Beyond the Tariffs: 4 Themes That Will Shape Developments in Southeast Asia in 2025

Let’s begin with a sizable but necessary caveat: any meaningful prediction of what lies ahead in Southeast Asia (SEA) in 2025 is going to benefit from an uncomfortable combination of three key attributes—insight, foresight and a fervent imagination. 

Rarely have we seen such uncertainty across so many issues—the result of multiple economic and political levers being tinkered with, all at once and out of sequence.  

William Gibson’s oft-misquoted view that “the future is already here, it’s just unevenly distributed” helps. By connecting what we already see with what we already know, we can rationalise what might happen next.  

But if we fast forward 12 months from now and find that the most surprising thing about this year is that there were no surprises at all, we are managing expectations well.  

These are the four geopolitical and commercial themes that we think will matter most in Southeast Asia in 2025: 

1. New Friends

The first half of the year will see the political and economic discourse in Southeast Asian markets dominated by the impact of substantial tariffs promised by the Trump administration. Whether the proposed sweeping tariffs are realised in full is, in some respects, a moot point. They pose an existential threat to the region with estimates of a 3% drop in overall exports to the United States.  

Economies are already having to rethink trade alliances, and we expect to see that prompt an increase in mini-lateral partnerships across the broader Indo-Pacific landscape.  

The year kicked off with Singapore and Malaysia setting up a special economic zone (SEZ) focusing on economic cooperation, more efficient cross border movement of goods and talent development. The Digital Economy Partnership Agreement between Singapore, Chile and New Zealand is fast attracting interest from markets across Asia-Pacific (APAC), most notably from South Korea; and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) already includes four Association of Southeast Asian Nations (ASEAN) states, with China expecting to submit a membership request later in the year. 

New friendships are being forged long before Trump’s inauguration and we expect to see further shifts in political, security and trade alliances across the region in 2025. 

2. BRICS and Mortar

Whilst the growing membership base of BRICS Plus (the alliance of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates) will contribute to the reorder of global trade priorities in 2025. This will be less of a defensive move on tariffs and more of a response to confident, economic ambition. 

Indonesia is a case in point. Newly elected President Prabowo Subianto has committed to the ambitious target of 8% GDP growth, a goal that would make them one of the world’s fastest growing economies. As a member of BRICS Plus, his government sees significant potential for an uplift in economic opportunity, the chance to accelerate inward investment and greater strength on a global stage. Other Southeast Asian nations are watching carefully, and we expect to see a push for increased participation in BRICS in 2025.   

Like its neighbours, Indonesia’s participation in BRICS goes well beyond geopolitics. Almost 90% of SEA exports remain in APAC, and the country will want to draw increased foreign direct investment (FDI) into the expansion of its interests in metals, mining and chemicals.  

With the United States accounting for 32% (USD 75B) of FDI inflows into ASEAN markets in 2023, increased geopolitical tensions this year means that Indonesia will not be alone in pushing to diversify its FDI sources from markets closer to home. 

3. Content Moderation

Meta announced overhauls of its content moderation policy by ending its fact-checking program, which has stoked fears of a surge in harmful content and misinformation across its social channels.  

The Australian government had already confirmed it will introduce regulations that moderate children’s access to social media. The latest news from Zuckerberg’s team means we now expect to see governments in Southeast Asia taking more progressive steps to strengthen monitoring, targeting and moderation of content.  

This may also extend into increased policy pressures on social media channels in each market, with the likelihood that they increasingly become a proxy for geopolitical manoeuvring. 

4. Nature First

As global brands and governments draw back from previously opined sustainability commitments, Southeast Asian markets will take a more prominent role in progressing the develop and deployment of renewable energy sources, and sustainable agriculture and aquaculture practices. 

The diversification of supply chains, reshaped export opportunity and a shift in sources of FDI, will all play a factor in the implementation of more ambitious environmental and social impact policies. So too will enshrined policy commitments, including Singapore’s Green Plan 2030, that have set the tone for consumer and market expectation for a stable investment and innovation agenda that builds long-term economic resilience. Malaysia’s ASEAN chairmanship theme of inclusivity and sustainability will consolidate that agenda. 

We expect to see a shift in business and government focus that stretches beyond net-zero compliance and puts a spotlight on nature; 55% of global GDP is dependent on resources that are in decline. That makes nature the number one supply chain partner for most economies. 

It also makes nature the government’s primary ally in their response to the climate transition, helping safeguard the natural resources economies depend on and creating a stronger connection to their rural communities—which collectively make up a significant proportion of voters.  

After a year of national elections that saw political change in many Southeast Asian countries, newly formed governments are more attuned to the need to be seen to respond to the citizen vote. A demonstrated understanding and management of their country’s long-term dependencies on nature will become a more pressing voter issue.