SINGAPORE — As protectionism hardens and geopolitical competition reshapes global commerce, Southeast Asian governments are betting that closer regional integration can provide a measure of economic security.

“The world is fracturing, fragmenting apart, but at the same time, ASEAN is integrating,” Gan Kim Yong, Singapore’s deputy prime minister and minister for trade and industry, said Friday at the Singapore Business Federation’s ASEAN Conference 2026.

Mr. Gan described integration not simply as a commercial ambition, but as a strategic response to an increasingly unstable international order. He pointed to cooperation during the coronavirus pandemic, when ASEAN members sought to protect essential supply chains, and to the 2025 overhaul of the ASEAN Trade in Goods Agreement after the United States introduced sweeping tariffs.

The upgraded agreement was the first major revision since the original pact took effect in 2010. Intra-ASEAN trade expanded from $503 billion in 2010 to $823 billion in 2024, while tariffs have now been eliminated on nearly 99 percent of products traded under the arrangement, according to ASEAN figures.

Trust as ASEAN’s Strategic Capital

ASEAN’s strength, Mr. Gan argued, does not come from economic uniformity. Its members range from advanced financial and manufacturing centers to lower-income economies still developing basic infrastructure. Instead, he said, the bloc’s durability rests on trust accumulated through repeated crises.

“Because we have gone through many crises together, and with every crisis, we were able to overcome and work together, it deepens the trust among ASEAN members,” he said.

That trust is increasingly valuable. The International Monetary Fund expects world trade growth to slow from 5 percent in 2025 to 3.5 percent in 2026, reflecting tariffs, geopolitical disruption and changing production networks. IMF research also suggests that ASEAN economies benefited from trade diversion during earlier United States-China tariff disputes, although such gains came with greater exposure to scrutiny over transshipment and supply-chain dependence.

The World Bank has similarly argued that deeper regional integration could cushion East Asia against global protectionism. But integration alone cannot fully insulate economies that remain heavily dependent on exports, foreign investment and demand from China, the United States and Europe.

A Common Digital Market Moves Closer

The most immediate test is the ASEAN Digital Economy Framework Agreement, or DEFA, intended to establish common rules for digital trade, cross-border data transfers, electronic payments, digital identities and online transactions.

Negotiators have completed the agreement’s substantive text, and ASEAN is preparing to sign it at the 49th ASEAN Summit in November 2026. Implementation is expected to begin in 2027. Officials say the agreement could make it easier for smaller companies to serve customers across the region without navigating 11 separate systems of regulation and payment infrastructure.

For businesses, however, the value of DEFA will depend on enforcement and practical interoperability—not merely the signing of an agreement. Differences in privacy law, cybersecurity standards, consumer protection and restrictions on cross-border data remain significant.

Mr. Gan acknowledged that governments could not deliver integration alone. Businesses must identify regulatory obstacles, invest across borders and help translate regional agreements into commercial activity, he said.

Artificial Intelligence Is the Next Test

Once DEFA is in place, artificial intelligence is expected to become ASEAN’s next major digital priority. Mr. Gan identified skills development, technical compatibility, governance standards and real-world applications as likely areas of cooperation.

ASEAN already has a Responsible AI Roadmap for 2025 to 2030 and regional guides covering AI governance, generative-AI security, accountability and content provenance. Yet most of these recommendations remain voluntary, illustrating the bloc’s familiar balancing act: creating common principles without overriding national sovereignty.

John Kain, an Amazon Web Services executive, urged companies at the conference to begin adopting AI rather than wait for an ideal model.

“The challenge is always: How does the technology get implemented and integrated into your business operations that will actually augment productivity and efficiency?” he said.

Amazon plans to invest more than $33 billion in cloud and AI infrastructure in Indonesia, Malaysia, Singapore and Thailand by 2039. The company estimates that the spending could add $64 billion to their combined economic output and support more than 56,300 jobs annually. It says it has trained 2.7 million people in Southeast Asia in cloud skills since 2017. Those projections are company estimates and will depend on electricity availability, workforce development and sustained demand.

The investment boom also exposes a regional divide. Singapore, Malaysia, Indonesia and Thailand are attracting much of the new data-center capital, while less-developed members risk falling further behind unless digital infrastructure and technical training become more evenly distributed.

Energy and Climate Plans Face a Slower Road

Integration is proving more difficult in energy and environmental policy. ASEAN has begun a feasibility study for a Green Economy Framework Agreement, but negotiations must reconcile different stages of development, energy systems and dependence on fossil fuels.

The ASEAN Power Grid faces similar obstacles. Cross-border electricity trading could improve energy security and allow renewable power to move between countries, but projects require extensive transmission infrastructure, compatible regulations and long-term financing.

ASEAN, the Asian Development Bank and the World Bank launched a financing initiative in October 2025 to reduce early-stage project risks and attract private investment. Regional finance ministers have also identified a pipeline of 30 green infrastructure opportunities valued at $19.4 billion for 2026 through 2028.

When Singapore assumes ASEAN’s rotating chairmanship in 2027, Mr. Gan said, it will seek to advance internal integration while expanding the bloc’s engagement with outside partners.

That agenda reflects ASEAN’s central dilemma. The organization wants to remain open to every major power without becoming dependent on any one of them. Its consensus-based system often produces gradual progress, but in an era of tariffs, wars and technological rivalry, the ability to keep 11 diverse economies moving in roughly the same direction may itself be a strategic achievement.

Sources: IMF, ASEAN.org,  Amazon, World Bank