John Goyer John Goyer
Executive Director, Southeast Asia, U.S. Chamber of Commerce


January 31, 2023


When does 1,300 exceed one trillion?  When 1,300 regulations threaten $1 trillion in economic activity.  

This was the essence of a question that the U.S. Chamber of Commerce explored in a January 24 event which looked at the phenomenal growth of Southeast Asia’s e-commerce market. According to the latest in an annual series of studies commissioned by Google, Temasek, and Bain, the region’s e-commerce market, measured by gross merchandise value, will be worth $1 trillion by 2030.  In 2016, the first of these studies projected that the region’s e-commerce market would be worth $200 billion by 2025. It reached that level last year.   

E-commerce, and the digital transformation of the economy writ large, have supported and undergirded Southeast Asia’s impressive economic growth in recent years. The digital revolution has helped offset gale-force headwinds from the pandemic, the war in Ukraine, inflation, and supply chain imbroglios.   

This makes the 1,300 new regulations across the APEC region since 2020, according to Digital Policy Alert, all the more concerning as they threaten this economic growth. Whether addressing data flows, localization, privacy, cybersecurity, or digital taxation, this large and growing number of regulations – often developed with little stakeholder consultation or regard for international best practices – is creating a fragmented digital environment. The overall effect is to threaten economic growth across the region and limit U.S. exporters’ access to these important markets.   

So, what can the U.S. and other governments do to arrest the slide toward regulatory fragmentation while supporting the $1 trillion potential? Three things, in the near term at any rate.  

First, U.S. leadership in the Indo-Pacific Economic Framework (IPEF), APEC, and other regional and multilateral fora is vital.  IPEF’s trade pillar includes a digital economy element, and as the U.S. Chamber has previously argued, IPEF could help provide a means by which to forestall the threats from discriminatory digital rules that often target American firms. APEC for years has incubated digital economy standards and norms, and with U.S. leadership, has had notable successes, such as the APEC Cross-border Data Privacy Rules.    

IPEF is a U.S.-led initiative, and the U.S. is the APEC Chair in 2023; in both forums, the U.S. has agenda-setting prerogatives.  It should exercise them.   

Second, recognize that digital fragmentation is a real threat, and address it with appropriate urgency bilaterally.  Governments across Southeast Asia, and around the world, are enacting regulations that limit or prohibit cross-border data flows, mandate local data storage, require disclosure of source code and algorithms, contain confusing and ambiguous requirements in cybersecurity or data privacy, and address other aspects of Internet governance in ways that make regulatory compliance extremely difficult, time-consuming, and expensive.   

Particularly worrisome is the push by some countries to end the WTO moratorium on tariffs on e-commerce transmissions, arguing that it robs government coffers. However, a study by the European Center for International Political Economy demonstrates that ending the moratorium and applying import duties to digital goods and services would result in minimal payoff in tax revenues compared with the economic damage due to higher prices and reduced consumption which would act as a substantial drag on GDP growth.  Indonesia, for example, would forfeit 160 times as much in GDP as it would collect in tariffs.   

For large companies, the regulatory morass is relatively manageable, albeit at great opportunity cost.  For smaller companies – whose welfare all governments profess to champion – it could mean the difference between selling to foreign customers, or not.  It’s that stark.   

Third, be ambitious.  High standard digital economy disciplines have been successfully implemented in the United States Mexico Canada Agreement and the US-Japan Digital Trade Agreement.  Technology evolves quickly, and the language in such agreements may need updating, but those earlier agreements provide a solid foundation.    

In January 26 remarks to the World Affairs Council in Philadelphia, United States Trade Representative Katherine Tai said, “we’re focusing on things that can help our businesses compete and succeed – like… facilitating digital trade.”  In describing IPEF at a speech to the Roosevelt Institute last October, she said “Simply put, [IPEF] will be a model to address the real challenges we face today.” 

Tai is absolutely right that facilitating digital trade will indeed help our businesses compete and succeed. And the digital transformation of the economy is unquestionably one of the “real challenges” we face today. To move beyond rhetoric, the Administration must push a more aggressive and forward-leaning digital agenda in IPEF than we’ve seen so far.   

U.S. companies are enabling the digital transformation in Southeast Asia, a region which has added 100 million new Internet users in the past three years alone.  That transformation has benefitted the region tremendously and has also afforded U.S. companies – especially small and medium sized ones – greater opportunities to sell to customers in these dynamic markets. In a recent survey, the Global Innovation Forum found that only 10% of the current revenue of U.S. small businesses comes from the Asia Pacific region, but these companies projected a 35% to 44% increase in export sales if barriers to trade were lowered through a digital trade agreement.  

We know the Southeast Asian digital economy can become a $1 trillion opportunity. The question is, will governments help that process along, or throw sand in the gears of progress through regulatory overreach? There is time to course correct, but no time to lose.    

About the authors

John Goyer

John Goyer

John Goyer is executive director of Southeast Asia at the U.S. Chamber of Commerce. Goyer focuses on issues of market access, investment barriers, regulatory and other issues that pose challenges for U.S. business in Southeast Asia.

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