KUALA LUMPUR (Bernama): South-East Asia’s next growth cycle will not be written by one economy, one commodity cycle or one manufacturing corridor, but will instead be shaped by five economies, namely Malaysia, Indonesia, Thailand, the Philippines and Vietnam.
Juwai IQI global chief economist Shan Saeed told Bernama the combined demographic scale, industrial depth, external buffers and policy discipline of the five economies now define ASEAN's economic sophistication.
He said the scale is structural, with Malaysia’s population of about 34 million supporting one of ASEAN’s deepest capital-market and institutional-finance ecosystems.
Indonesia, with a population of about 287 million, remains ASEAN’s demographic anchor and one of the world’s most consequential domestic-demand markets, while Vietnam, with more than 103 million people, has converted demographic momentum into export-manufacturing capability.
The Philippines, with more than 115 million people, is powered by services, remittances and a young labour force, while Thailand’s population of more than 71 million sustains an established industrial, automotive and tourism platform.
Together, the five economies represent more than 610 million people, accounting for close to nine-tenths of ASEAN’s population, he said.
"Growth across the first quarter of 2026 (1Q 2026) confirms divergence rather than uniformity, and divergence, rather than headline speed, is what sophisticated capital now prices,” he added.
Shan said Vietnam recorded the fastest growth at 7.83 per cent year-on-year, followed by Indonesia at 5.61 per cent, while Malaysia expanded by 5.4 per cent, supported by resilient private consumption, trade and manufacturing momentum.
Thailand and the Philippines each recorded growth of 2.8 per cent, with Thailand supported by exports, manufacturing and tourism recovery, while the Philippines was constrained by delayed budget execution, weaker confidence and softer investment activity.
"This dispersion does not weaken the ASEAN story. It sharpens it. Capital is increasingly rewarding economies that combine growth with institutional credibility, external stability and policy execution,” he said.
Macroeconomic Resilience
On sovereign macroeconomic fundamentals, Shan said these remain central to the thesis.
Malaysia’s international reserves stood at US$130.5 billion as at June 15, 2026, sufficient to finance 4.6 months of imports of goods and services.
Thailand’s official reserve components totalled about US$280.5 billion in March 2026, while Indonesia’s foreign exchange reserves stood at US$148.2 billion at end-March, equivalent to around six months of imports.
The Philippines’ gross international reserves stood at US$107.5 billion as at March 2026, while Vietnam’s reserves stood at about US$87.6 billion as at June 18, 2026.
"These reserves provide external buffers that reinforce currency resilience, sovereign liquidity and investor confidence at a time when global interest rates, dollar strength and geopolitical risk continue to test emerging-market balance sheets,” he said.
Digital Transformation Drives Next Phase of Growth
Shan said the next phase of capital allocation will increasingly be driven by digital infrastructure.
Thailand’s Board of Investment reported investment applications exceeding 1.01 trillion baht (US$31.8 billion) across 624 projects during 1Q 2026, with digital-related projects accounting for 873.7 billion baht, led largely by data centres and cloud services.
Malaysia has emerged as one of ASEAN’s most dynamic data-centre markets, with Johor and the Klang Valley becoming critical nodes in the region’s artificial intelligence (AI) and cloud infrastructure buildout, he said.
"The ASEAN Sustainable Data Centre Guide notes that Johor alone has more than 5GW of projects in various stages of development,” he added.
Vietnam is attracting AI-, semiconductor- and electronics-linked infrastructure commitments, while Indonesia remains ASEAN’s largest digital-consumption market by domestic scale, he said.
"If executed well, the ASEAN Digital Economy Framework Agreement could nearly double the bloc’s digital economy to US$2 trillion by 2030.
"That dividend will accrue most clearly to economies capable of combining digital ambition with regulatory clarity, energy security, cross-border data governance and infrastructure execution,” he said.
Shan said productivity across ASEAN will increasingly be shaped by cloud capacity, artificial intelligence adoption, digital payments, cybersecurity, e-commerce, fintech, semiconductor ecosystems and data-centre energy resilience.
Resource Strengths Remain Strategic Advantage
Shan said ASEAN's competitive advantage extends beyond digitalisation, with its natural-resource base continuing to support manufacturing, exports and long-term competitiveness.
Malaysia and Indonesia together account for roughly 85 per cent of global crude palm oil production, he said.
"Malaysia remains a major liquefied natural gas (LNG) exporter, with Reuters noting its Bintulu LNG complex has an annual production capacity of 29.3 million tonnes and that Malaysia was the world’s fifth-largest LNG exporter in the prior year,” he said.
Vietnam is the world’s largest robusta coffee producer and remains a leading rice exporter, while Thailand’s jasmine rice retains a premium built on brand equity, quality and global consumer trust, he said.
"These are not legacy sectors. They are real economy anchors that support foreign exchange earnings, industrial policy and national balance sheets,” he said.
Shan said each economy, nevertheless, faces structural challenges.
"None of this is riskless. Malaysia must sustain reform momentum, talent depth, energy readiness and institutional credibility as AI, semiconductors and advanced manufacturing accelerate.
"Thailand’s household leverage remains a structural constraint on consumption and credit growth, while Vietnam faces the challenge of moving from low-cost manufacturing towards productivity-led value creation. Indonesia must continue converting scale into higher-value industrial capacity, while the Philippines needs to improve execution discipline, infrastructure delivery and investor certainty,” he said.
Shan said what distinguishes the "Fabulous Five” is not uniform growth, but institutional credibility.
"These are economies capable of defending currencies, absorbing external shocks, sustaining macroeconomic stability across electoral and commodity cycles, and converting demographics, resources and industrial capacity into investable growth.
"That is what global capital is now pricing, not only growth, but credibility; not only scale, but execution; not only resources, but the ability to compound national economic power,” he said.
Shan said Malaysia, Indonesia, Thailand, the Philippines and Vietnam have become ASEAN's benchmark for economic sophistication and represent one of the most compelling long-term investment propositions among emerging markets.
He said the "Fabulous Five" concept is not intended to rank ASEAN economies, but to identify the five large economies whose demographics, external buffers, industrial depth and policy execution are expected to drive the region's next decade of investable growth. -- BERNAMA
