The Brunei government, as it takes over the chairmanship of the Association of Southeast Asian Nations in 2021, faces the daunting task of uniting members in addressing the biggest challenges of this generation. Driving the region’s economic recovery post Covid-19 must be at the top of the economic bloc’s agenda. The good news is that Asean is well placed to leverage the potential of its digital economy to drive recovery efforts. In 2019, Southeast Asia’s internet economy hit US$100 billion, more than tripling in size over the preceding four years. By 2025, the region’s internet economy is expected to grow to US$300 billion. The internet economies of Malaysia, Thailand, Singapore and the Philippines are growing by between 20 per cent and 30 per cent annually. Indonesia and Vietnam are the markets to watch – they boast growth rates in excess of 40 per cent a year. Asean member countries need to work together to develop smart, forward-looking policies that stimulate the digital economy by spurring innovation, encouraging greater entry and participation of small and medium-sized enterprises and entrepreneurs, and empowering businesses with the ability to grow and invest for the future. Free cross-border data flows are critical to overall economic growth. According to the McKinsey Global Institute, over a decade, global flows of all types acting together have raised world GDP by 10 per cent over what would have resulted in a world without any cross-border flows. This value amounted to some US$7.8 trillion in 2014 alone, and data flows account for US$2.8 trillion of this impact. The restrictions that some governments in the Asean region have placed on data flows, such as data localisation , are likely to hamper inclusive economic growth prospects, dampen foreign investment and restrict opportunities for local businesses to grow domestically and globally. The free flow of data across borders enables SMEs that do not have an international footprint to use common infrastructure to serve customers in multiple markets. While the Asean E-Commerce Agreement touches on cross-border data flows, member countries need to further build on this agreement to take on more binding commitments that will have a meaningful impact on the regional digital economy. Similarly, while the Asean Framework on Digital Data Governance is an encouraging commitment to setting the right policies for the seamless flow of data that drives innovation, efforts need to be accelerated to enable greater regional digital trade. Governments in several Asean economies, including Vietnam, Indonesia, Cambodia, Thailand and the Philippines have recently enacted content regulations and licensing requirements that not only differ from their peers in the region, but are often onerous. Conflicting policies create unnecessary barriers and complexities, especially for growing local start-ups trying to operate across multiple markets. To enable companies to plan for the future with a good degree of certainty and to provide them with a level playing field when operating across borders, Asean governments need to leverage digital trade agreements as umbrella frameworks to address policy issues in a coherent and consistent manner across the bloc. The Organisation for Economic Co-operation and Development is currently leading multilateral efforts to address international tax issues arising from the growth of the digital economy. The goal is to develop an agreement built around the key principles of neutrality, efficiency, certainty and simplicity that will give governments comfort on revenue, businesses the ability to grow and invest for the future, and consumers an understanding of the impact on their wallets. However, the adverse economic impact of Covid-19 has led to an acceleration in unilateral digital taxation measures by governments, including in Indonesia, as a way of expanding state revenue. Such unilateral measures are doing more harm than good by creating double-taxation and administrative hurdles for companies. The cost and complexity of individual countries creating and applying their own rules ultimately hits consumers’ pockets and potentially delays market expansion. Brunei, as the new Asean chair, has a huge task ahead. It must galvanise member economies to work together and put the digital economy at the centre of the region’s economic recovery strategy. Jeff Paine is managing director of the Asia Internet Coalition