South East Asia, under the banner of ASEAN, is becoming an increasingly important region in international global affairs. 2014 could prove to be a crucial year for ASEAN. After years of sustained growth and political stability, the region is seeing rising tensions and risks of an economic slowdown. Add in external threats, such as China’s rising power, and 2014 could set the stage for years to come.
No one can predict the future, but that shouldn’t stop us from trying. These following three scenarios could have huge impacts on the regional and national development of ASEAN and its member states.
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Asia’s economies will suffer from a rough ride
Most ASEAN countries have enjoyed high economic growth over the last few years. Spurred by increasing FDI and burgeoning middle classes, South East Asia has become a global economic hotspot. Many investors may be hoping to see continued good returns throughout 2014, but building property bubbles, rising national debt, political instability could dash their dreams.
Property bubbles appear to be building in Singapore, Malaysia, and elsewhere. Debt levels, and especially debts held by companies and private individuals, have also been rising. Meanwhile, more developed countries, such as Malaysia, are losing their cost advantages, while developing countries such as Indonesia are having trouble moving up the value chain. Myanmar has enjoyed a great year, but “out-the-gate” exuberance often ends with a cool-off.
On top of these trends, there is the soon-to-be-discussed political instability currently affecting many ASEAN countries, and the end of the United States’ quantitative easing programs, which will cause credit to tighten across the region. Now add in what will likely be stagnant demand from the West, potential economic instability in China, and the need to tighten public finances, and there are plenty of reasons to be downbeat on the economic potential of ASEAN as a whole.
Internal political instability will continue to mount
The fortunes of ASEAN countries have increased substantially over the last few years. A funny thing happens, however, as people grow wealthier and become interconnected with the world through the world wide web. They start to demand more, especially of their governments.
Already, Singapore has suffered its first riot in generations, while Cambodia and Thailand have been rocked by protests. The Philippines’ government has been forced into action by its activist-minded citizens, and the long-ruling coalition in Malaysia was nearly thrown out of power in spring elections.
Leaders across South East Asia may be hoping for a reprieve, but their wishes won’t be answered. Protesters appear to be on the verge of bringing Thailand‘s government down, and even if they fail to achieve that goal, the power of the ruling party will be greatly diminished, and that means elections will follow shortly thereafter.
Meanwhile, in Singapore the People’s Action Party will continue to be pressured into moderate reform. With elections slowly approaching for the PAP, the government will ramp up social spending and look to take a softer, less parental stance in its relations with society. Malaysia will likely see a massive Bersih Rally in 2014, and the ruling government will be left shaking in its boots, but not faced with the threat of being overthrown. The opposition, however, will begin building a strong platform for elections in 4 years.
The Philippines will be forced to push forward with efforts to crack down on corruption and reform the government. Mynamar, meanwhile, could see the emergence of new civic society groups and the nascent formation of activists. While these actors might not present much of a threat in 2014, they will lay the foundation for things to come.
Regional political integration will grow tighter
While many regional economies may suffer from setbacks and bumps in the road, and political instability will likely mount in many countries, ASEAN as a whole will grow more tight-knit. This will have less to do with loving thy neighbor, and more to do with the increasing threat from China and other regional powers.
ASEAN countries are finding themselves increasing pushed into the world stage, but with most countries being small in terms of population, and lacking advanced military capacities, they will quickly come to realize that strength lies in numbers. On their own, no ASEAN country has the potential to emerge as a world power in the near future. Combined, ASEAN could be a regional force to reckon with.
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