The world is hurtling towards an era where ink on paper is fast becoming a relic of the past. Contracts, agreements, and business deals now surpass physical boundaries, existing instead in the digital ether. Yet, with this evolution comes the need for trust – how can one be sure that a virtual signature carries the same weight as a handwritten one?
This is the challenge ASEAN faces as it races towards seamless digital transactions across its member states.
In their policy brief, Enhancing E-Authentication and E-Signature across ASEAN: Building Interoperable Frameworks for Seamless Digital Transactions, Director of the Economic Geography Studies Group at the Development Studies Center Ikumo Isono, Research Associate at the Economic Research Institute for ASEAN and East Asia (ERIA) Hilmy Prilliadi, and Manager for Digital Innovation and Sustainable Economy at ERIA Mahirah Mahusin examine how ASEAN member states (AMS) can harmonise their digital frameworks to facilitate secure, interoperable electronic transactions.
Their research, published by ERIA, highlights the complexities and imperatives of this transformation.
A DIGITAL AGREEMENT FOR A DIGITAL AGE
The ASEAN Agreement on Electronic Commerce, which came into force on December 2, 2021, mandates AMS to establish electronic authentication frameworks that align with international standards.
By 2025, the goal is clear: interoperability. But what does this mean in practice? The foundation of any digital economy rests on the legal validity of electronic records and signatures.
Without uniformity across borders, businesses, governments, and individuals risk stumbling through a labyrinth of conflicting regulations.
Isono, Prilliadi, and Mahirah’s research identifies three regulatory models that govern e-signatures worldwide: the prescriptive, minimalist and two-tiered approaches.
Each has distinct advantages and trade-offs. The prescriptive model, followed by Malaysia and Brazil, ensures stringent security but can be cumbersome for private businesses. The minimalist model, embraced by Australia and the United States (US), prioritises flexibility but demands robust judicial and administrative oversight.
The two-tiered model, widely used in the European Union (EU), provides a balance – granting equal recognition to all e-signatures while reserving special validity for highly secure ones.
THE ASEAN CONUNDRUM
For ASEAN, the two-tiered model appears to be the most viable path forward. Given the economic disparities among AMS, a rigid prescriptive framework could stifle digital adoption in less technologically advanced nations.
Meanwhile, a minimalist approach might compromise security in high-stakes transactions. The two-tiered approach, therefore, offers a strategic middle ground, ensuring both security and accessibility.
However, adoption requires more than just policy adjustments. Legislative coherence, technological infrastructure, and public acceptance are crucial pillars in the transition.
According to the policy brief, implementation success correlates closely with a nation’s GDP per capita – wealthier nations with advanced digital economies find it easier to integrate robust e-authentication systems.
But what about developing ASEAN economies? If interoperability is to be truly regional, no member state should be left behind.
THE ROAD TO DIGITAL TRUST
Building trust in digital signatures extends beyond policy agreements. For instance, despite the legal validity of e-signatures in many AMS, judicial officers and public officials often remain sceptical, preferring traditional handwritten endorsements.
This resistance stems from a lack of familiarity and training. Without a concerted effort to shift mindsets, even the most sophisticated e-authentication frameworks risk gathering dust in legal archives.
The authors highlight the necessity of capacity-building initiatives.
ASEAN must invest in awareness campaigns, judicial training, and technological upskilling to ensure widespread adoption. Equally vital is cross-border cooperation – mutual recognition of certification authorities, standardised identity verification mechanisms and synchronised data protection laws.
The EU’s eIDAS framework serves as a prime example of how interoperability can be successfully implemented across diverse economies.
THE FORGOTTEN STAKEHOLDERS?
While much of the discussion around e-authentication revolves around governmental and corporate needs, what about micro, small and medium enterprises (MSMEs)? These businesses form the backbone of ASEAN’s economy, yet they often struggle with the bureaucratic complexities of digital compliance.
Isono, Prilliadi and Mahirah recommend a thorough impact analysis of how e-signature policies affect MSMEs. Costly certification requirements or intricate verification processes could inadvertently exclude smaller businesses from the digital economy. A phased implementation, allowing these enterprises to gradually adapt to new regulations, could prevent such unintended consequences.
A SEAMLESS DIGITAL ASEAN
To realise a fully integrated e-authentication ecosystem, ASEAN must adopt a holistic approach.
The policy brief outlines several recommendations: ensuring region-wide interoperability based on the two-tiered model, conducting MSME impact analyses, implementing flexible timelines, and establishing a central ASEAN e-signature information portal.
The ultimate goal? A digital ASEAN where businesses, individuals, and governments can confidently authenticate identities and validate transactions – without ever needing to question the legitimacy of a virtual signature.
As the clock ticks towards 2025, the success of this initiative will determine not only ASEAN’s digital future but also its ability to compete on the global economic stage.
The challenge is complex, but the potential rewards – a borderless, secure and efficient digital economy – are worth the effort. – Izah Azahari
