- 7 months ago
ASEAN stands at a critical crossroads. The region is projected to become the world’s fourth-largest economy by the end of this decade—but it is doing so amid rising geopolitical tensions, trade fragmentation, tighter global financial conditions and rapid digital transformation. Dr. Ko Young Kyung shares her views.
Category
🗞
NewsTranscript
00:00Welcome back to Niagat Awani.
00:01ASEAN stands at a critical crossroads.
00:04The region is projected to become the world's fourth largest economy
00:08by the end of this decade,
00:10but is doing so amid rising geopolitical tensions,
00:14trade fragmentation, tighter global financial conditions
00:17and rapid digital transformation.
00:19And to help us make sense of what lies ahead,
00:23we're joined by Dr. Ko Yong-kyung,
00:26research professor at the Digital Trade Research Centre,
00:30Yonsei University.
00:31Dr. Ko, thank you so much for being with us today.
00:34First of all, maybe you can tell us more in terms of the ASEAN.
00:40ASEAN is projected to become the world's fourth largest economy by 2030.
00:45What structural reforms are essential to sustain this growth
00:49amid global uncertainty now?
00:52Actually, ASEAN grew up so fast up to now,
00:55so what is the main driving force is a large population,
01:00we call it the democratic dividends.
01:03And then FDI, like a foreign direct investment at the export.
01:06Yes, it's true, but in overall.
01:09But today, the scale alone doesn't guarantee the growth further.
01:16So we are seeing some economies,
01:19some countries' economic growth is still,
01:22we say, we call it the middle-income trap.
01:26For example, like Thailand,
01:27their growth rate is getting lower and lower and stuck recently.
01:31So in this era of global uncertainty,
01:35structural reform is not an option,
01:40it's essential.
01:41So it's a strategic shield.
01:43So to reach our goal to 2030 growth,
01:48we must focus on two pillars.
01:52So first, true market integration.
01:55So we say ASEAN is one market.
01:58But in reality,
02:01we still are hindered by over 10,000 non-tariff barriers.
02:07For example, sanitary measures and TBTs,
02:12like technical barriers,
02:14and also fragmented halal or labeling,
02:18all those kinds of different types of non-tariff barriers.
02:21So some companies,
02:24they entered another market,
02:25they have to change the packaging and labeling and everything.
02:29So what to do?
02:31So for every single country we entered,
02:35we changed all those things,
02:36so we needed to get a real, true, integrated market.
02:40So these invisible words prevent us
02:43from achieving this real scalability.
02:45So from now on,
02:47we needed to work on,
02:49focusing on working in the integrated market standard.
02:54So remove those kind of non-tariff barriers.
02:58And second is more important,
03:00industrial upgrading.
03:02Okay.
03:02Yeah.
03:03So many of the countries in ASEAN,
03:05they are focusing on the labor intensive
03:08or lower cost labor intensive export and assembly.
03:13So now we needed to shift to the high end,
03:17more upgraded in manufacturing sector,
03:21like through the digital and green transformation.
03:25So those kind of the way to ensure
03:27that ASEAN become the fourth largest economic entity
03:31in the world by 2030.
03:34Yeah.
03:34Dr. Ko,
03:35of course,
03:37when we talk about ASEAN,
03:39we can't deny
03:40or we can't run from RCEP,
03:43but how basically RCEP
03:45reshaping regional supply chains
03:48and where does ASEAN now sit in between,
03:50for example,
03:50in between China, India,
03:52and also Western economies.
03:54Yeah.
03:55So RCEP,
03:56the Regional Comprehensive Economic Partnership,
03:59it's uniting the more than 10 countries
04:02in ASEAN Pacific.
04:05So it is the world's largest free trade agreement.
04:11So when we're joining the RCEP,
04:14we have a more bigger market.
04:16Yes.
04:16So this is fundamentally reshaping our supply chain
04:21by harmonizing the rule of origin.
04:24So when I mentioned,
04:26when we make one integrated market of ASEAN,
04:29there is not so many non-type barriers.
04:32So the RCEP changes the rule of origin.
04:36So easy to enter the market,
04:38easy to mobility,
04:39easy to transfer.
04:40So the RCEP turns ASEAN into one-stop production platform.
04:48So, for example,
04:49I give you examples,
04:51like an electric vehicle,
04:53so nickel, battery from Indonesia,
04:58and then the automotive power chips
05:00from Malaysia or Singapore.
05:03And then the assembly and final production
05:06in Thailand or Vietnam,
05:09like that.
05:10So those kind of entire supply chain
05:14now stay in ASEAN.
05:17So we have to make use of ASEAN.
05:21It's like leveraging to turn ASEAN
05:23into one-stop platform.
05:26So there is another example,
05:30like the smartphone
05:31and other digital devices,
05:34but we are no longer just an alternative.
05:38like replacing China or other things.
05:43So we are the essential bridge
05:46between West and East,
05:49North Asia or Southeast Asia,
05:52like that.
05:52So RCEP is a big chance
05:55for opportunity for ASEAN too.
05:57I want to bring our discussion
06:00into a much bigger picture,
06:02especially with the US-China rivalry intensifying.
06:07Is ASEAN better served by non-alignment,
06:09diversification,
06:11or deeper regional integration?
06:13Is your thought on this?
06:14So, actually,
06:17we don't need to choose just one side.
06:20One side, yeah.
06:21But some people say
06:22it's like a very flexibility
06:24or bamboo diplomacy.
06:26Just be friendly about this.
06:27Yeah, but I would like
06:29to give it some better terms.
06:31Yeah, yeah.
06:32Active multi-alignment.
06:34We can be a friend of the US.
06:38We can be a friend of China.
06:39We can be a friend of India
06:41or Brazil, any country.
