The Association of South East Asian Nations (ASEAN) is on track to emerge as a global center of growth, as predicted by the World Economic Forum. Composing ten nations in the region, the association has journeyed through tides of challenges since its inception in 1967 to ensure peace and prosperity. And it still has a long ride to surf.
Image Credit: Cagle
Presently, the World Economic Forum predicts that ASEAN is on track to emerge as a global center of growth. According to the 2019 ASEAN Development Outlook report, the joint GDP of the nations was valued at $3.2 trillion, making it the world’s fifth largest economy. Some factors that have resulted in this growth is the high proportion of young and educated in the population, rapid regional integration and rich natural resources in ASEAN.
The region is also poised to lead the next generation of digital participation. According to the ASEAN Digital Generation Report, 60 million people in the region became online consumers over the course of the pandemic, and this digital boom has shaped almost every aspect of life, including doing business. Globally, several ASEAN countries are already leading in some aspects of digitalization, with Philippines and Malaysia registering growth of 25% and 23% respectively per year.
However, the region faced with sailing stones that may undermine its relevance and centrality, and the future of ASEAN will depend on its ability to evolve and navigate its way about such uncertainty and disruptions.
For one, external geopolitical tensions could negatively impact ASEAN’s development. Conflicts like the South China Sea territorial dispute may create tensions within ASEAN states and between ASEAN states and other countries. However, with ASEAN being placed in a strategic geographical juncture, the region is of pertinent importance to global powers. Therefore, conflicts between such powers may undermine ASEAN’s stance on neutrality. Particularly, tensions between the Unites States and China have also resulted in instability in the ASEAN region, as the two countries are pressuring ASEAN to make a binary decision on certain matters.
Changing demographics in the ASEAN region also poses as a challenge to ASEAN as ageing population becomes an increasingly bigger problem due to the low fertility rates and increased life expectancy of the ASEAN society. Forecasts suggest that by 2050, 1 in 4 people will be aged 60 and above. Resultantly, there is a greater need for governments to invest in a stronger healthcare infrastructure, which may incur opportunity costs as governments will have to forgo the benefits of their next best alternative investments. Moreover, as more people choose to migrate to cities for more opportunities, there is pressure created on the current infrastructure and job markets of the area. Therefore, ASEAN governments would need to innovate and construct sustainable solutions to combat such challenges.
The global economy is also putting a strain on ASEAN’s economic potential as higher inflation pressures and interest rates worldwide worsens. The COVID-19 pandemic, Russian-Ukraine crisis and other developments have led to global supply chain disruptions and resultantly, increased the cost of living in ASEAN.
With the worsening climate crisis, ASEAN risks economic downfall – the rising average temperatures throughout the region may result in detrimental impacts on the financial development of the region. Estimates by the Asian Development Bank (ADB) shows that Southeast Asian Nations could sugar bigger losses than most regions worldwide; if left unchecked, the climate crisis could result in an 11% loss in the region’s GDP by the end of the century as it decreases the productivity of many key sectors like tourism and agriculture, while worsening human health and labor productivity. The region needs to develop sustainable technology to mitigate the impacts of the climate crisis, and therefore minimize the disruptions of external natural factors on ASEAN’s economic growth.
Leveraging on the demographics of ASEAN can help the region overcome these challenges and sail to through the tides – the region’s youthful population constructs a favourable background for increased economic growth. This demographic advantage highlights the need to ensure that all segments of the population contribute and benefit. ASEAN’s key goal is to address disparities across and within member states through the promotion of digital transformation and human welfare. The region has mapped out several visionary goals since its establishment, including the most recent ASEAN Vision 2045, adopted in 2021.
ASEAN Community Vision 2045 Convention. Image Credits: ASEAN.org
The ASEAN Vision 2045 aims to coordinate and streamline processes across three pillars of focus: political/ security, economic and social cultural. The vision expresses many ambitious plans of the region, such as the establishment of the ASEAN Digital Community, which addresses challenges in data security, cybersecurity, competition and the digital divide while leveraging digital potential, sustainable development and transitioning to green economies, and regional cooperation to promote ASEAN centrality and ensures peace, stability and vibrancy in the community.
ASEAN’s ability to achieve such goals, and the future of the region at large, is highly dependent on its ability to weather the storm, chart new waters, and batten down the hatches together, as one ASEAN. As ASEAN navigates these complex waters, its potential to emerge as a global center of growth remains strong, and ASEAN is poised to play an increasingly significant role on the world stage.
References
7 key challenges for the future of ASEAN. (2020, February 7). World Economic Forum. https://www.weforum.org/agenda/2018/08/7-challenges-to-business-in-the-asean-region-and-how-to-solve-them/
Adam, J. L. a. S. (2022, May 23). Asean is poised for post-pandemic inclusive growth and prosperity - here’s why. The Straits Times. https://www.straitstimes.com/opinion/asean-is-poised-for-post-pandemic-inclusive-growth-and-prosperity-heres-why?close=true
ASEAN Digital Generation Report: Pathway to ASEAN’s inclusive digital transformation and recovery. (2023, November 6). World Economic Forum. https://www.weforum.org/publications/asean-digital-generation-report-pathway-to-asean-s-inclusive-digital-transformation-and-recovery/
Foxdev. (2023a, September 4). Achieving the ASEAN Community Vision 2045 - The ASEAN Magazine. The ASEAN Magazine. https://theaseanmagazine.asean.org/article/achieving-the-asean-community-vision-2045/
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Is ASEAN on the cusp of fulfilling its long-held promise? (2023, January 17). World Economic Forum. https://www.weforum.org/agenda/2023/01/is-asean-on-the-cusp-of-fulfilling-its-long-held-promise-davos-2023/#:~:text=Its%20economies%20enjoyed%20strong%20growth%20during%202022%20on,Malaysia%2C%20the%20Philippines%2C%20Singapore%2C%20Thailand%20and%20Viet%20Nam%29.
The Impact of climate change in Southeast Asia – IMF Finance & Development Magazine | September 2018. (2018, September 1). IMF. https://www.imf.org/en/Publications/fandd/issues/2018/09/southeast-asia-climate-change-and-greenhouse-gas-emissions-prakash