ASEAN Should Hope for the Best But Prepare for the Worst in 2025

As 2025 ASEAN Chair, Malaysia faces significant challenges, including Myanmar’s crisis, South China Sea tensions and geopolitical shocks from the US–China rivalry. To ensure ASEAN makes it through the year not only unscathed but even stronger, Malaysia should use its chairmanship to drive deeper regional economic integration, further develop economic instruments like the ASEAN-China Free Trade Agreement 3.0 and promote diplomatic solutions to ASEAN members states’ deep divisions.
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The new normal for any ASEAN Chair is the expectation of having to manage a crisis, if not multiple crises, amid an increasingly hostile geopolitical environment. The Myanmar conflict and South China Sea crisis will have repercussions for ASEAN throughout 2025.
The Myanmar crisis is the most severe test of ASEAN’s internal unity to date. In the absence of a common position, the grouping’s approach to the crisis remains its most divisive issue, with some members keen to bring Myanmar back into the fold as quickly as possible, while others insist on staying true to a ‘Myanmar-owned, Myanmar-led’ process. Given the divergent interests of ASEAN member states and that of key external partners — such as China’s — support for the junta’s election plans, as the 2025 ASEAN Chair, Malaysia would need to carefully balance and engage stakeholders with parity.
The South China Sea is becoming a serious potential flashpoint for ASEAN, with severe repercussions for global security and trade. 2024 was marked by episodes of heightened tensions and provocations between China and the Philippines which are likely to continue in 2025 and possibly worsen.
Malaysia should use its chairmanship to elevate confidence-building measures and preventive diplomacy at the ASEAN–China level to reduce the risk of conflict in the South China Sea. As a claimant state, Malaysia has direct stakes and would be well-placed to start the ball rolling. But given Malaysia’s significant trade relations with China, it remains to be seen how much leverage Malaysia has. Malaysia’s best course of action will be to keep the South China Sea Code of Conduct negotiations channel open.
As 2025 ASEAN Chair, Malaysia faces heightened geopolitical tensions, increased economic fragmentation, rising protectionism, nationalism, revisionism and consequences of the growing China–US rivalry in the region.
Of these issues, the most concerning is the United States’ unpredictable turn towards insularism and increasingly protectionist measures. Trump’s ability to disrupt the liberal international order is alarming for many moderate countries of the Global South that are used to operating in a stable global order that respects international law and promotes free trade.
But Malaysia–US bilateral relations have been tense under Prime Minister Anwar Ibrahim largely due to the US position on the Gaza war which runs counter to Malaysia’s support for the Palestinian cause. This is juxtaposed with the excellent relationship that Malaysia currently enjoys with China. With Malaysia as Country Coordinator for ASEAN-China relations until 2027, it is likely that Malaysia may place more emphasis on ASEAN–China relations and less on developing ASEAN–US relations at a time when the incoming Trump administration is showing signs of disinterest.
Malaysia has formally invited China to attend the ASEAN–Gulf Cooperation Council (GCC) Summit in May 2025. This proposal took observers by surprise as the first ASEAN–GCC Summit was only in October 2023. It is unclear what China’s role will be at the second ASEAN–GCC Summit, but the rationale behind this proposal could be to build on China’s deep economic linkages with both regions to find greenfield opportunities. This summit will also give Anwar an opportunity to showcase Malaysia’s leadership in South–South cooperation, as evident in Malaysia’s stated ambitions to join BRICS.
Malaysia’s best bet is to continue to drive deeper regional economic integration. Notwithstanding Trump’s threats to impose tariffs on friends and foes alike, an economically integrated ASEAN yields many benefits. To ASEAN’s credit, despite the challenges of the COVID-19 pandemic and economic shocks in recent years, ASEAN has continued with key upgrades to make ASEAN’s economic instruments fit-for-purpose. These upgrades include the ASEAN–China Free Trade Agreement 3.0, the ASEAN Trade-in-Goods Agreement and the expansion of the ASEAN Single Window with key trading partners.
Under Malaysia’s watch, the region will see the adoption of the ASEAN Community Vision 2045 at the 46th ASEAN Summit in Kuala Lumpur in late 2025. This will set ASEAN’s strategic direction for the next 20 years. There is much at stake for Malaysia as the co-Chair of the High-Level Taskforce on ASEAN Community’s Post-2025 Vision. It is incumbent on Malaysia to ensure that the final ASEAN Community Vision 2045 is able to future-proof ASEAN.
The second major milestone in 2025 is the conclusion of the ASEAN Digital Economy Framework Agreement (DEFA). Negotiations have been fast-tracked and are expected to conclude by the end of the year. The Agreement will be the world’s first regionwide digital agreement that offers a comprehensive roadmap to accelerate digital trade in services, e-commerce, digital payment systems and more. The DEFA is projected to value-add some US$2 trillion to ASEAN’s economy by 2030 and pave the way for ASEAN to facilitate a greater volume of digital trade with its dialogue partners.
But ASEAN may run the risk of deepening the digital divide in the region. As part of the ASEAN digital community discussions, Malaysia can bridge this divide with a focus on enhancing digital education and access across the region.
Malaysian Prime Minister Anwar Ibrahim has already set the stage for Malaysia’s ASEAN Chairmanship by announcing the appointment of informal personal advisers. These advisers include former Thai prime minister Thaksin Shinawatra, former Indonesian foreign minister Retno Marsudi and former Singaporean foreign minister George Yeo. There remains much scepticism about Anwar’s ‘ASEAN study group’, with some observers seeing this advisory team as performative on Anwar’s part.
For the last 50 years, ASEAN has been a beneficiary of a free, stable global environment. But with the changes Trump’s presidency will usher in, the biggest challenge for Malaysia, as Chair of ASEAN, will be figuring out how to navigate these changes and find opportunities for ASEAN to continue to thrive in unfamiliar territory.
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Sharon Seah is Senior Fellow and Coordinator at the ASEAN Studies Centre and the Climate Change in Southeast Asia Programme, ISEAS–Yusof Ishak Institute, Singapore.
This article is part of an EAF special feature series on 2024 and the year ahead.
Featured image is from EAF
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