THE PAST WEEK
China-Asean FTA to help spur growth
China aims to increase and bring forward engagement with ASEAN in order to enact the upgraded free trade agreement, as both sides aim to drive regional and global economic growth. Read more.
Summary: Ahead of the 23rd China-Asean Expo, Yan Dong, vice-minister of commerce, has commented on China’s ambitions to increase policy support to help businesses take advantage of opportunities created by China-ASEAN Free Trade Area. The two sides intend to implement the CAFTA 3.0 Upgrade Protocol, the latest stage in the evolution of the China-Asean FTA. This reflects the 3rd version of it, with its first implementation coming in 2010 whilst its subsequent version in 2019.
Amidst a period of risks and challenges towards more supply chain fragmentations, the upgrade of the FTA has derived from intentions to fortify and maintain resilience and stability in supply chains due to its growing significance in global economic growth. Emerging areas such as the digital economy, green development, artificial intelligence, digital technologies, blue economy along with strengthening links across aspects of research, manufacturing and commercial applications will be increasingly invested in.
Simultaneously, the FTA has not only enhanced regional connectivity but created new opportunities in the form of business ties, specifically for Chinese exporters. Resources such as diesel, gas generator sets, hydrogen fuel cells and materials needed for modular housing have had an increasingly high demand from the ASEAN market, specifically from Indonesia and Vietnam.
Asean ‘compelling’ for businesses looking for long-term growth amid tensions
Amidst a time of high amounts of tariffs and trade restrictions for businesses to conduct their work, ASEAN may provide a solution to be the next area of stability, reliability and opportunity for long-term growth. Read more.
Summary: Singapore’s Minister for Trade and Industry, Tan See Leng has advocated for the future of ASEAN as a business hub, promoting its aspects of resilience, continuously deepening integration among ASEAN member states, and openness towards the rest of the world. He continued to promote ASEAN by discussing the numbers surrounding the region - world’s 4th largest economy with a GDP of US$4 trillion, growing by 4.5% from 2025 and drawing 15% of global foreign direct investment, the equivalent of US$240 billion.
These numbers represent deep economic linkages within ASEAN that businesses can take advantage of to access regional production networks and consumer markets. Furthermore, in response to the recent energy crisis, ASEAN countries have grown to be able to adapt to shocks by working towards the official approval of the ASEAN Petroleum Security Agreement, meant to tackle future oil and gas supply disruptions.
Not only that but also the promotion of an upgraded ASEAN Trade in Goods Agreement, in order to strengthen the rules governing trade and signing the Digital Economy Framework Agreement, to set out rules and regulations on cooperation in emerging technology industries. Tan emphasises on ASEAN’s continued engagement not only regionally but also outside of the ASEAN sphere, such as upgrading the ASEAN-Australia-New Zealand FTA, ASEAN-Korea FTA and discussions for an upcoming FTA with Canada.
Business Tour to Three Southeast Asian Countries Concluded Successfully Forging a New Bridge for Economic, Trade, and Tourism Collaboration between Macao and ASEAN Countries
A delegation from the Macao SAR Government has recently hosted the Macao SAR Government reception and the Macao Economic, Trade and Tourism Investment Promotion Seminar in Singapore, Malaysia and Indonesia. The delegation concluded their eight-day trip by forging a new bridge for economic, trade and tourism collaboration between Macao and ASEAN. Read more.
Summary: Said receptions and seminars have fortunately led to the signing of 189 agreements between stakeholders from Macao, Hengqin, Chinese mainland and institutions and associations from Singapore, Indonesia and Malaysia. Each country received their fair share of projects, with Singapore signing off 82 projects, Indonesia 45 projects and Malaysia 65 projects. These projects will encompass various sectors ranging from high technology, cross-border e-commerce, muslim-friendly tourism and investment and financing services, laying the groundwork for long-term economic, trade and tourism co-operation networks.
Specifically in the tourism sector, the Macao Government Tourism Office (MGTO) signed memoranda on cooperation with various groups such as Crescent Rating, a muslim tourist research group, the National Association of Travel Agents Singapore (NATAS), Indonesian Travel Agents Associations (ASTINDO), Malaysian Association of Tour and Travel Agents (MATTA) to name a few.
On the other hand, in the investment sector, Macao’s Commerce and Investment Promotion Institute (IPIM) has also signed co-operation agreements with Chinese business chambers in the three countries, along with the Lyfe Capital Equity Investment Management, a Shanghai investment firm. The agreements will lay the foundation for a more comprehensive business network between Macao and Southeast Asia that will add support towards the initiation of future investment projects in Macao.
Through a variety of promotional initiatives and incentives such as discounts for travelling customers in Macao and special travel offers in the three countries, the MGTO has shown their dedication of tapping into the Southeast Asian visitor market and showcasing the potential of Muslim consumers, in attempts to expand international markets.
