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ASEAN provides playbook for navigating choppy waters
Instead of a zero-sum approach, ASEAN’s private and public sectors have struck a delicate balance in their relationships with the US and China.
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Downstreaming: A factory belonging to PT Krakatau Posco Energy in Cilegon, Banten, engages in steel production. (Courtesy of /Krakatau Posco Energy)
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tormy seas require skilled sailors. And as business leaders in a sink-or-swim global economy, we have had to hone our skills and recalibrate our compasses to maintain growth and development.
Indeed, over the last several years, business executives have come to learn first-hand the ever-growing real-world impact that geopolitical developments have on bottom lines. In the age of social media and economic interdependence, events on one side of the world can shape markets on the other side, at a breakneck pace.
COVID-19, the Russia-Ukraine war and rising tensions between the United States and China are examples of how economic volatility somewhere impacts countries everywhere. Each of these events fundamentally changed the playing field for sectors, sometimes overnight. Events that span a matter of days can undo decades worth of business planning.
ASEAN has been navigating this reorientation with distinction. In a world of unprecedented volatility and disruptions, ASEAN nations, and in particular Indonesia, have traversed the choppy waters of US-China relations, maintaining deep economic and people-to-people ties with both Beijing and Washington.
Instead of a zero-sum approach, ASEAN’s private and public sectors have struck a delicate balance in their relationships with the US and China. Indeed, in this economic cold war, both American and Chinese companies see ASEAN as a stable “warm” bridge and alternative production hub amid the uncertainty of changing tariffs arising from US-China trade disputes.
As companies discuss the need for nearshoring, offshoring and friendshoring, ASEAN has smartly positioned itself as an ideal partner for companies of all stripes who have identified vulnerabilities within their own multinational value chains.
This calculated approach has served the ASEAN region well. The bloc represents some of the world’s fastest-growing countries, boasting a combined economy of US$3.2 trillion, with a total population of over 660 million, behind only China and India. Its global foreign investment has grown from 7.8 percent in 2014 to over 11 percent in 2021.
