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What is Asean? | CNBC Explains
CNBC International
Overview
ASEAN, the Association of Southeast Asian Nations, is a 10-member economic and political alliance originally formed to promote regional stability during the Cold War. Despite significant economic disparities among its members, ASEAN collectively represents a major global economic force, ranking sixth worldwide and poised for future growth driven by its young, digitally-savvy population. The organization is increasingly courted by global superpowers like the US and China, particularly due to its strategic location and economic potential, leading to complex geopolitical challenges, especially concerning the South China Sea disputes, which ASEAN must carefully navigate to protect its interests.
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- ASEAN was founded in 1967 by five Southeast Asian nations (Thailand, Indonesia, Philippines, Singapore, Malaysia) during the Cold War.
- Its initial purpose was to foster regional stability and counter the spread of communism.
- After the Cold War, five more countries (Brunei, Vietnam, Laos, Cambodia, Myanmar) joined, bringing the total membership to 10.
- The alliance is geographically based, with all members located in Southeast Asia.
Understanding ASEAN's origins helps explain its foundational goals of stability and cooperation, which continue to influence its present-day actions and geopolitical positioning.
Founded during the Vietnam War to contain communism, highlighting its Cold War roots.
- ASEAN members have significant economic disparities, with Singapore's GDP per capita being 24 times higher than Cambodia's.
- Collectively, ASEAN is the world's sixth-largest economy, surpassing the UK, France, and India.
- The region is a global growth engine, with countries like Vietnam and the Philippines experiencing high growth rates.
- ASEAN boasts the third-largest labor force globally, with over 600 million people, and a young population (over half under 30).
Recognizing ASEAN's collective economic strength and growth potential is crucial for understanding why major global powers and businesses are increasingly investing in and engaging with the region.
ASEAN's economy is the sixth largest in the world, comparable to the UK's.
- Southeast Asians spend more time on mobile internet than any other population globally, indicating a vibrant digital economy.
- The digital economy in ASEAN is projected to reach $200 billion by 2025, attracting major tech companies.
- The EU is ASEAN's largest investor, while China is its biggest trading partner.
- Despite a dip in overall foreign direct investment in 2016, significant investments from the EU and China were noted.
This highlights the significant opportunities and growing importance of ASEAN in the global digital landscape, making it a key market for international businesses and investors.
Tech giants like Google, Facebook, and Alibaba are actively competing for a share of ASEAN's digital market.
- ASEAN is situated amidst ongoing superpower rivalry, particularly between the US and China.
- The South China Sea dispute, where China claims vast territories also claimed by four ASEAN nations, is a major point of contention.
- The US conducts 'freedom of navigation operations' in the region, while China engages in large naval displays, increasing regional tensions.
- Disagreements over how to handle China's claims have previously led to ASEAN's inability to issue a joint statement, exposing internal divisions.
ASEAN's strategic location and economic importance make it a focal point for superpower competition, forcing member states to carefully balance relationships and navigate complex geopolitical issues like the South China Sea.
In 2012, ASEAN failed to issue a joint statement on the South China Sea issue due to disagreements among member states on how to address China's claims.
- ASEAN member states have varying approaches to international relations, with some aligning with superpowers and others maintaining ties with both.
- Countries like India, Australia, and the EU are seeking to deepen their engagement with ASEAN.
- ASEAN aims to avoid being forced to choose sides between major powers, seeking to maintain its autonomy.
- Upcoming negotiations for a code of conduct in the South China Sea with China present a significant challenge for ASEAN.
ASEAN's ability to maintain its unity and strategic autonomy while managing relationships with global powers is critical for its continued economic growth and regional stability.
Singapore, as the ASEAN chairman, faces the challenge of hosting talks on a code of conduct for the South China Sea amidst escalating tensions.
Key takeaways
- ASEAN is a significant economic bloc with substantial growth potential, driven by its large, young, and digitally active population.
- The alliance's geopolitical importance stems from its strategic location, making it a key area of competition for global superpowers like the US and China.
- Despite internal economic disparities, ASEAN functions as a unified economic powerhouse on the global stage.
- The South China Sea dispute poses a major challenge to ASEAN's unity and its ability to act cohesively on the international stage.
- ASEAN members strive to maintain strategic autonomy, balancing relationships with major powers to safeguard their economic interests and regional stability.
- The digital economy represents a rapidly growing sector within ASEAN, attracting significant investment and attention from global tech giants.
Key terms
ASEAN (Association of Southeast Asian Nations)Cold WarCommunismGDP per capitaForeign Direct Investment (FDI)Digital EconomySouth China Sea DisputeFreedom of Navigation OperationsCode of Conduct
Test your understanding
- What was the primary motivation for the founding of ASEAN?
- How does ASEAN's collective economic power compare to other major global economies?
- What makes ASEAN's digital economy particularly attractive to international businesses?
- Why is the South China Sea a point of contention involving ASEAN and global superpowers?
- How do ASEAN member states attempt to navigate the geopolitical pressures from the US and China?