The ASEAN countries represent a huge market. Taken together, they have a population of about 625 million people, skewed heavily toward youth, with 65 percent of the people under 35. Their combined economies make Southeast Asia one of the fastest growing regions in the world, with five of the countries ranked among the top 25 in the world as measured by gross domestic product (GDP) growth. Singapore’s GDP per capita ranks among the top 10 in the world, higher than that of the U.S., and Indonesia’s GDP also ranks in the top 10. However, the individual and collective fortunes of the ten members and two observers has been less than rosy in recent years.
Thailand has been at the forefront of the nosedive. Already in a decline when Yingluck Shinawatra was leader, the ruling military junta of General Prayut Chan-o-cha has done little more than push the yoke forward. In 2015 alone, Thailand lost tens of billions in GDP growth, the baht slumped to six year lows, FDI sank by over 1/3, exports dropped by 5 percent, and household debt is higher than it’s been in a decade. Moreover, human rights have cratered, while the elections initially slated for 2014 saw three postponements, the latest to 2017 after the military council rejected a draft constitution.
General Prayut, in seeking a way out of the economic disaster, has embarked on an economic plan strangely similar to that of his predecessor. The only difference this time is adding in a white elephant or two. Upon taking power, Prayut appointed Somkid Jatusripitak, former deputy prime minister and commerce minister under the Shinawatra government, to be leader of his government’s economic policy rollouts. Also upon taking power, the Prayut government began a $75 billion program of building road and railway projects. Though impressive in theory, the project does not address the structural problems with the Thai economy.
Indonesia is faring scarcely better. President Joko Widodo, immensely popular due to his perceived status as an outsider to the Indonesian political scene, has done precious little to improve upon the economy he inherited upon taking office last October. He promised seven percent growth, but he’s delivered 4.9 percent, the lowest since 2009. The Indonesian economy has been hamstrung by the precipitous drop in the natural resource markets that make up close to half of the country’s exports. For instance, the price of coal, which was at record highs not long ago, has plunged below 2009 “crisis levels” for the first time in five years, making it one of the world’s worst-performing commodities. The government has attempted some stimulus packages intended to kick-start the economy, but they have been little more than window dressing.
Although the outlook is dire for many of ASEAN’s members, others have fared much better. For instance, Malaysia has been able to avoid the economic malaise brought by China’s slumping economy. The country experienced a growth in GDP of 5.3 percent, and agrees with the International Monetary Fund’s projection of 4.7 percent for the entire year. In order to counterbalance the bottoming-out of the crude oil market, Malaysia has taken several measures, including various cash infusions in certain sectors of the economy and lowering of certain tariffs on spare parts and natural resources. As such, Malaysia has one of the healthiest economies in the region, with low unemployment, low debt, and high savings.
The 2016 budget, announced on October 23, predicts strong growth next year of 4 percent to 5 percent, along with a lower budget deficit meant to ensure the country maintains it’s investment grade rating for its sovereign debt. This is a positive outlook for the country’s first budget of the 11th Malaysia Plan, a five-year plan aimed to lift Kuala Lumpur from emerging status to developed nation by 2020.
China’s economic quagmire, brought about by Beijing’s need to restructure its economy away from low-cost manufacturing as salaries inched upwards, has severely shaken the finances of South East Asian economies. However, just over the horizon for the region is the looming economic impact of the Trans-Pacific Partnership (TPP). Two of the “biggest winners” in the opinion of the Eurasia Group are Vietnam and Malaysia. The TPP is projected to increase the Vietnamese GDP 11 percent in ten years primarily by increasing exports by up to 28 percent. Help for Malaysia is also in the works as well, due to reduced trade barriers for the various natural resources it exports. Additionally, Singapore’s leadership, with a recession hot on the country’s trail as evidenced by a continuing contraction of its economy, have lauded the TPP as creating “a pathway towards a free-trade area” for the region.
Though the going is tough for some members of ASEAN, the future looks bright for many, if not most, of them. For a select few, the bright future is now.
