Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Following the conclusion of 43rd ASEAN Summit, Zhouchen Mao, Head of Research and Advisory at Asia House, highlights the key Summit outcomes in areas of regional integration, digital economy, and sustainable development.
Key messages:
ASEAN members achieved several key deliverables at this month’s summit that have the potential to transform the bloc and accelerate its drive to become an engine of growth regionally and globally.
Key takeaways from the 43rd ASEAN Summit
The 43rd ASEAN Summit concluded on 7 September following a series of events aimed at consolidating the bloc’s role regionally and globally. In particular, the Summit made considerable progress on economic cooperation programmes as part of the ASEAN community-building agenda. It produced several key outcome documents on strengthening ASEAN as an institution, the development of a regional digital economy, regional payment connectivity, sustainable transition, and the implementation of the ASEAN Outlook on the Indo-Pacific.
ASEAN as a regional institution
Of the several outcome documents produced during the Summit, the ASEAN Leaders’ Declaration on ASEAN as an Epicentrum of Growth was of particular significance. The declaration spelt out ASEAN’s attempts to strengthen the bloc and become the engine of growth, both at the regional and global levels. Aimed at accelerating the region’s growth rate, the declaration also reiterated ASEAN’s commitment to building an “innovative, dynamic, and people-centred” economic centre by cementing ASEAN’s resilience in critical areas such as supply chain connectivity, macroeconomic stability, health, and food and energy security.
This was complemented by the adoption of the Jakarta Declaration on ASEAN Matters: Epicentrum of Growth (ASEAN Concord IV), a declaration that added strategic heft to ensure ASEAN remains relevant and the “epicentre of growth in the Indo-Pacific region and beyond”. More importantly, the declaration will form the foundation of ASEAN Vision 2045 and serve as the new guideline for the bloc starting in 2025.
With the bloc having faced criticism in recent years for its slow decision-making process in times of crisis, the Summit endorsed a set of non-legally binding rules to provide direction on how decisions should be made in situations that involve possible violation of the ASEAN charter, emergency circumstances, and when unanimity cannot be achieved. It also agreed on the importance of enhancing the capacities of the ASEAN Secretariat and the role of the ASEAN Secretary-General in the decision-making process to ensure the bloc remains relevant.
The Chairman’s Statement of the 43rd ASEAN Summit focused on deepening regional integration. Most notably, 11 of the 16 Priority Economic Deliverables (PED)[1] were completed to solidify regionalism through greater market connectivity, digital economy, and sustainable development. The remaining five PEDs are due to be delivered in Q4 2023. Additionally, significant progress has been made on upgrading the ASEAN Trade in Goods Agreement[2], with negotiations on most chapters set to be completed by 2024.
The forward-looking agreement will not only further elevate ASEAN’s position in the supply chain, but will also enhance economic integration by incorporating emerging issues such as digitalisation and sustainability. For businesses, an updated agreement will enable multinational corporations to leverage ASEAN’s position as an expanding single market and a regional production base that in turn will enhance the region’s overall competitiveness.
The development of digital economy
One of the main PEDs completed at the Summit was the much-anticipated launch of the ASEAN Digital Economic Framework Agreement (DEFA) negotiations. The announcement was seen as another milestone in the region’s efforts to establish the foundation for digital economy interoperability, especially since the negotiations began two years ahead of the original 2025 timeline. The target is to complete the negotiations within two years, by the end of 2025.
Besides progress on DEFA, the Summit emphasised its commitment to enhancing regional payment connectivity and supporting the use of local currency in cross-border transactions. This decision followed on from May’s 42nd ASEAN Summit, where leaders stressed the importance of minimising the risks of using foreign currencies and underscored the value of cross-border payment systems.
Specifically, the latest Summit pushed for the region’s QR payment system to be expanded to allow all bloc residents to pay for goods and services in local currencies using a QR code. The system, which is now active in Indonesia, Malaysia, Thailand, and Singapore[3], supports cross-border trade settlement, investment, and other economic activities with the goal of deepening financial integration between ASEAN member states using digital technologies. The initiative could be transformative for smaller businesses in the region, providing both market and financial access to micro, small, and medium-size enterprises, as well as boosting consumer spending.
ASEAN Outlook on the Indo-Pacific
ASEAN’s commitment to the broader region is reflected in the Summit’s call to implement the ASEAN Outlook on the Indo-Pacific (AOIP), a platform created to mobilise both public and private funding to enhance economic collaboration and reduce geopolitical tensions. First signed in 2019 despite the lack of strong support within ASEAN, the AOIP has become increasingly instrumental in promoting the bloc’s centrality amid global uncertainties and great power competition. As chair, Indonesia insisted that the “Indo-Pacific region” cannot be a matter of security but must be an area of economic engagement. To this end, Indonesia hosted the inaugural ASEAN-Indo Pacific Forum during the Summit. It produced tangible results, with 93 projects worth US$38bn showcased. Some 81 projects amounting to US$34.53bn focused on green infrastructure and supply chain resilience, while there were four projects in sustainable financing, and eight projects in digital transformation.
Sustainable transition
Substantial success was made at the Summit relating to the green economy. Under the overarching goal of balancing economic growth and environmental protection, the Summit adopted three major PEDs – the Building of the ASEAN Strategy for Carbon Neutrality, the formation of the Blue Economy Framework for the seas and oceans, and the Leaders Declaration on the Developing Electric Vehicle Ecosystem.
With regard to the latter, Indonesia succeeded in pushing for the development of an electric vehicle ecosystem via the development of downstream industries that can provide added value. The plan was also supported by non-ASEAN attendees China, Japan, and South Korea.
Conclusion
The Summit ultimately succeeded in achieving several key deliverables that have the potential to significantly transform ASEAN. For instance, the forthcoming implementation and/or upgrading of key agreements on the digital economy and trade, coupled with ongoing regional integration, are poised to propel the bloc’s future economic growth. Indonesia, the ASEAN chair in 2023, set out an ambitious agenda and is seen to have made great strides in achieving key goals. Going forward, the crux is in implementation. It is expected that Indonesia will continue to have a facilitating role in driving ASEAN’s integration and economic agenda amid concerns over the capacity and capability of 2024 rotating chair Laos.
[1] The 16 PED focuses on the economic pillars of the digital economy, sustainability,
[2] ATIGA is a major agreement under the ASEAN Economic Community in promoting regional economic integration by liberalising tariffs, streamlining customs, and establishing trade dispute mechanisms.
[3] Vietnam and the Philippines are expected to be linked in end-2023.
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