How Significant Is Southeast Asia in the World?

  • Share this:
How Significant Is Southeast Asia in the World?

For centuries, Southeast Asia has been a bustling and dynamic center of trade. Its strategic geographic location between the Indian and Pacific Oceans has made it an important stopover for traders from around the world.

Southeast Asia's position in the global economy has played an important role since ancient times. Even today, the region continues to attract investors and become a promising destination. Its rich natural resources, tremendous tourism potential and large population are undeniable magnets.

Not surprisingly, Southeast Asian countries have experienced impressive economic growth in recent years. Moreover, the region's per capita income growth is among the fastest in the world, making it the fourth largest contributor to global growth after China, India, and the United States. The region is on a path to prosperity that is only getting stronger. Living standards have improved dramatically and poverty rates have fallen significantly.

According to a study conducted by HSBC and published in The Edge Markets, Thailand, Singapore, Indonesia, the Philippines, Malaysia and Vietnam are expected to grow between 3.2 and 7.6 percent by 2023. In fact, according to the IMF, the average global growth rate is only around 2.7%.

Driving Southeast Asia's Success

Southeast Asia's growth has been driven by its openness to trade and foreign investment. Countries such as Malaysia and Thailand have successfully consolidated their positions as global manufacturing powerhouses, producing cars, electronics, and computer chips.

On the other hand, Indonesia and the Philippines are emerging markets that are among the fastest growing in the world, driven by strong domestic demand. Then there is Singapore, a major financial and commercial center in the region.

Meanwhile, frontier countries such as Cambodia, Laos, Myanmar, and Vietnam have managed to break out of central isolation and integrate into regional supply chains, especially with China, after joining ASEAN.

Advantageous Foreign Presence

The research also shows that 90% of enterprises hailing from China, France, Germany, India, the United States, and the United Kingdom are set to bolster their footprint within the region over the next two years.

Moreover, the rivalry between the United States and China has brought unexpected benefits to Southeast Asia, as the two countries deepen their ties and increase their presence in the region.

Companies wary of rising production costs, pandemic restrictions, and uncertainty in China have shifted production to Southeast Asia, particularly Vietnam and Thailand. The establishment of new economic and free trade zones, tax incentives and infrastructure improvements, as well as the "China Plus One" strategy, have encouraged greater FDI flows into the region.

Analysts also say that ASEAN is poised for great success as the world's largest market by 2030. This prediction sees promising investment flows and business opportunities in various industries. The year 2023 is expected to be a golden age for manufacturing, tourism and the digital economy in ASEAN, which will bring many benefits to stakeholders.

From Southeast Asia to the World

As the world rebounds from the more than two-year COVID-19 lull, the global economy faces uncertainty due to the threat of recession, supply chain disruptions, and widespread inflation. While the IMF forecasts average global growth of 2.7% for 2023, the Asian Development Bank (ADB) projects growth of 4.7% for Southeast Asia. This is even higher than the average for most regions in Asia.

ASEAN has been a central force in global manufacturing supply chain networks (GVCs) for many years. Each ASEAN member state has an impressive level of involvement in supply chain networks, exceeding the regional average in Asia and the Pacific.

The region is also the fastest growing digital hub in the world. During the years of the COVID-19 pandemic, internet usage and the number of tech startups grew 85% faster than in Europe and 65% faster than in the United States during the same period. The number of new Internet users reached 40 million in 2020/2021, while the e-commerce sector grew 21% to a value of $90 billion, the fastest growth in the world.

In addition, the Regional Comprehensive Economic Partnership (RCEP) free trade agreement is expected to make Southeast Asia the world's largest single market by 2030.

So far, the region has contributed 8% of the world's total exports and received 10% of the world's total foreign direct investment (FDI), almost equal to China's contribution. The gradual reduction of tariffs in the region will further boost local economic growth. The potential of a large population and abundant labor, coupled with high cost efficiency, could lead the region to a much higher level of progress than before the pandemic.


  1. Rahman, Serina. (2023). Southeast Asia in 2023: Economic Resurgence with Climate Change Uncertainty. Heinrich Böll Stiftung
  2. Imson, Noah. (2023). ASEAN 2023: Southeast Asia Most Promising Industries. YCP Solidiance
  3. Asian Development Bank. (2023). ASEAN and Global Value Chains: Locking in Resilience and Sustaunbility
  4. Rhee, Chang Yong. (2018). Straight Talk: Reaching The Next Level. International Monetary Fund

Terima kasih telah membaca sampai di sini