Credit by Ho Chi Minh City © Image by Thành Nguyễn from Pixabay
Southeast Asia's Rise as World's New Economic Force

Southeast Asia's Rise as World's New Economic Force

The Association of Southeast Asian Nations (ASEAN) demonstrated its confidence in becoming a global economic powerhouse at a summit held in Labuan Bajo, Indonesia from May 10-11.

Indonesia chaired this year's 42nd ASEAN Summit, providing leadership for the event.

During the summit's opening session on May 10, Indonesian President Joko Widodo highlighted ASEAN's strengths, such as being an epicenter of growth with an economy that surpasses average global economic growth, benefiting from demographic advantages and sustained regional stability.

Vietnamese Prime Minister Pham Minh Chinh, quoted by Vietnam News Agency, emphasized three core factors of ASEAN's characteristics — values, vitality, and reputation — which have enabled the regional bloc to maintain independence, strategic self-reliance, transform into a growth epicenter, and adapt better to external shocks.

In an April report, the Asian Development Bank projected resilient economic growth of 4.8 percent in the Asia-Pacific region for this year and the next, an increase from 4.2 percent in 2022.

Leaders and senior officials engaged in productive bilateral and multilateral meetings during the summit. For instance, President Widodo met with Prime Minister Pham Minh Chinh on May 9 to discuss joint efforts towards achieving a bilateral trade target of $15 billion by 2028.

On the same day, Indonesia and Timor-Leste leaders agreed to establish a joint working group for economic development in their border areas, with immediate talks proposed for a bilateral investment treaty.

Highlighting the opportunities in the electric vehicle (EV) sector, Indonesian Tourism and Creative Economy Minister Sandiaga Uno emphasized ASEAN's role as an epicenter of growth during a news conference on May 10. Indonesia has been actively promoting EV use in the region to reduce emissions as part of the ongoing energy transition.

During the summit, an agreement was ratified to develop a regional EV ecosystem, aiming to establish ASEAN as a global production hub for the EV industry.

ASEAN has set a target to raise the proportion of renewable energy in its energy mix to 23 percent by 2025, aligning with its vision for a low-carbon future. President Widodo also mentioned the implementation of the Regional Comprehensive Economic Partnership (RCEP) as a step towards reinforcing inclusive cooperation for ASEAN's future.

The RCEP, involving 15 Asia-Pacific countries, including the 10 ASEAN member states and five trading partners (China, Japan, South Korea, Australia, and New Zealand), is recognized as the world's largest free trade area. It covers a significant portion of the global population, contributes to a substantial share of global GDP (approximately 30 percent), and represents a considerable portion of global trade in goods and services (over a quarter).

Indonesian Tourism and Creative Economy Minister Sandiaga Uno acknowledged the mutually beneficial relationship between China and ASEAN, as they are each other's largest trading partners, contributing positively to the world economy.

The International Monetary Fund's April World Economic Outlook report stated that the reopening and growth of China's economy will likely have positive spillover effects on countries with strong trade links and reliance on Chinese tourism.

Minister Sandiaga Uno emphasized the importance of achieving more equitable, sustainable, and higher-quality trade and investment operations between ASEAN and China after China's reopening of its borders.


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