Asean can foster strategic multi-alignment and multiple partnerships and collaboration in investment promotion through offering investors a “plug-and-play” regional supply chain proposition. Semakin banyak promosi dijalankan menjelang Sidang Kemuncak ASEAN ke-46 yang dijangka menghimpunkan sekitar 20,000 peserta, termasuk ketua negara, perwakilan, dan pegawai dari negara-negara anggota serta rakan dialog seperti China dan negara-negara Teluk yang dijadual berlangsung di Pusat Konvensyen Kuala Lumpur (KLCC) pada 26 dan 27 Mei ini. --fotoBERNAMA (2025) HAK CIPTA TERPELIHARA
MALAYSIA has concluded its tenure as Asean chair, leaving behind a high standard of chairmanship marked by key milestones under the theme of “Inclusivity and Sustainability” while reinforcing Asean’s relevance and neutrality as a stabilising force amid global economic and political uncertainties.
This year marks the fourth time for Malaysia assuming the Asean chairmanship, 10 years after hosting the Summit in 2005, 1997 and 1977.
Malaysia’s careful and tactical diplomacy is being put to litmus test as it plays a role in helping Asean navigates through complex geopolitical challenges in the region and also develops a coordinated Asean response to the United States’ Reciprocal Tariff on the bloc’s members.
Exceeding expectations, Malaysia has demonstrated her strong leadership and diplomacy capability on the international stage to organise the largest gathering of regional and world leaders at the 47th Asean Summit and related summits.
More than 30 heads of state and government, including Asean leaders and key dialogue partners such as the United States, China, Japan, South Korea, India, Australia, New Zealand and Canada, have converged at Kuala Lumpur, to discuss regional peace, economic resilience and inclusive growth. Brazil’s president, who is also chair of BRICS, was an invited guest.
Malaysia’s chairmanship presented a defining moment for the region to remain resilient in a disrupted global landscape, shaped by the shifting trade policy, strategic rivalries between the large economic powers and geoeconomic fragmentation as well as technological and climate disruptions.
Asean must stay united to be relevant in upholding multilateralism, promoting open, inclusive, and rules-based cooperation.
One of the key milestones is the accession of Timor-Leste into the bloc, bringing to 11 members bloc. Asean’s new Community Vision 2045 (ACV 2045) marks a major shift in the region’s development strategy, shaping the future direction of the grouping for the next two decades, ensuring a resilient, innovative, dynamic, prosperous, and people-centred region.
The ACV will help Asean navigate an increasingly complex and rapidly evolving geopolitical environment.
The enhanced Asean Trade in Goods Agreement (Atiga) in deepening economic integration, making it easier for businesses to navigate trade across the bloc, helping to increase the share of intra-Asean trade. Atiga has several positive effects, including streamlined obligations, provisions for trade facilitation, increasing trade openness to over (99%), strengthening regional supply chains, and addressing non-tariff barriers, estimated between 5,000 and 7,000 across the region through the introduction of an alternative dispute resolution mechanism of mediation.
The upgraded China Asean Free Trade Area (Cafta) 3.0 is expected to significantly impact economic cooperation between China and Asean by deepening integration through new chapters on the digital and green economies, eCommerce, and supply chain security.
The enhanced Malaysia-Republic of Korea Free Trade Agreement (MKFTA) upon entry into force, will guarantee long-term duty-free access to various products of strategic export interest for Malaysia, covering the food and agricultural sectors, herbal products and extracts, commodity including palm and cocoa, chemical and petrochemicals as well as tropical timber and plywood.
Additionally, both countries also concluded a Memorandum of Understanding (MoU) on strategic cooperation on supply chains in ensuring economic security and supply chain resilience.
Malaysia and Brazil have exchanged a series of MoUs, marking a significant step towards strengthening bilateral ties across key sectors, including semiconductor technology, science, innovation and agriculture.
In 2024, Brazil was Malaysia’s second-largest trading partner in Latin America, with total bilateral trade amounting to US$4.46bil.
Asean has announced it reached “substantial conclusion” in negotiations for the region’s Digital Economy Framework Agreement (Defa), which will be signed in 2026 to bolster a digital economy that could reach US$2 trillion by 2030.
Defa will foster cooperation in artificial intellignece (AI) and digital technology through specific provisions aimed at harmonising regulations, promoting talent development, and establishing common ethical guideline.
New Zealand and Asean have announced the establishment of the Asean-New Zealand Comprehensive Strategic Partnership. Canada is advancing a new phase of trade, economic and security cooperation with Asean, including an accelerated effort to conclude a Canada-Asean Free Trade Agreement by 2026.
In a time of global fragmentation, can Asean stand out as a rare economic bright spot.
Asean must leverage global uncertainty into strategic advantage, foster strategic multi-alignment and multiple partnerships, as a deliberate effort to maximise economic and business opportunities.
