Indonesia’s 2023 ASEAN Chairmanship will have “ASEAN as an Epicenter of Growth” as its theme. While some are optimistic about the potential of this vision, others consider it more like jargon than an actual vision. There are key economic indicators that point to ASEAN’s potential as an epicenter of growth. The region has recorded an average economic growth of 5% from 2000 to 2022 and has a population of 672 million, making up 9% of the world’s population. Additionally, ASEAN contributes 6.4% to global GDP, and about 68% of the population in the six largest economies of ASEAN are within the working age range of 15 to 64 years old.
ASEAN has also shown promise in trade and investment. Its total trade accounts for 7.7% of the world’s total trade, and its total foreign direct investment accounts for 26.7% of total FDI in East Asia and 11.6% of total FDI in the rest of the world. Furthermore, ASEAN has made impressive strides in the digital era. It is estimated that ASEAN will contribute US$1 trillion or 10% of the world’s digital trade of US$10 trillion by 2030. In 2020, about 80% of internet users in ASEAN engaged in online shopping.
However, ASEAN faces several challenges. The first is rising geopolitical tensions, as the ongoing US-China trade tensions and the war in Ukraine complicate the global geopolitical landscape. The second challenge is that ASEAN centrality is increasingly tested as there has been a growing number of developed countries-led economic frameworks and/or economic cooperation initiatives. Lastly, ASEAN faces inconsistencies in its domestic policies that may hinder its ability to fully realize its potential as a unified economic bloc.
To ensure its success on the international front, ASEAN should prioritize maintaining its centrality and solidarity as a united entity instead of hastily joining numerous developed country-led trade agreements or economic frameworks. It should also manage its openness in trade and investment and ensure consistency with its bilateral, regional, and multilateral commitments. On the domestic front, ASEAN should step away from populist policies such as subsidies to state-owned enterprises or particular industries and instead allocate resources to investment in infrastructure, institution building, and education. This is the time for ASEAN to stand up for the best interests of its people and embrace policies that are most beneficial to them.
