South-east Asia to make adjustments

In this contested world, how will South-east Asia fare?

Quite well, if you take Malaysian Prime Minister Anwar Ibrahim's words at face value. Much of the world still regards the region as possessing the greatest growth potential, as it rides the wave of growth from industrialisation, powered by companies searching for China+1 locations.

Trump's tariffs may sting, but South-east Asia can still strike some sweet deals with the growth-focused Trump administration. With some luck, there might even be a digital free trade agreement with Asean. Just don't expect him to show up at every Asean-related summit.

With Trump's return looming large, Asean leaders have pushed back on protectionism and concentrated on making headway into regional integration and trade. These export-oriented economies - home to nearly 700 million people, and making up altogether the world's fifth-largest economy - have some of the world's highest trade-to-gross domestic product ratios and much to lose if Trump enacts across-the-board tariffs.

Asean has not stood still. A Regional Comprehensive Economic Partnership that came into force in 2022 has boosted trade with Australia, China, Japan, South Korea and New Zealand. Some have also signed up to the amended Trans-Pacific Partnership agreement to deepen economic integration, an arrangement Trump pulled the US out of on his first day in office in 2017.

Two big Asean initiatives, years in the works, are expected to be finalised under Datuk Seri Anwar's watch. First is an upgrade to the Asean-China Free Trade Area, which will boost intra-regional economic exchange and investments. Second is the Digital Economy Framework Agreement, which is projected to double the size of Asean's digital economy in 2030 by lowering barriers and developing common standards for cross-border e-commerce, digital payments and the use of artificial intelligence.