As global trade realigns and U.S. tariffs rise, ASEAN faces both pressure and potential. Prof. Shandre Mugan Thangavelu of the Jeffrey Cheah Institute explains how the region can seize this moment to embrace reform and turn disruption into economic opportunity.
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00:00Global trade is shifting, but for ASEAN, this is a moment of opportunity.
00:05Rising U.S. tariffs may pose challenges, but they also open the door for reform,
00:10from advancing technology and green trade to building new industries.
00:14Professor Chandra Mugen-Tangavelu, head of the Jeffrey Chah Institute on Southeast Asia,
00:19shares how ASEAN can turn disruption into opportunities for growth.
00:23First one is still engage U.S. because still the 20 percent, whatever, in Cambodia is around 37 percent.
00:36In Vietnam, it's slightly higher, around 30 percent trade, and then Thailand might be around 20 percent or so.
00:43They need to protect that trade itself.
00:45So in the short run, there will still be negotiation to protect whatever trade they have.
00:50So the second track will be to seek new markets to substitute away from the U.S.
00:57That's a medium-term strategy.
00:58So when you look at the way the tariff line has been put out, the tariff line that they came out, the formula,
01:04we don't need to discuss the formula, no, it doesn't make sense,
01:07but they had an annex, too, that has the exemption clause.
01:12So they have many products in the exemption clause itself.
01:15So fairly, member countries need to outpenetrate this exemption clause so that the tariff will not apply to this set of goods.
01:27So that is, again, a short run to a medium-term strategy in how I'm going to engage U.S.
01:33The third one is still ASEAN as a trading bloc, ASEAN centrality,
01:38because that pins down the 85%, 80% of our trade.
01:42So I don't think there will be serious delinking or decoupling away from China itself,
01:47because we already embedded ourselves in the asset.
01:50So under that framework, under the legally binding framework of 30% of the global trade,
01:5830% of the global investment, 30% of the world population in that framework is going to consolidate further.
02:06So ASEAN has made quite a significant reform over the last three decades or four decades.
02:15Now is seriously the time to go deep dive into technologies, into green trade.
02:21So it's an ample opportunity for us to actually reform and create another set of frontier in ASEAN itself.
02:28So what Trump's reciprocal tariff has given us is an ample opportunity to reform and create new industries,
02:36new kind of services, a new framework of thinking for the next stage of growth,
02:42a new kind of architecture will emerge faster and faster, I think.