To institutions, companies, and professionals operating in the Asia-Pacific region, the Association of Southeast Asian Nations (ASEAN) is usually a familiar entity, as it is rare for a day to pass without them having some direct or indirect interaction with it or its member countries. However, in the vast majority of cases, a lack of knowledge about ASEAN—specifically the role it plays in the region—is common. Therefore, it may be useful to dedicate a few lines to discuss its present and, above all, analyze its future, even if only to answer Mary Natalegawa’s question in her book “Does Asean Matter?” by saying that yes, despite its structural limitations, ASEAN matters, and it matters a lot.
ASEAN is an organization established on August 8, 1967, by Indonesia, Malaysia, the Philippines, Singapore, and Thailand to foster economic, political, and socio-cultural cooperation. Among its objectives and purposes, based on the principles of non-interference and consensus, are to accelerate economic growth, social progress, and cultural development; to promote peace, collaboration, and mutual assistance; and to maintain close cooperation with similar organizations. Following its inception, Brunei Darussalam (1984), Vietnam (1995), Laos and Burma -now Myanmar- (1997), Cambodia (1999), and finally, after a long accession process, Timor-Leste (2025) joined to consolidate a platform for regional stability and development.
Over time, its initial approach evolved in several directions: first, by institutionalizing various cooperation forums such as ASEAN + 3 (China, South Korea, and Japan), ASEAN + 6 (India, Australia, and New Zealand), and ASEAN + 8 (the United States and Russia); second, by creating the ASEAN Economic Community to facilitate the free flow of goods, services, capital, and labor among its members; and third, by promoting the Regional Comprehensive Economic Partnership (RCEP) with five countries with which it has existing free trade agreements: Australia, China, South Korea, Japan, and New Zealand. Currently, this partnership represents nearly 30% of the world’s Gross Domestic Product (GDP) and has shifted the economic center of gravity toward the Asia-Pacific.
1. Membership: Timor-Leste, the most recent addition.
Timor-Leste is the latest country in the region to join ASEAN, which became effective at the 47th Summit held in Kuala Lumpur on October 26, 2025, with the signing of the corresponding admission declaration. This marked the end of a long process that began in 2011 and included an intermediate stage as an observer in 2022, after overcoming certain hesitations from some Member States. These reservations were based on political reasons in some cases—arguing that Timor-Leste lacked the state and administrative structure necessary to assume the responsibilities of membership—or economic reasons in others, estimating that its level of development (one of the lowest in Asia-Pacific) made it highly vulnerable to competition from larger countries.
Its territory, located in the eastern part of the island of Timor—hence its name—also includes the islands of Atauro and Jaco, spanning approximately 15,000 square kilometers. Home to nearly 1.5 million inhabitants, its economy is heavily dependent on oil (one field, Bayu-Undan, currently in operation) and gas (one project, Greater Sunrise, yet to be exploited). It faces significant challenges for which foreign investment is essential: infrastructure (roads, ports, communications), digital connectivity, tourism, agriculture, and fishing. Special economic zones, such as the Special Zone of Social Market Economy of Timor-Leste located in the Oé-Cusse Ambeno region, encourage the establishment of platforms dedicated to industrial, commercial, and technological activities through significant incentives.
As the World Bank points out in its Timor-Leste Economic Report, the country is at a decisive moment. While the risks are high (external factors: an uncertain global geoeconomic and geopolitical environment; and internal factors: structural constraints such as fiscal fragility and excessive dependence on the Petroleum Fund), its potential is also vast. Law 15/2017 of August 23, which regulates private investment, and Decree 2/2018 of February 21, offer broad opportunities to foreign investors in most sectors, providing guarantees for the free repatriation of capital, profits, and dividends; protection against indiscriminate expropriation; and arbitral or judicial solutions for dispute settlement.
2. Politics: The complex balance between China and the United States
The struggle between the United States and China—to consolidate the liberal international order in one case, and to promote an alternative order inspired by socialism with Chinese characteristics in the other—has been playing out for years across various stages. One of these is Southeast Asia, where ASEAN’s central role in the regional architecture is key to promoting peace, stability, and prosperity. This role is characterized by what Alfred Gerstl calls “Hedging”: a calculated strategy of ambiguity toward both powers to diversify dependence and preserve autonomy. This autonomy remains relative, given its reliance on the United States for security and on China for the economy.
The question, as Federico Merke acknowledges, is not whether ASEAN can remain in the middle, but how long this “middle” will last before pressures force it to align with either the United States or China. Internal factors may contribute to this positioning, such as the lack of cohesion evidenced by the inability to execute the Five-Point Consensus to end violence against people, public services, and civilian infrastructure in Myanmar. External factors also play a role, such as disputes in the South China Sea resulting from China’s claims based on the Nine-Dash Line against Brunei, the Philippines, Indonesia, Malaysia, and Vietnam—claims that remain active despite the Code of Conduct adopted by ASEAN in 2002.
Strategic containment by the United States (through the AUKUS—Australia, UK, US—and QUAD—Australia, US, India, Japan—alliances) on one hand, and China’s progressive influence (through the Belt and Road Initiative) on the other, increasingly strain the fragile geopolitical balance of Southeast Asia, consolidating a structural rivalry. Nevertheless, it is interesting to note that in a survey on The State of Southeast Asia conducted by the ISEAS-Yusof Ishak Institute in Singapore, when asked about a hypothetical alignment, 52.3% leaned toward the United States and 47% toward China—a scenario that, given ASEAN’s adaptive strategy, is unlikely to ever fully materialize.
3. Economy: From the SWIFT system (dollar) to the CIPS system (yuan).
The fact that China is ASEAN’s largest partner, with trade exchanges reaching 234 billion dollars in the first quarter of 2025—largely thanks to the China-ASEAN Free Trade Agreement (ACFTA 3.0); that it is one of the largest investors in new projects across infrastructure (ports, railways, roads), manufacturing (automotive, electronics, semiconductors), technology, and energy, totaling 400 billion dollars in 2024; and that it is the natural leader of the RCEP (which it views as a tool to promote a multipolar world order and counter tariff tensions created by the US), reveals a massive, growing, and dependent influence, with the inherent risks that entails.
This influence seems linked to the decision made in late 2023 by ASEAN finance ministers and central bank governors to reduce dependence on the dollar, euro, yen, and pound sterling in financial transactions, moving toward local currency settlements. This was followed, almost without pause, by the shift from the SWIFT system (Society for Worldwide Interbank Financial Telecommunication), dominated by the dollar, to the CIPS system (Cross-Border Interbank Payment System), dominated by the yuan. An indication of the significance of this shift is the volume of cross-border settlements in yuan with ASEAN countries in 2024: 5.8 trillion-c.es.
