This article first appeared in Forum, The Edge Malaysia Weekly on June 24, 2024 - June 30, 2024

In 2025, Malaysia will assume the chairmanship of the Association of Southeast Asian Nations (Asean), 10 years after its previous tenure.

The country’s return to leadership within the bloc occurs at a significant time. During the last presidency, Malaysia was instrumental in developing the Asean Economic Community Blueprint 2025, a framework established in 2015 to enhance economic integration across the region. With the blueprint due for renewal in 2025, Malaysia’s chairmanship allows the country to set the stage for discussing broader visions, such as the preliminary considerations for the 2045 blueprint.

However, beyond these long-term aspirations, there are specific areas where Malaysia can actively drive impactful change.

The chairmanship agenda is traditionally guided by three core pillars: cultural, political and economic.

While it is essential to continue championing legacy topics such as economic integration and political and cultural cooperation, Malaysia has an opportunity to push forward new topics that will be important for the new age of Asean. This forward-looking focus will allow Malaysia to make substantial contributions within its one-year term as Asean chair — contributions that could genuinely transform the region.

Within the economic pillar, Malaysia would need to identify several priority economic deliverables (PEDs) to champion.

We have identified three key focus areas Malaysia could consider: (i) green growth; (ii) digital economy; and (iii) people-centric development.

With Asean being one of the most vulnerable regions to climate change, mobilising climate action could be one of Malaysia’s priorities as chair. A balanced approach focusing on both mitigation and adaptation is vital.

This could include sharpening the business case for increased funding to the region in order to support adaptation and resilience (A&R) initiatives. This can be done through climate analytics to identify high-risk regions and assess the economic impact for the region, as well as developing the business case for investments into resilient infrastructure to prevent supply chain disruptions and support cross-border trade. Malaysia can play a role in amplifying Asean’s need for A&R financing, particularly tapping global funds available for developing nations.

As many Asean countries have committed to net zero targets, including Malaysia with its National Energy Transition Roadmap, there is a significant need for investment to realise these ambitions. In this regard, attracting green foreign direct investment would be essential to help countries meet their net zero goals and promote growth in areas such as renewable energy, carbon capture, utilisation and storage and hydrogen. Malaysia can play a role to amplify the proposition of the region as a hub for green investments.

In addition, Malaysia could ini­tiate action to align standards for carbon credit methodologies and issuance that can be accepted across carbon exchanges in Asean to ensure high quality and credibility of credits. Unified standards would help boost international buyers’ confidence, creating access to greater capital flow for carbon credit projects in Asean. With Indonesia and Singapore initiating carbon taxes in 2022, there is potential for regional collaboration in closing the carbon dioxide gap towards carbon neutrality.

Lastly, incorporating circular economy principles within the Asean Trade in Goods Agreement could be a key focus to ensure sustainability spans all economic activities. This approach can help to build a resilient, sustainable Asean economy that is prepared to confront the challenges of climate change.

Malaysia can also play a crucial role in shaping the future of the region’s digital economy. Southeast Asia boasts more than 460 million digital consumers and is characterised by a young, tech-savvy population, setting a solid foundation for digital advancements.

Among the initiatives Malaysia could advance is the Asean Digital Economy Framework Agreement, which was endorsed in 2023, with negotiations expected to conclude during Malaysia’s role as Asean chair in 2025. This is projected to double Southeast Asia’s digital economy to US$2 trillion by 2030, and benefit lower-middle-income Asean member states by potentially increasing their digital economy value up to 6.5 times.

Furthermore, Malaysia could champion the creation of a more mature Asean digital landscape. This includes building robust cybersecurity infrastructure and attracting digital talent in artificial intelligence, metaverse and blockchain to fill demand gaps.

In the payments space, while efforts are currently underway to implement seamless digital payments, accelerating the pace of implementation and adoption will be key.

With one of the fastest-growing economies and populations in the world, prioritising a people-centric economy is essential for Asean. The region is home to 213 million youths aged 15 to 34, representing the largest ever cohort of Asean youth.

This demographic presents an opportunity for Malaysia to foster an Asean spirit and cultivate the next generation of regional leaders. One such initiative could be to establish a young professional fellowship for top talent from different industries across Asean, with mentorships from regional topic experts and opportunities and capability-building programmes.

Furthermore, engaging both young and experienced leaders with collaborative green economy opportunities could help shape the direction of Malaysia’s economy towards stronger sustainability. A platform to address this could be a green job portal, one that connects supply and demand of green talent, builds awareness and education capabilities, and incentivises companies to join the green economy.

Encouraging equal opportunity will also be vital to ensure women have a voice at decision-making levels across Asean member states and key industries. A 2022 report by UN Women revealed that women represented only 26% of higher-paying roles such as middle and senior management across the Asean region.

Malaysia can champion initiatives to close these gaps, such as introducing senior management peer groups that facilitate career sharing and networking. This could be backed by robust gender mainstreaming policies that empower female representation in government, healthcare, information technology and other key underrepresented industries.

While there are numerous economic areas that require attention, Malaysia’s PEDs will be a vital part of its Asean chairmanship.

Achieving them, through the implementation of strategic policies underpinned by the three key themes discussed above, would enable Malaysia to accelerate regional economic growth and seize global opportunities.

As Asean chair, Malaysia would be granted a unique platform to unlock greater value for people and nations across the region. The road ahead may not be without challenges, but with the vast opportunities standing before the country, success is within our grasp. Now, we just need to act.

Nurlin Mohd Salleh is head of Boston Consulting Group Malaysia. Anis Mohd Nor is a principal at BCG.

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