Investing in Readiness: Vietnam as a Bright Spot in Asia
Vietnam’s economy has been one of resilience and steady growth and this success was based on strong fundamentals and policies developed over the past three decades.
Great power competition has Southeast Asia in a delicate balancing act that will require bold, forward-thinking action
By :The Bizruption Team Jan 31,2025 5-7 minutesAs the world waits with bated breath for the second coming of Trump, the Association of Southeast Asian Nations (ASEAN) is particularly focused on the developing situation in the White House.
A much-vaunted China tariff engagement strategy — expected to be more pronounced than Trump’s first term — could fall either way for ASEAN. In anticipation, Vietnam, Thailand, Malaysia, and Indonesia have already implemented “anti-dumping tariffs” on Chinese goods and services.
One could see emerging nuances and shifts in strategic approaches
So, with the world divided, countries are bracing for the opportunities and fallout from changing economic, trade, and geopolitical dynamics.
For the upcoming quarter, as it develops bizruption.asia will be speaking with business leaders, industry captains, “think tankers”, policy analysts and many more to get a sense of what it takes to thrive in the current climate.
Trade and Economic Partnerships In Flux
Based on its last term, we can reliably expect the Trump administration to reevaluate existing regional cooperative partnerships and trade deals. How much undoing of the Biden administration’s covenants and commitments will the new administration undertake remains to be seen.
According to Thomas Daniel, Senior Fellow of Foreign Policy and Security Studies at the Institute of Strategic & International Studies (ISIS) Malaysia, the real impact is likely to be felt on a one-to-one basis between individual ASEAN member states and Washington.
“(O)ne could see emerging nuances and shifts in strategic approaches. Southeast Asian countries would try to either proactively engage the U.S. or keep a low profile depending on their strategic interests. Washington’s focus on bilateral relations with specific countries in the region would be based on trade, political, and security priorities,” he said.
He said tariffs and trade barriers pose a serious threat to Washington’s trade relationships with the region’s economies. Indeed, countries like Vietnam, who hold trade surpluses with the U.S., stand to suffer as a significant exporter of textiles, electronics, and footwear to the very lucrative U.S. market.
Findings from by ISEAS–Yusof Ishak Institute over the years shows that China is consistently perceived to be dominant in the region.
On the flip side, a more protectionist, “America First” administration prioritising bilateral trade deals may present unique opportunities. These deals could address trade and labour offshoring imbalances, as well as gaps in intellectual property laws. For the Philippines, home to one of the world’s largest Business Process Outsourcing (BPO) sectors, this could be a game-changer.
The country has long had a special relationship with the U.S., but its intellectual property management has ample room for improvement. Additionally, increased diversification of low-cost manufacturing and infrastructure markets may drive Washington to pursue opportunities in Southeast Asia amid anti-dumping laws that curb Chinese goods and services.
The likes of Peter Thiel and Elon Musk have close links to the Trump administration. Can Southeast Asia leverage this relationship for its benefit?
Meanwhile, the more advanced Singapore could leverage its status as a hub for tech, finance, and international arbitration to foster deeper ties with Washington. With Elon Musk, Vivek Ramaswamy, Peter Thiel and other tech billionaires set to play significant roles in the incoming administration, the U.S. could seek out trade opportunities in technology, digital services, and e-commerce.
As a result, the new administration may focus on expanding US involvement and investments in Southeast Asia, particularly next-generation technology including Web3, e-commerce, e-government and cybersecurity. It is highly unlikely that the Trump administration will pursue joined up, overarching, umbrella strategies, but may remain tactical in the short to medium term to score quick wins. It remains to be seen what fate awaits initiatives like the Build Back Better World (B3W), but a similar infrastructure investment strategy would energise funding and financing to strengthen U.S. businesses in the region.
Key industry players such as AECOM, Liebert Corporation, Vertiv, Halliburton, Boeing operating in the region could benefit from U.S. protectionist policies that may have unseen economic expansionist policy effects akin to the post-Second World War Marshall Plan. This may provide a platform for U.S. tech companies like CISCO, AWS, Google, Meta, and Netflix to leverage the increased demand for solutions, with favourable trade agreements clearing the way for them to surge ahead in key markets.
But Washington’s tug of war with Beijing may also exacerbate friction around data privacy, cybersecurity, compliance and regulations, ensnaring the region’s growing middle class, who are major drivers of consumption of U.S. software and digital platforms.
China and the Indo-Pacific conundrum
With the new administration looking to counterbalance Chinese expansion in the Indo-Pacific, Southeast Asia could be the theatre where this great power battle plays out most sharply. The U.S. could push for, not only more favourable trade agreements with Southeast Asian countries, but possibly offer economic incentives and political coverage to reduce dependence on China, particularly in technology, infrastructure, and supply chains. How this plays out with Trump’s oft-stated isolationism remains to be seen.
Proactively maintaining them would make US intentions clear
Trying to counter Chinese supply chain influence could spark greater military involvement with key regional allies including the Philippines, Indonesia, Thailand, Malaysia, Singapore, as well as nearby Australia. For William Matthews, Senior Research Fellow of the Asia-Pacific Programme at Chatham House, defence partnerships will grow in importance for the U.S. strategic regional presence amid China’s growing military capabilities.
"Proactively maintaining them would make U.S. intentions clear. However, the other side of unintended ambiguity is that Beijing, long fearful of U.S. containment, perceives growing hawkishness as indicative of aggressive rather than defensive motives."
Regardless, the region’s future is at an interesting inflection point; expect a period of speculation, dialogue, negotiation, and collaboration for Southeast Asia and the ASEAN bloc. These regional economies will also need to demonstrate agility and nimbleness in policy making to be resilient over the next four years.
Whether it is feast or famine, bust or boom, policy makers, industry captains, and leaders need to display sophistication and layered thinking in problem solving.
Interesting times for those of us on the sidelines!
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