Desk
