THE 2025 tariff shockwaves present Asean with its gravest unity test since the 1997 financial crisis; and its greatest underlying opportunity.
In the face of President Donald Trump's "Liberation Day" tariffs and management of global affairs, major rifts in Asean’s regional solidarity had emerged. Despite the bloc’s enshrined consensus-driven approach, its members had individually raced to secure bilateral arrangements, a worrying outcome for Asean’s collective cohesion. Unity must now be restored against the pull of individual survival instincts.
Malaysia's 2025 Asean chairmanship now carries the mandate to lead the bloc towards concrete integration, safeguarding its strategic autonomy and economic leverage.
The upcoming visit by Trump to Malaysia would serve as a litmus test for Asean’s ability to engage with competing global powers without compromising its hard-won strategic autonomy. How it responds will be vital for its future.
Unlike the European Union's supranational authority, Asean’s consensus and non-interference principles often impede collective decision-making. Trump’s successive tariff pauses only intensified the frenzy as the bloc’s export-oriented economies scrambled for bilateral deals with Washington to safeguard their market access.
Such "every-state-for-themselves" dynamics expose Asean's underlying institutional weakness; collective action can be easily compromised.
The challenge, which goes beyond trade, is whether Asean can transform into a cohesive economic bloc capable of leveraging its collective strength.
Despite dramatic headlines surrounding the de-dollarisation ambition, these efforts remain "practical" experimentation. Even successful arrangements that enabled non-dollar currencies to dominate bilateral trades, such as that between India and Russia, have mostly constituted a crisis-driven necessity rather than a pioneering monetary architecture. The US dollar still comprises 58% of disclosed foreign reserves globally.
Other major aces up the American sleeves, such as threats of exclusion from SWIFT (Society for Worldwide Interbank Financial Telecommunication), will also preserve the US dollar's hegemony against alternative currencies like the renminbi for the foreseeable future.
Caught between the US' increasing protectionism and BRICS’ dollar decoupling ambition, Asean’s path forward must be grounded in pragmatism to insulate its economic leverage through stronger, more self-sufficient regional financial frameworks.
In light of the latest tariff shocks, Asean cannot afford to invest in grandiose currency replacement schemes. Instead, it must continue advancing the Regional Payment Connectivity (RPC) initiative.
Strengthening cross-border linkages in local currencies, Malaysia has most recently advanced QR payment linkage with Cambodia. Malaysian travellers can now pay instantly using the MAE app, featuring automatic currency conversion that practically bypasses dollar intermediation.
Similar systems connect Thailand's PromptPay, Singapore's PayNow and Indonesia's QRIS.
Collectively, these efforts strategically promote more interoperable financial ecosystems, sustaining the momentum for localised currency connectivity and systemic integration within Asean.
Strategic autonomy through multilateral partnership and dialogue
Amid the geopolitical divergence, Asean must secure its regional autonomy through fostering multilateral dialogues. Malaysia's 15-Priority Economic Deliverables laid the fundamental blueprints for Asean to strategically diversify trade partnerships with China, India and the Gulf Cooperation Council (GCC) countries.
To transcend traditional bilateral negotiation approaches and deepen regional economic integration, Asean stands to gain from advancing its Asean Trade in Goods Agreement
(Atiga) and Digital Economy Framework Agreement (Defa) negotiations to establish supply
chain and digital resilience.
By championing open and constructive dialogue, Malaysia has leveraged its chairmanship to both host the inaugural Asean-GCC Summit and simultaneously secure US participation ahead of the Asean Summits this month.
These steps carry exceptional promises for Asean’s strategic autonomy on the global stage as the bloc continues to impartially engage with global powers without co-opting into bilateral alliances amid geopolitical tension. Nonetheless, the challenge of devising institutional mechanisms conducive towards long-term unity remains.
Malaysia's chairmanship must move beyond rhetorical commitments to cement regional integration that promotes multilateral dialogues within the context of global multipolarity and non-alignment.
Integration through crisis
Malaysia's leadership demands acknowledgment that Asean's traditional consensus-building approach has reached its limits. The bloc cannot achieve strategic autonomy through diplomatic declarations alone. It requires operational integration that could shift the regional mindset from costly fragmentation towards beneficial unity.
This means accelerating key concrete initiatives already underway, such as completing Atiga negotiations by March 2025, operationalising the US$1 trillion digital economy framework and expanding payment connectivity to encompass the full range of trade finance.
Most critically, it means creating institutional mechanisms that reward collective action and penalise unilateral defection.
The tariff crisis of 2025 has revealed both Asean's vulnerabilities and its potentials. Malaysia's chairmanship occurs at the precise moment when traditional diplomacy has proven insufficient. Transformational integration is key towards navigating global divergence and geopolitical uncertainties.
The choice is stark: continue as a loose association of convenience, susceptible to external pressure or evolve into an integrated economic bloc capable of mobilising collective
bargaining tools. Malaysia has the means – from payment connectivity to digital integration – to make this transformation real.
The question is not whether Asean can survive the current crisis but if it can use this crisis to finally become what its founders envisioned: a unified regional power capable of shaping rather than merely reacting to external developments.
The window for this transformation is narrow, and the stakes couldn't be higher. But for the first time in decades, Asean has both the economic foundation and external pressure necessary to forge unity.
Malaysia's leadership will determine whether this moment could become a catalyst for integration or merely another missed opportunity.
DATUK SERI VIJAY ESWARAN
Executive chairman
QI Group of Companies
Hong Kong (headquarters)
