As Thailand takes the 2019 Asean chairmanship on Tuesday, threats and challenges lie on the horizon. Experts are warning that Thailand and Asean must brace for spillover from the trade war between the United States and China and push harder for the promotion of free trade.
Chulalongkorn University's Asean Studies Centre's director of academic affairs, Piti Srisangnam, predicted that this year could be critical for the region considering the various issues Thailand, as Asean chair, must deal with.
The ongoing discord between the US and China, including the possibility of US businesses reshoring, puts Asean at risk since it could disrupt the global value chain in the bloc, he said.
For the region to avert the spillover effects from the trade war, he said, Asean needs to expedite free trade agreements such as the Regional Comprehensive Economic Partnership (RCEP), Asean Plus Six and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
"Thailand, as a leader, should help Asean stand firm and ensure the bloc supports free and open trade," he said.
The waning enmity between Japan and China may allow the two to join hands and direct investments into other countries in the region, including Asean members, creating a win-win situation for us all, said the assistant professor.
Mr Piti also said that the much-touted Indo-Pacific strategy, with many activities in the Strait of Malacca and in the region itself, will almost certainly benefit the member nations.
"The dash between Indo and Pacific [the Indian and the Pacific Oceans] is Asean; it's not possible to overlook the bloc to get the scheme going," he said.
"Free trade agreements will be beneficial to Thailand and Asean as a whole. With a shrinking export sector, Thailand needs RCEP more than ever," he said.
"Thailand has seen a period of growth but it is on the verge of recession."
"We are also aligned with the 'Thailand plus one' scheme which focuses on emerging economies in the CLMV countries [Cambodia, Lao PDR, Myanmar and Vietnam]. However, emerging markets have been experiencing a period of slow down. Therefore, the alternative is to rely on free trade with wider partners."
Kaewkamol Pitakdumrongkit, deputy head and assistant professor at the Centre for Multilateralism Studies, S Rajaratnam School of International Studies (RSIS), Singapore, echoed concerns that a major threat to Asean next year will be the effect from the Sino-US trade war and the US Federal Reserve's interest rate hikes.
"I don't think the 90-day truce will end the tension and conflict between these two powers. For China to buy goods from the US to lessen the US trade deficit with Beijing is easy. But for China to implement policies to address unfair trade practices to the point that the Trump Administration is satisfied will be tough within the 90-day timeframe," she said.
Therefore, she said, she is inclined to think that the tensions will linger beyond March, and regional economies may suffer as a result.
"The Fed's rate hike may bring financial instability to some economies, as seen previously in Indonesia and the Philippines. The next hikes might trigger capital outflows from some regional economies and trigger financial instability or even crisis," she stated.
Meanwhile, she said, as the chair of Asean, Thailand can shine in the field of security -- its strength in being a non-claimant state in territorial disputes such as the South China Sea enabling it to play the role of independent arbitrator.
"Our role as the previous coordinator of Asean-China relations is a case in point. The MFA team played a crucial role in launching the first informal consultation for the CoC," she said, referring to the Code of Conduct in the South China Sea.
She stated that the RCEP may see more progress around the second half of 2019.
"Because India, Indonesia, Australia, and Thailand will all have elections in the first half of 2019, their focus will be more on domestic affairs. Little progress can be expected as a result. The second half will likely to see more forward momentum than the first," she said.
Furthermore, the RCEP has major challenges, namely the lack of clear leadership and stark differences among the negotiating parties on several issues. She said she doubts whether the members can conclude the partnership in 2019.
In terms of the country's preparedness for taking the helm of the region, Mr Piti said civil servants and agencies such as the Foreign Ministry and Defense Ministry are ready and able but their efforts need to be more coordinated.
Mr Piti also stressed that human rights are a major concern for Asean, not just in Rakhine state but also in the Philippines and Laos.
"In this regard, the current policy of non-interference may jeopardise the bloc," he warned.
However, he said the key is to work on the issues in non-confrontational ways. For example, conflicts between Asean countries can be dealt with informally. Indonesia's intervention in the 2013 Preah Vihear temple dispute between Thailand and Cambodia which led to a peaceful resolution, is a good example of this, he said.