06:43So as a global shipping hub,
06:45if our ASEAN can be a strategic, safe hub.
06:52We don't need to stand just one side.
06:55Never, ever.
06:56So, the more integrated we internally,
07:01the more bargaining power we have externally.
07:07So, we don't need to be,
07:08we need to be just a stable platform
07:11every country.
07:13That's our ASEAN, the strength.
07:16The neutrality.
07:19One thing, Donald Trump,
07:22he brings headaches to the world, basically.
07:24His decision to impose higher tariffs
07:27on countries trading with Iran.
07:29I think this could hit ASEAN,
07:32especially on the ASEAN exporters indirectly.
07:37How significant is this risk, Dr. Koh?
07:39But every day, his stance changes.
07:42Okay, yeah.
07:43Every word.
07:44So, that's why we need to check out
07:46his social media posting.
07:49So, even though last night, yesterday,
07:51Before he sleep, and also when he wakes up,
07:53he does two different things.
07:55So, it's a little bit of a setback.
07:57So, he was about to engage in
07:59some kind of a military involvement in Iran.
08:02But, a setback.
08:03So, yeah.
08:05So, every day is a different voice,
08:07a different stance, a different...
08:08Yeah.
08:09So, but the risk doesn't...
08:12Risk is not just to trade the volume
08:15between Iran and ASEAN.
08:18What is the risk?
08:20It's a supply chain security.
08:23Yeah.
08:24Whatever happens, anything.
08:26So, we cannot forecast exactly.
08:29So, that's the risk.
08:30That's the volatility.
08:31So, how do we deal with those kind of things?
08:34But we worry about some kind of secondary sanction.
08:38Yeah, yeah.
08:39So, if some company is indirectly related to any company in Iran or trading,
08:45then we worry about those kind of secondary sanctions.
08:48So, those kind of supply chain risk or secondary sanctions spike.
08:55May spike energy cost and insurance cost.
09:00So, it's directly skewed the Malaysian company
09:04or other ASEAN companies' profit margin over their manufacturing.
09:11Yeah.
09:12Donald Trump's also attacking the U.S. Federal Reserve Chair, Jerome Powell.
09:18With U.S. Federal Reserve signaling prolonged tight monetary policy,
09:23and also how vulnerable are ASEAN currencies and capital markets to volatility?
09:29Volatility, yeah.
09:30But recently, you already follow up the how strong ringgit is against the dollar.
09:36Yeah, yeah.
09:36So, those kind of impacts are not the same to every emerging market currency.
09:43Some countries enjoy it.
09:44Some countries have something loose on the side.
09:48But now we are very clearly in a different environment.
09:54Because last year, the Federal Reserve, Fed, cut the rate consecutively down to three times in the 3.5% range.
10:07So, our narratives shifted from the tightening to easing or adjustment.
10:14So, and then recently, the old formula, Fed, cut the rate, it's equally, the emerging market booming up, market lately.
10:24Those kind of old formula has been broken.
10:27So, check it out.
10:28Recently, you can see the gold price and silver price is a record high.
10:35Which is signaling is market distrust.
10:40So, in 2026, it's about what they say is a fundamental selection.
10:48So, investors probably ignore any single strong noise or risk itself.
10:57So, probably we have to check it out the everyday news, both sides.
11:02Talking about investors and markets, what are the most attractive, especially for the foreign direct investment in ASEAN?
11:11For example, like in manufacturing or renewables, energy or digital.
11:15What are your thoughts on this?
11:17In 2025, Vietnam and Malaysia also showed very good evidence in FDI investment.
11:26So, for 2026, this kind of trend will continue.
11:33So, Vietnam, Malaysia would be the top picks for FDI.
11:39So, especially Malaysia, lead in AI data center and semiconductor.
11:44It's combined by the AI boom.
11:47And then, also Vietnam is in electronics and manufacturing sector.
11:51There's a top picks for FDI.
11:54So, every investor agrees on that.
11:56But, Thailand has a bit moderate.
12:00Some people looking at the positive on Thailand for the digital infrastructure.
12:06But, some people consider their political instability.
12:11Yeah, so, a little bit moderate.
12:13But, most important thing for FDI, not only think about the labor cost or the subsidized.
12:23The most important thing is policy predictability.
12:29Ah, okay.
12:30So, I think in terms of the policy predictability, Vietnam and Malaysia also has a very good reputation in that verse.
12:39Yeah.
12:40In position as you as a digital trade research center from the digital trade research center.
12:46One thing that most interest, we have like in one or two minutes, global protectionism rising now.
12:56What's ASEAN's best strategy to strengthen its bargaining power?
13:00Especially on standards leadership or supply chain resilience or like capital market integrations.
13:08Your thoughts on this, yeah.
13:09So, we already mentioned, the more internally that we integrated, we have more bargaining power externally.
13:20That's one of the key points.
13:22And then, also, ASEAN must be a rule maker, rule setter, rather than rule follower or rule taker.
13:32Without that, ASEAN always follow up all the advanced countries' rule and standard.
13:41There is no room.
13:42So, that's why the Global South's countries are getting together.
13:45So, we need to actively engage in the AI rule or those kind of new technology, the standard and things.
13:54And ASEAN also engaged it very much.
13:57Then, we can exaggerate our power or our competitive strength in the business field, in the economic field,
14:08and further up to the global policy.
14:12Dr. Koh, thank you so much.
14:13Thank you for your time.
14:15Dr. Koh, thank you.
14:17Of course, what's clear is that ASEAN's future will not be shaped by growth alone,
14:23but also by the choices it makes on integrations, resilience, and strategic positioning in a more fragmented global economy.
14:33Thanks again, Dr. Koh.
Comments