2024 was an eventful yr in ASEAN. Clear power had its ups and downs throughout the area, tourism and journey continued their gradual restoration towards pre-pandemic ranges, and international locations like Thailand pushed forward with massive fiscal spending packages. However, if we glance again on 2024 and attempt to pinpoint probably the most noteworthy developments it actually comes down to 1 story: protectionism and financial nationalism are on the rise, and it doesn’t seem to be they’re going away anytime quickly.
There are literally two elements to this story. The primary entails states making an attempt to spice up home manufacturing by intervening straight out there via fiscal and tax coverage. Thailand has been fairly energetic right here, providing beneficiant subsidies to customers who buy electrical autos, and enticing phrases to international firms that put money into native EV manufacturing. In actual fact, the coverage has been so profitable that the Thai market is now susceptible to becoming over-saturated with EVs, primarily from Chinese language firms.
The second is the expanded use of commerce instruments, similar to tariffs and bans, to guard home business and undercut international opponents in pursuit of industrialization. We’ve seen an uptick in this sort of protectionism this yr, with Indonesia main the pack. In 2024, the ban on nickel ore exports to spice up downstream industrialization continued apace, with the state now trying to purchase extra direct possession of nickel smelters.
Indonesia has additionally been aggressively utilizing market entry to attempt to safe higher phrases of funding and commerce from international counterparts. The Ministry of Commerce is blocking the latest iPhone from the Indonesian market until Apple makes concessions on funding commitments. Chinese language e-commerce platforms have acquired the identical therapy, with Indonesian regulators maintaining low-cost retailers like Temu out of the market. Vietnam additionally banned Temu a couple of weeks in the past, which exhibits that utilizing commerce and market entry on this method is changing into more and more normalized across the area.
That is clearly not a uniquely Southeast Asian phenomenon. The USA is pursuing its personal industrial coverage with the CHIPS and Inflation Discount Acts. The re-election of Donald Trump ought to take away any doubt that the overall thrust of American coverage is now bending towards home pursuits on the expense of a free and open system of world commerce. And China has clearly been utilizing varied levers of commerce and industrial coverage for a few years to drive financial progress, most not too long ago trying to supercharge manufacturing to assist offset weak spot in different sectors.
Rising protectionism and financial nationalism in Southeast Asia needs to be seen as a response to this bigger international development. In each Indonesia and Vietnam, for example, the rationale for banning Temu is that Chinese language client items are getting into the market at such low costs that native companies can not compete. By banning Temu, Indonesia and Vietnam are saying they may now not take up surplus Chinese language manufacturing if it comes on the expense of home financial pursuits. The message is evident: native companies and customers are the precedence and the state will use a variety of instruments to guard them.
Financial nationalism is hardly a brand new development. Indonesia and others within the area have been tilting towards extra state intervention in markets for a number of years now, particularly in terms of commodities, pure assets and strategic industries. The writing has been on the wall that the worldwide financial system and the area are shifting towards a extra nakedly transactional and inward-looking method to financial improvement.
However, there are nonetheless commentators who will argue that Southeast Asia stays basically dedicated to free commerce and that the rise of financial nationalism is ephemeral. It’s true that international locations within the area are open to commerce and funding when it fits their functions, however it’s also true that they’re keen to intervene in markets, forcefully if needed, once they consider that doing so is within the nationwide curiosity. 2024 is the yr, in my thoughts, the place it grew to become not possible to disregard this actuality and that’s the reason I believe it was the most important story of this previous yr.
