Does ASEAN Matter?

How the summit tackles current challenges

Krisna Gupta

June 24, 2023

Krisna Gupta

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  • Does ASEAN Matter?

  • RCEP

  • EV

  • Food security

The ASEAN Summit

  • The ASEAN 42nd Summit produces several declarations like the AEC post-2025, regional development of electric vehicle (EV) ecosystem, and regional payment connectivity.

  • The theme is “ASEAN Matters: Epicentrum of Growth”

    • ASEAN is aspired to be a stable region in the midst of global uncertainty

    • Remains committed to regionalism & multilateralism

    • but does ASEAN really matter?

ASEAN: some facts in 2021

ASEAN: some Facts in 2021

  • ASEAN’s trade and investment with itself remain strong.

  • China still dominates trade, while USA in FDI inflow.

ASEAN matters?

  • Challenges going forward remains:

    • a weaker global growth, with growth estimated to be just 2.3% in 2023

    • inward-lookingness & geopolitical rivalry, with EU, China, and the US are trying to reduce their interdependence.

    • Climate change devastate food security & requires resources to tackle

  • Opportunities are there: RCEP & the region’s commitment to multilateralism.


  • ASEAN+5 FTA (sort of)

  • Enacted in 2020. The Philippines ratified RCEP in June 2\(^{nd}\) 2023.

  • Covers trade in goods, services, investment and movement of natural persons.

  • Also covers development cooperation.

About RCEP

  • The impact from tariff is negligible: about 0.07% higher real income from World Bank’s estimate.

  • Outside tariff, the agreement seems watered down:

    • not enough immediate commitment in the agreement on issues such as non-tariff measures, investment, government procurement, and competition.

    • many of the issues will be depending on the future RCEP secretariat & each countries’ commitment.

Rules of Origin

  • The gain will come from the new Rules of Origin (RoO): The one region RoO rules.

  • Single region RoO means a good that uses components from various RCEP countries will be counted as originated from RCEP.

  • This rules streamlined previous “spaghetti bowl” created by ASEAN+1 FTAs.

  • This is a perfect environment for Regional Value Chain (RVC) industries.

Can RCEP works?

  • The RoO can only be utilised by also streamlining various non-tariff measures (NTMs) like standards & import/export control.

  • However, the region is increasingly more protective:

    • in ASEAN, NTMs has risen from 1,634 to 5,975 between 2000 to 2015.

    • domestic policies

  • Geopolitically, RCEP may push ASEAN more towards China. Can the region still be independent?

    • We’ll see how IPEF change the equation.

Climate change

Vehicle trade

  • ASEAN’s vehicles are quite competitive (7th largest).

  • BYD, Wuling, Hyundai already has presence, VinFast is promising.

  • Indonesia, Malaysia and Thailand’s incentives rolled in: USD 465, 560, 2032 per vehicle respectively.


  • EV, despite subsidies, are still relatively expensive in the region.

  • production may require the global market to benefit from economies of scale

    • turning inward & global rivalry, again.

    • regional rivalry vs multilateralism. Case in point: Latin America in the 80s.

  • Don’t forget about infrastructure!

Greening the grid?

Food Security

  • Climate change reduces the productivity of the agriculture sector, while Russia’s aggresion leads to a wheat and fertilizer crisis.

  • The region remains relatively in the middle according to The Economist’s Global Food Security Index (GFSI):

Rank 28 41 46 63 64 67 72 78 81
Score 73.1 69.1 67.9 60.2 60.1 59.3 57.6 55.7 53.1

Food security

  • The ASEAN Integrated Food Security (AIFS) Framework was crucial in helping to solve food crisis during the Global Financial Crisis (GFC) and COVID Crisis.

  • The framework helps with monitoring, reacting to crisis, and keeping trade open.

  • There is no way around increasing productivity: rice & palm oil yield are reducing amid climate change and limited land.

  • Thankfully, commitment in food security is strong.


  • Economy-wise, ASEAN remains relatively small, but an important region nonetheless in the midst of global rivalry.

  • The summit remains committed to multilateralism, seems like.

  • RCEP, commitment to regional EV development and food security will determine whether ASEAN really does matter: to become the epicentrum of growth!

Thank you