Jakarta. The rivalry between two major powers, the US and China, could deliver short-term benefits to ASEAN as Washington sought to substitute Chinese goods, according to a senior economist.

Lili Yan Ing, the former lead advisor of the Indonesian Minister of Trade and secretary-general of the International Economic Association (IEA), made the statement at the recent PRAXIS 2024 conference. According to a press statement, Ing told the conference Southeast Asia -- particularly Singapore, Malaysia, and Vietnam -- might benefit from the global geopolitical uncertainty and US-China tensions.

“Southeast Asia could see short-term gains driven by import diversification and FDI [foreign direct investment] relocation,” Ing said in a press release.

According to Ing, ASEAN exports to the US had risen from $185 billion in 2018 to $270 billion in 2023. The increase was mainly driven by machinery, electronics, and semiconductors which are substitutes for Chinese products. However, Ing warned that persistent US-China tensions could lead to long-term challenges such as increased production costs and inflation, ultimately reducing the overall welfare.

Ing responded to claims of ASEAN competing against another, particularly in the semiconductor industry. She also talked about how ASEAN could move forward with the agenda of forming a strategic regional integration.

“While ASEAN nations compete in sectors such as palm oil, oils, mining, agricultural products, automobiles, electronics, semiconductors, and many sectors, competition among ASEAN countries is good if all members can keep it fair and square,” Ing said.

In the semiconductor industry, ASEAN countries can collaborate in a conducive regional production network. Singapore specializes in water fabrication, contributing about 11 percent of the global wafer fabrication exports in 2023. Malaysia can focus on assembly, testing, and packaging (ATP), accounting for 5 percent of global APT in the same year, while Vietnam is an emerging player.  

Hosting the PRAXIS 2024 conference Institute of Strategic and International Studies (ISIS) Malaysia in collaboration with the Malaysian government. The forum also sought to welcome Malaysia’s upcoming ASEAN chairmanship in 2025.