Thus, the tour has been framed as a part of Macao’s intentions to engage and support the ‘Belt and Road’ initiative. By reinforcing the economic, trade and tourism engagements with Southeast Asian countries, expanding overseas markets and seizing business opportunities with various nationwide associations, the Macao SAR government will be able to implement more tangible projects with the support of stable external momentum that will diversify Macao’s economy.
After the Gulf Crisis: Rethinking ASEAN Energy Security through Regional Grid Governance
The recent Gulf Crisis is pushing ASEAN member states to rethink energy security as it moves beyond oil and gas and instead towards a riskful power grid integration. Read more
Summary: Energy security in the region has been long shaped by access to affordable oil and gas resources. However due to high dependence on exporters, price volatility and critical maritime routes, this older model of securing energy security has been deemed vulnerable. With the Middle East supplying 95% of Philippines oil imports and 49% of Vietnam’s gas imports, the need to redefine the energy security risk is imminent, thus the shift towards a cleaner electrification to represent long-term resilience planning.
Electrification will not only reduce exposure to oil and gas vulnerabilities but increase electricity demand, which in return will rely on grid stability, secure supply chains, cross-border governance and cybersecurity. ASEAN leaders have combined short-term petroleum security measures via the ASEAN Framework Agreement on Petroleum Security (APSA) for a strong emergency response mechanism and long-term shifts to diversify the energy system through renewables, biofuels, electric vehicles and cross-border power connectivity projects such as the ASEAN Power Grid (APG).
Simultaneously, said electricity shift has been spearheaded by rising electricity demand as regional power demand has grown by upwards of 60% between 2015-2025 and will continue to rise by 4% annually through 2035, creating a growing energy security concern. To tackle this growing demand, ASEAN will need over US$300 Billion worth of investments in grid expansion and modernisation between 2025-2040. In 2025, ASEAN’s cross-border interconnection capacity stood at 7.7 gigawatts (GW) but will however need to double that amount by 2040.
However, deep regional grid integration may expose ASEAN to additional risks ranging from exposure to geopolitical and climate disruptions, increased dependencies to support electrification, increased cross-border coordination to regulate the supply and demand of electricity and securing a robust and stable digital security system. Thus, ASEAN via organisations such as the ASEAN Power Grid Consultative Committee (APGCC), the Heads of ASEAN Power Utilities/Authorities (HAPUA) and the ASEAN Power Grid (APG) Task forces to name a few have set out regional arrangements to tackle these risks.
Philippine peso left behind in Asia as oil shock erodes dollar reserves
Whilst other Asian currencies have thrived against the Dollar, the Philippine Peso has found itself to be the region’s worst-performing currency, hitting a record-low of 62.77. Read more.
Summary: Whilst each country suffers economic blows from rising oil prices, unlike neighbouring nations that have the ability to bring in dollars using exports of commodity and manufacturing to cushion this blow, Philippine’s heavy reliance on their service sector has seen its trade deficit widen and inflation surge. Due to the increase in oil import prices, Manila’s trade gap has also widened by 29%, which in return has caused Philippines foreign reserves to fall by 9%.
In response to this, President Ferdinand Marcos Jr and Central Bank Governor Eli Remonola have stated that acts to tackle the Peso’s decline by drawing upon foreign reserves may be pointless, in hopes of soothing volatility. Whilst other countries have also seen their currencies value decline by higher oil prices, countries like India and Indonesia have taken measures to mitigate the destructive repercussions of the surge in oil prices such as mobilising US$127 Billion from their diaspora and aggressively raising interest rates .
With that, the Philippines have enacted plans to counteract the Peso’s volatility such as the intervention of monetary authorities and the use of monetary tools to manage inflation. However, while neighbouring countries have all been hit by catastrophic repercussions of the surge of oil prices, data has shown that Phillipine’s GDP growth has slowed to 2.3% compared to India’s 7.8% and Indonesia’s 5.3% whilst its consumer prices rose by 6.1% instead of a targeted 3%. This has prompted the Philippines to be called an ‘Outlier’.
Thus, analysts see the Peso weakening even further, putting borrowers with a foreign-currency debt in an even harder position to repay. Given the predicted situation, the Philippine government may decide to sell five-year jumbo bonds to counter the weak Peso and rising interest rates. Amidst this, a wider fiscal deficit, slow growth and political noise has also added pressure towards a declining peso.
STRATEGIC INSIGHTS
Southeast Asia's AI Advantage Is Real. And DEFA Arrives at Exactly the Right Moment
As November approaches and Digital Economic Framework Agreement (DEFA) conversations begin to take shape, enterprises across ASEAN find themselves at a critical juncture, one where the central question being asked is no longer whether digital transformation matters, but rather how the region can position itself to lead, not follow, in the digital economy. The data on AI adoption offers a clear and compelling answer to this question.
The chart before us maps AI adoption across five distinct stages, beginning with those still experimenting with pilots and extending all the way through to organizations where artificial intelligence has become fully embedded within their operations. What stands out most immediately is this: 73% of Southeast Asian companies have already moved beyond the pilot stage and into more advanced phases of adoption. They are either actively scaling AI across their operations or have already achieved full deployment.
