ASEAN faces a tougher world, but its diversity and resilience offer an edge: WEF panel

Even as South-east Asia moves more slowly than it would like to, and recognises its own challenges, it often gives itself too hard a time and should capitalise on its diversity, neutrality and growing resilience, said the panel of government and business leaders at the forum’s annual meeting in Davos, Switzerland, on Thursday (January 22).

Thailand’s Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas sketched out three “mega shifts” that he said had dominated the conversation at the annual meeting in Davos: geopolitics, AI or artificial intelligence-powered transformation, and climate change.

In a world where change on such a big scale is happening, and the old playbook is weakening, Ekniti said ASEAN needs to work more closely together to meet the moment.

He said that over the past few days, he has had many investors tell him that ASEAN remains a safe place for investment, as it can trade with so many countries.

“We are very neutral in terms of trade and investment, but we need to move closer,” he said. “If we can work together, if we can work closer, based on the foundations that we have, like intra-regional trade, we can be stronger.”

The panel, titled “Is ASEAN Moving Fast Enough?”, was moderated by The Straits Times’ editor, Jaime Ho.

Whether ASEAN was moving fast enough depended on how speed was defined, noted Indonesia’s Communication and Digital Affairs Minister Meutya Viada Hafid. For Indonesia and the region, the pace of integration could not be separated from questions of inclusivity.

Indonesia alone has about 280 million people spread across more than 17,000 islands, she said, making the challenge less about headline adoption rates than about how quickly technology can be diffused across societies.

This, however, can be done. She pointed to Indonesia’s QR code payment system, known as QRIS, which has helped expand digital payments nationwide and is now interoperable with systems in countries such as Thailand, Malaysia and other places, allowing cross-border transactions using local payment apps.

It is this culture of collaboration that ASEAN’s work on the Digital Economy Framework Agreement (DEFA) seeks to build on, as a way to accelerate integration without leaving countries behind, said Meutya.

Touted as the world’s first major region-wide digital economy agreement, talks on DEFA officially began in September 2023, and cover areas such as digital trade, cross-border e-commerce, cybersecurity, digital identity, digital payments and cross-border data flows. ASEAN is poised to sign the pact in 2026.

“It will not only serve as a trade agreement among ASEAN countries, but it will also serve as an operating system,” she said, referring to how the agreement would allow technologies from different countries in the region to work together.

Skills development is also critical, Meutya added, warning that the potential of the region’s large demographic would pay off only if young people were properly trained.

Asian Development Bank president Masato Kanda echoed those concerns, saying AI offered significant productivity gains but also carried social risks if not managed carefully.

“If you can’t give the young population good jobs… it creates huge social instability,” Kanda said, pointing to unrest seen in several countries globally. He said ASEAN would need to invest in education, skills and regional connectivity to turn disruption into opportunity.

Zurich Insurance Group Asia-Pacific chief executive officer Tulsi Naidu said ASEAN’s appeal lay not just in its growth potential but in its resilience amid global shocks.

Despite heightened geopolitical uncertainty and tariffs at their highest levels since the 1940s, she said ASEAN economies had proved more resilient over the past year than many investors had expected.

The focus, Naidu added, should not only be on how fast the region grows but on the quality of that growth, particularly in building resilience against climate risks and cyberthreats.

ASEAN doing well

Still, South-east Asia is doing better than it is often assumed, said World Intellectual Property Organisation director-general Daren Tang.

“I think ASEAN is really at the forefront of a lot of the intellectual property innovation developments,” Tang said, pointing to a “real transformation” in the region’s innovation landscape over the past few years.

The region now has about 45 to 50 unicorns – the highest for an emerging economy region, he noted, while research and development spending has been growing at an average of 8.5 per cent a year and totals about US$60 billion (S$77 billion).

Tang also pointed to the rise of the creative economy as evidence that ASEAN is competing increasingly on ideas, culture and content, not just cost. Thai cuisine, he said, has become a global export in its own right, found in cities around the world and helping project soft power far beyond the region.

In film and animation, Indonesia’s Jumbo has become the highest-grossing ASEAN film, while Thailand and Malaysia have also recorded international success, underscoring how ASEAN countries are increasingly confident in exporting their stories and creativity overseas.

Reflecting on ASEAN’s longer arc, Tang, a Singaporean and former trade negotiator, recalled debates nearly two decades ago over whether the grouping should follow the European Union’s model of deeper, more centralised integration.

At the time, ASEAN opted for a looser arrangement that allowed for greater flexibility among very different member states, a choice that he said had aged well.

“We are all very different as ASEAN member states, but I think the way we work together, which gives a lot more space (for) interoperability, rather than forcing harmonisation, can also be a source of strength for us,” Tang said.

Hariz Baharudin

The Straits Times

Asia News Network