Five Reasons to Watch Southeast Asia

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Photo by Emma Campbell-Mohn

Photo by Emma Campbell-Mohn

By Emma Campbell-Mohn.

Nestled between China in the North and India in the East, Southeast Asia seems like merely a dot in a world where political conflicts dominate the news. It will likely slip past the above-the-fold headlines of the war-torn regions in Northern Africa, the Levant and Eastern Europe. In 2014, pundits such as Professor William Inboden claimed the Obama Administration focused its energy on the Middle East, not Asia, as it was daunted by the threat of ISIL. Yet, Southeast Asia, which includes countries such as Indonesia, Malaysia and Thailand, could dramatically impact U.S. foreign policy over the next ten years. From free trade agreements to political frameworks, here are five reasons to watch Southeast Asia.

1. The Transpacific Partnership

During her tenure as Secretary of State, Hilary Clinton wrote,  “the future of politics will be decided in Asia…and the United States will be right at the center of the action.” Indeed the Obama Administration stresses the importance of its Rebalance to Asia, also known as the Asia Pivot. Officials ranging from Deputy National Security Advisor Benjamin Rhodes to Former Assistant Secretary of State Kurt Campbell tout the importance of Asia in American foreign policy. As part of the Obama Administration’s strategy towards Asia, the Trans-Pacific Partnership (TPP) aims at establishing free trade between the US and Asian countries that meet TPP’s requirements, including Singapore, Malaysia and Vietnam.  Most discussion involving TPP focus on Japan’s agricultural policies; however, the benefits are clearly reaped by Southeast Asia. According to Former Deputy Secretary of the Treasury Roger Altman and President of the Council on Foreign Relations Richard Haas, a free trade agreement would not only “stimulate growth,” but it would also counterbalance against China’s growing economic influence.  While President Obama and other policymakers push for TPP to pass this year, the relevance and impact of Southeast Asia will increase as economic ties strengthen between the United States and the Southeast Asian countries.

2. Indonesia’s Booming Potential

Currently, Indonesia is the 16th largest world economy with the 4th largest population in the world, but experts from McKinsey&Company predict that Indonesia will be the 7th largest economy by 2030, greater than both Germany and the United Kingdom. Why the big leap? In part, Indonesia’s relatively small GDP belies the size of its large population because Indonesia’s political and economic landscape discourages foreign investment. However, with the elections of 2014, Indonesia’s political climate may be changing. President Joko Widodo promised reform in his campaign suggesting the rise of the new Indonesia with the potential to be the next Asian tiger. Similarly, foreign direct investment in Indonesia greatly increased by 16.2% in 2014, indicating rising economic promise.

Yet, Indonesia is far from achieving rapid growth. Allegations of corruption and protective economic policies still stymie its economic potential. President Widodo’s initial momentum faltered when his Presidency became embroiled in scandal involving an allegedly corrupt police chief. The Indonesian labor department also plans to unveil a new rule requiring foreign workers to speak Bahasa Indonesia – a hindrance to foreigners working in the country. These scandals and protective policies not only damage Indonesia’s image but also inhibit its growth into a rising power.  If the Widodo Administration contains corruption and encourages foreign development, Indonesia will likely become one of the key global markets.   

3. The Straits of Malacca

Indonesia isn’t the only reason that Southeast Asia will become increasingly important during the coming years. This region houses the Straits of Malacca: a shipping choke point located between Malaysia, Indonesia and Singapore. In addition to 50,000 merchant ships navigating its waters, 13.4 millon barrels of crude oil passed through the 1.7-mile wide gap in the Strait.  This oil is then used around Asia including in Indonesia, Japan and South Korea. Indeed, 70 to 85% of China’s imported oil travels through Malacca. As China’s global presence rises, so too will its reliance on the Strait of Malacca for trading purposes.

4. South China Sea

The most commonly discussed problem in Southeast Asia is China’s increasingly militarized presence in disputed territories. Last week, the Wall Street Journal reported that China is building “fake” islands in contested waters. These “artificial island fortresses expand China’s military presence, thereby deterring other countries from pursuing claims in contested waters. Southeast Asian countries, most notably the Philippines and Vietnam, engage in small skirmishes with the Chinese military in defense of what they believe is their rightful territory. This conflict is unlikely to be resolved in the coming months as the Philippines takes its territorial grievances to the United Nations.

5. ASEAN

Lastly, Southeast Asia is not merely a potential flashpoint or a geographical designation. The Southeast Asian countries organized themselves into a political bloc known as Association of Southeast Asian Nations, or ASEAN. While some fault ASEAN for lacking substantive means of uniting distinctly unique cultures and countries, ASEAN provides a framework for discussing regional issues. As ASEAN states grow in prominence, this unifying body will likely becoming increasingly important.

Southeast Asia is on the rise. Whether examining Indonesia or the South China Sea, there is no doubt that this region will be strategically important in the coming years. Yet, exactly how the U.S. will interface with the rising Southeast Asia remains an unresolved question. Whether you are interested in business, politics or culture, Southeast Asia will increasingly play an important role in world affairs.




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