When we compare this figure to what we see globally, 63%, or to adoption rates in the United States, or even to broader Asia-Pacific figures, the distinction becomes clear. Southeast Asia is not keeping pace with these regions. It is ahead of them. This difference is not marginal or easily dismissed. The visual distribution of the chart tells the story with unmistakable clarity. The darker navy sections represent companies where AI is fully scaled, where the technology has become embedded into the fabric of how work actually happens. The lighter blues show organizations in active scaling phases, where deployment is underway across meaningful parts of the business. What is particularly striking is how much of Southeast Asia's bar concentrates precisely in these more advanced stages. The green segments, which represent companies still in pilot phases, occupy noticeably less space. The orange sections, representing companies with no AI use at all, are proportionally smaller than in other regions.
The reasons underlying this momentum are worth understanding. Southeast Asia benefits from a workforce that is notably younger and has grown up accustomed to mobile-first solutions as a default. The region's talent costs remain competitive, which allows organizations to experiment and iterate more rapidly than in mature markets with higher operational expenses. But beyond these structural advantages, there is something else at work. There is a sense of momentum itself. When peers are scaling AI capabilities, the pressure to move accelerates throughout the region, creating a virtuous cycle where adoption begets further adoption.
Why this matters for DEFA: ASEAN's competitive position in the global economy ultimately depends on enterprise productivity and the speed at which innovation can be deployed and scaled across sectors. Faster AI adoption is not simply a matter of technology deployment or the successful implementation of new tools. It represents a fundamental reshaping of how work operates within organizations, how business decisions are made with greater speed and insight, and how value gets created throughout the broader economy. If Southeast Asia can sustain this current pace of AI adoption, and the data suggests the conditions are in place to do so, the region will move beyond the familiar pattern of following global trends and will instead begin to set them.
This analysis is based on a survey of 330 respondents from companies actively using AI, distributed across six Southeast Asian countries: Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam conducted by McKinsey. The sample spans ten industries, including advanced industries, financial services, consumer goods and retail, technology, telecommunications, and others, representing a cross-section of company sizes and sectors across the region.
Source: AI in Southeast Asia: An era of opportunity, report from EDB Singapore
THE WEEK AHEAD: STRATEGIC WATCHLIST
23rd China-ASEAN Expo (17 - 21 September 2026)
Why it matters: The China–ASEAN Expo (CAEXPO) is an important platform for strengthening economic and commercial ties between China and ASEAN, bringing together governments, businesses, investors and trade representatives from across the region. Its significance extends beyond business networking, as the expo provides a window into the evolving direction of China–ASEAN trade, investment and regional supply chains.
The 2026 edition is particularly relevant as ASEAN and China continue to deepen economic integration through the ASEAN–China Free Trade Area and the implementation of the upgraded CAFTA 3.0. The expo can help reveal where new commercial opportunities are emerging, particularly in manufacturing, agriculture, digital industries, logistics and cross-border trade. It also provides an indication of how Chinese companies are positioning themselves within ASEAN markets and regional production networks.
Source: China-ASEAN Expo
58th ASEAN Economic Ministers Meeting (AEM) and Related Meetings (14 - 22 September 2026)
Why it matters: The 58th ASEAN Economic Ministers’ Meeting (AEM) is a key platform for shaping ASEAN’s economic integration and trade agenda. The meeting comes at an important time as ASEAN seeks to deepen regional economic cooperation while navigating global trade fragmentation, shifting supply chains and increasing digitalisation. Discussions on the ASEAN Trade in Services Agreement and Priority Economic Deliverables will provide signals on the bloc’s progress towards reducing barriers to intra-ASEAN trade and strengthening the regional business environment.
The meeting is also significant for ASEAN’s digital economy, particularly efforts to advance the ASEAN Digital Economy Framework Agreement (DEFA). Progress on DEFA could establish common rules for digital trade, data flows and the wider digital economy, with implications for ASEAN’s competitiveness and ability to attract technology investment.
Source: ASEAN Economic Ministers Meeting
Tech in Asia Conference 2026 (15 - 16 September 2026)
Why it matters: Tech in Asia Conference 2026 is particularly relevant as Southeast Asia moves from experimenting with AI to deploying AI at scale. Held in Singapore on 15–16 September, the conference brings together more than 1,500 enterprise leaders, technology companies and AI builders, with a strong focus on practical deployment, infrastructure and business adoption rather than AI hype.
For ASEAN, the event provides a useful window into how businesses are responding to the rapid diffusion of AI and what infrastructure, skills and investment will be required to support adoption. Its focus on AI infrastructure, enterprise implementation and measurable productivity gains is particularly relevant to discussions around ASEAN's digital transformation and the emerging compute economy. The conference is also strategically relevant to future-of-work debates. As companies integrate AI into operations, the technologies showcased and discussed can provide early signals of which tasks and occupations are likely to be transformed, alongside the skills enterprises will increasingly demand.
Source: Tech in Asia Conference
