Economic Tide Turning in Favour of ASEAN Region

SINGAPORE, October 17, 2023 – In the world of business in 2023, the ASEAN area has been making waves. At the 9th edition RHT CABA ASEAN Summit, which was recently held in Singapore, Dr. Victor Tay, CEO and Governing Council of China-ASEAN Business Alliance (CABA), stated that the 10-member ASEAN union’s expansion, size, and commercial strength are now working in its favour. “ASEAN 2030: Towards a Sustainable and Secure Digital Economy” served as the theme’s main point of emphasis.

Dr. Victor said in a speech at the ceremony that the combined GDP of the ASEAN trading bloc is estimated to be over $3.65 trillion in 2022 and to rise to almost $5.65 trillion by 2028. “If fully realized, this will result in growth of more than 55% in just five years.

After its Asian neighbours China and India, ASEAN region will have a combined population of 705 million by this date, making it the third-most populous market worldwide. The phrase “ASEAN turning heads” derives from the area’s present 2030 goal of attaining the standard of living enjoyed by people in advanced countries and realizing its desire to become a resilient, inclusive, competitive, and peaceful (RICH) region.

Dr. Victor cites the trading bloc’s favorable demographics as a standout characteristic. Vietnam and the Philippines are among the ASEAN nations with the youngest populations, with an average societal age of 23 and 25 years old, respectively. “By 2030, more than half of the world’s population, or more than 350 million people, will be middle-class, making them a powerful and productive group. ASEAN might be seen as the vibrant youth preparing to enter maturity filled with a promising future, whereas the EU is known as a mature dame in her 50s with a wonderful past,” thought Dr. Victor.

Dr. Victor Tay (left), CEO and Governing Council of China-ASEAN Business Alliance (CABA) in conversation with other participants.

Of course, size and purchasing power alone can only communicate a portion of the tale. In light of this bright future, ASEAN is making the development of a greener and more socially just trade bloc for all of its people and enterprises a top priority. Ingenious answers to some of Southeast Asia’s most severe socioeconomic and environmental problems are necessary to fully realize this audacious objective. Additionally, it will be necessary to carefully navigate changing geopolitical upheavals, according to Dr. Victor.

Sounding a note of caution, Dr. Victor said, “In fact, ASEAN seems to have a more difficult macroeconomic and political scenario. Both countries have emphasized their commitment to trade with ASEAN economies, particularly China, particularly through access to the Regional Comprehensive Economic Partnership (RCEP) agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), as the US-China rivalry intensifies and both superpowers seek to strengthen ties in the regions. Only a few ASEAN nations and the US have free trade agreements.

Dr Victor thought that this superpower economic competition would actually help ASEAN thrive in 2023, provided that ASEAN security and stability are upheld. According to Dr. Victor, the impact of China’s abrupt reopening post-Covid has worsened supply-chain constraints and uplift-waning demand concerns because China and the state of its economy influence economic growth in the ASEAN region significantly. The World Bank data indicates China’s economic growth rebounding to 4.3 percent in 2023 from a projected 2.7 percent in 2022.

The contraction of the money supply is another factor. This is mostly a result of tightening monetary policy and deteriorating global economic conditions. Because central banks have more rate flexibility due to declining inflation in the second half of the year, organic growth is projected to flourish under more favourable circumstances. This should go together with China’s growing economic activities. The ASEAN economies have recently shown to be desirable locations for foreign direct investment (FDI).

In 2021, Singapore received almost $100 billion in international investment. Information technology, aircraft, electronics, pharmaceuticals, and professional services are important sectors for investment in Singapore. The biggest amount of foreign investment in Indonesia’s history, at almost US$43 billion, occurred in 2022. The government wants to boost its goal for local and foreign investment in 2023 to US$92 billion, or 1,400 trillion rupiah.