By Professor Siah Hwee Ang
This article originally appeared on stuff.co.nz
Asean countries are by no means the largest trading and investment partners for New Zealand, but given their geographical proximity to us and the Asean Australia New Zealand Free Trade Agreement that has been in place for a few years now, Asean presents a natural option for New Zealand trade and investment.
The Asean Economic Community was established on December 31, 2015, making the countries more integrated, and as a region, Asean's nominal gross domestic product comes to US$2.76 trillion (NZ$4.08t).
If you treat the region as a whole (similar to the way in which we treat the European Union), its economy is larger than that of the United Kingdom, India, France, and Brazil.
While we know that there's a global trend towards tightening bilateral trade agreements, Asean as a group can be an attractive partner.
The Comprehensive and Progressive Trans-Pacific Partnership splits the region in terms of involvement in the partnership—only Brunei, Malaysia, Singapore, and Vietnam are involved in this multilateral free trade agreement.
If you treat the Asean region as a whole (similar to the way in which we treat the European Union), its economy is larger than that of the United Kingdom, India, France, and Brazil.
Singapore and Malaysia are only the third and fourth largest economies in the region—Indonesia (US$1.02t) and Thailand (US$460 billion) are the top two.
The Asean region leads the way in the negotiations around the Regional Comprehensive Economic Partnership (RCEP).
The latest meeting two weeks ago has left all parties confident that the countries involved in the RCEP, which also includes New Zealand, will have broad agreement at the end of this year, but the jury is out on the RCEP agreement
But there is a sense that the Asean countries are ready to work as a group to engage. The United States-China trade battles and the recent approach from the US to trade have also pushed other countries to hedge their bets.
Trade dependencies between Asean and China, and also between Asean and the US are there.
Nonetheless, rising intra-Asean trade and Asean's relatively strong economic relationships with India, Japan, and South Korea will help to see it through this tough period.
It is also hard to see how China will let its Asian neighbours become collateral damage to their own duel with the US, with more support from Asean needed on China's Belt and Road Initiative.
It will not help if the US-China trade disputes become another burden to this, on top of the South China Sea disputes that have been going on for quite a while.
Reports in Indonesia suggest that the US might be taking aim at the trade surpluses between the two countries. Should the US finally arrive at Indonesia's doorsteps, a likely result will be more intra-Asia trade for Indonesia.
The ballooning middle class in Asean is a further attraction and on July 16, Amazon will run its largest sales events, Prime Day, in Singapore for the first time.
In a market already crowded with sales events, such as Alibaba's Singles Day, Lazada's Online Revolution, Shopee's 9.9 Mobile Shopping Day, Qoo10's Super Sale and Shopback's ShopFest, the entry of Amazon into this space is testimony to the spending power of Singapore consumers.
The Asean region, home to 638 million people, almost twice as large as the US and five times larger than Japan, will have great growth potential for the next 20 to 30 years.
Through its own potential and what has transpired in the last year, Asean is certainly attracting more attention and no longer playing a peripheral role to the economic superpowers that we are accustomed to.