ASEAN, the friend everyone needs

At a time of widespread economic, trade and geopolitical turmoil, the Southeast Asian region is proving to be a safe haven for investment.

Editorial by Alessio Piazza

The tail end of the Covid-19 pandemic, the global energy crisis, galloping inflation, the rising dollar, weakening Chinese demand. Just to stay on the economic and financial side. Not to mention the geopolitical one, between war in Ukraine and various other fronts of tension. In short, the world is not having a particularly peaceful time. Yet, there is one region that is proving more resilient than others. A term that may have been overused recently but which seems to fit the economies of the ASEAN region like a glove. The bloc's six largest economies-Indonesia, Thailand, the Philippines, Singapore, Malaysia and Vietnam-are proving to be anything but fragile in the face of global shocks in recent months and years. Singapore is gaining ground in financial services and high technology, Vietnam and Malaysia are receiving greater inflows of foreign direct investment in manufacturing, and Indonesia is receiving record funds to exploit its mineral resources, particularly nickel. Not only that. In addition to greenfield investments, Southeast Asia was the largest recipient of mergers and acquisitions completed in Asia in the first half of 2022, having received as much as 56% of total inflows. Inbound transactions in Indonesia alone were twice as high as those in mainland China, still held back by anti-Covid restrictions. Interestingly, it is not only the West that deploys more capital in ASEAN, but also China, which has reduced offshore operations in other regions to focus specifically on Southeast Asia. The 10-member, 680-million-person association already accounts for 3.4% of global gross domestic product and 7.7% of world exports. And its centrality is set to grow. But also on the political front, the region has proven to be an indispensable platform for dialogue, as demonstrated during the recent multilateral summits held and successfully concluded between Cambodia (ASEAN summit), Indonesia (G20 summit), and Thailand (APEC summit). It is no coincidence that the Financial Times recently described the ASEAN area as "the diplomatic and trade friend everyone needs."