Singapore, 10 January 2024: The global trade outlook is significantly impacted by the continued rise of protectionism, affected by various factors. Geopolitical tensions, particularly the escalating US-China trade disputes, have expanded beyond traditional trade into technology, strategic industries, and security domains. Dr Lili Yan Ing, serving as ERIA’s Lead Advisor for the Southeast Asia region, addressed ASEAN’s potential, challenges, and the future direction for ASEAN Member States amid these tensions in her presentation at the ISEAS – Yusof Ishak Institute Regional Outlook Forum 2024: ‘Trust and Power in Pivotal Times.’

The event commenced with a welcoming remark by Mr Choi Shing Kwok, the director and CEO of ISEAS. Dr Ing contributed to Panel 2, focusing on ‘Regional Economic Challenges: Supply Chains, Technology, and Investment,’ moderated by Dr Jayant Menon, ISEAS’ Senior Fellow of the Regional Economic Studies Programme. The panel also included Dato’ Seri Wong Siew Hai, President of the Malaysia Semiconductor Industry Association (MSIA).

Dr Ing began her presentation by discussing geopolitical tensions and the US's use of ‘friend-shoring’ to maintain its competitive advantage, resulting in China investing over USD 143 billion in semiconductor self-sufficiency. Emphasising the ongoing global semiconductor competition, Dr Ing highlighted ASEAN’s crucial role, foreseeing substantial regional export growth.

Rising anti-globalisation sentiments, driven by WTO disputes and trade tensions, pose global economic challenges. Dr Ing underscored ASEAN’s burgeoning role in the semiconductor industry dominated by the US. ASEAN’s exports in the sector surpassed USD 165.3 billion in 2022, with robust growth reflected in ASEAN’s economic overview, featuring a 4.2% expansion in 2023 and a nominal GDP of USD 3.8 trillion in 2023. Global exports and imports surged, with China and the US as primary partners for ASEAN. FDI trends in ASEAN revealed a significant upswing, accounting for 12% of global FDI in 2022.

Dr Ing identified that ASEAN faces a dual challenge: firstly, enhancing manufacturing value added, given that 30% of exports remain resource-intensive; secondly, self-imposed political obstacles, such as export bans, local content requirements, investment barriers, policies favouring specific industries, and a non-automatic licensing system, causing concerns about trade and investment policies despite the region's economic promise.

To pave the way forward, Dr Ing highlighted that ASEAN should maintain a neutral stance while enhancing cooperation. This involves deepening trade and investment relations with current and potential partners, prioritising the functionality of the multilateral trading system, and maximising the benefits from ASEAN’s various FTAs. Additionally, creating a conducive trade and investment environment across all sectors, without showing bias towards specific industries, improving transparency in licensing and regulatory processes through the implementation of corporate governance standards, and leveraging digital technologies for increased productivity are imperative. Investing in both physical and digital connectivity, including upgrading infrastructure and decarbonising logistics systems, is crucial for sustainable growth and development within the region.

Furthermore, Dato’ Seri Wong Siew Hai highlighted the semiconductor industry’s increasing significance in the global economy, projected to double by 2030. He delved into the current sentiment of semiconductor supply chain decoupling sentiment between the two major countries, the US and China, while emphasising the role of ASEAN in this promising industry.

Dr Lili Yan Ing's Presentation 

Regional Outlook Forum 2024