Asean is set to become the world’s fourth-largest economy by 2030. It has long offered a diverse and attractive investment landscape.
A young demographics dividend, a competitive and trainable work force, rising urbanisation and a growing middle class in some member countries (approximately half of the Asean population is considered middle class, with projections that this will grow to 65%-70% by 2030), underpin long-term structural demand trends, which are expected to drive consumption upgrade and economic growth.
AI and emerging technologies are providing new avenues for driving growth and investment in high growth and high value industries including semi-conductor, digital economy, green economy, blue economy, aerospace, supply chain and logistics, healthcare, financial services, education and agriculture.
Regional cooperation and collaboration remain the bedrock of Asean’s success. The shared infrastructure development enables countries to pool resources for developing critical digital infrastructure, such as high-speed internet networks and data centrrs, which reduces costs and expands access across the region. For example, the Asean Power Grid has the goal of achieving regional interconnection for energy security.
The alignment of digital rules and standards, including data privacy laws, cybersecurity, AI governance and eCommerce regulations would enhance interoperability. It creates a more predictable and seamless connectivity and digital payments environment for businesses to operate across borders, fostering a larger single digital market.
Regional initiatives on capacity building, knowledge and talent sharing to bridge skills gap between the developed and less developed member countries. This can be facilitated through the technology exchange and joint-training as well as talent exchange programmes, covering the expertise, researchers, and skilled professionals.
Encouraging strategic public-private sector collaboration between the regulators, technology companies as well as small and medium enterprises (SMEs) through startup accelerators and cross-border innovation networks.
Asean offers a compelling case as an distinct and attractive investment destination due to its strong long-term structural growth potential, economic resilience, and a diverse range of industries and new emerging sectors.
Asean Investors are seeking stability, scalability, and supportive as well as efficient ecosystem depth that offer a reliable regional value chain that can withstand disruptions and deliver efficiency.
Asean can gain a significant advantage by positioning itself as an integrated, complementary, and future-ready investment destination, rather than a collection of competing national markets.
Asean can foster strategic multi-alignment and multiple partnerships and collaboration in investment promotion through offering investors a “plug-and-play” regional supply chain proposition.
Companies can strategically place different parts of their supply chain across Asean countries, and this approach will enhance regional integration, promote supply chain diversification, and ensure supply chain security.
Asean will benefit from the reconfiguration of the global supply chain by leveraging its specialised capabilities in certain sectors.
Malaysia is a major hub for semiconductor assembly, packaging, and testing. Under the New Industrial Master Plan, the government is confident that Malaysia’s semiconductor industry has the potential to expand its value chain into the front-end segment.
Meanwhile, Singapore is a preferred location for semiconductor companies, with investments in new chip factories and expansions of existing facilities.
For example, STMicroelectronics partnered with A*STAR to establish a leading-edge research and development line in its Singapore manufacturing facility.
Vietnam and Cambodia are known for electronics manufacturing, particularly consumer electronics.
Indonesia is rapidly emerging as a potential global hub for electric vehicle (EV) production, particularly focusing on EV batteries and other related component.
Thailand is a leading automotive manufacturing centre in South-East Asia.
Where does Malaysia stand in Asean? Malaysia is the second largest trade partner within Asean. Its total trade with Asean member countries stood at RM764.4bil in 2024, growing by 9.9% per annum from RM576.2bil in 2021, and had surpassed 8.9% per annum growth in Asean’s total trade. Its exports share to Asean had increased from 27.7% in 2021 to 29.0% in 2024.
Regional agreements are essential tools for navigating global economic uncertainties.
Malaysia’s 18 extensive multilateral and bilateral free trade agreements, including large, high-standard free trade agreement, namely Regional Comprehensive Economic Partnership and Comprehensive and Progressive Agreement for Trans-Pacific Partnership not only provide its businesses greater market access by reducing or eliminating tariffs, while simultaneously improve the investment climate for foreign investors and service providers by creating a more favourable business environment.
Malaysian businesses and industries will benefit from the enhanced trade agreements such as Atiga, Cafta 3.0, including MoU through expanded market access, streamlined customs procedures, stronger supply chains cooperation, and increased opportunities in high-growth sectors like digital economy, green economy, blue economy, and critical minerals.
Domestic SMEs must seize opportunities by leveraging on the reduced tariffs and streamlined trade facilitation to expand their market reach, increasing cost and products competitiveness.
SMEs can also improve their capacity to meet foreign market standards, build supply chain networks and integrate into global value chains through government’s support and resources, including financial assistance and market development programme. The FTAs have specific provisions for SMEs, such as capacity-building programmes and clear information on market opportunities, to help them adapt and participate.
Lee Heng Guie is the executive director of the Socio-Economic Research Centre. The views expressed here are the writer’s own.
