Vijay Eswaran: How ASEAN’s New Diplomacy Model Could Reshape Global Trade

Southeast Asia has emerged as a testing ground for a new kind of diplomacy that resists rigid alliance structures and instead multiplies options. While major economies lock horns in tariff disputes, the Association of Southeast Asian Nations (ASEAN) has crafted a model of “multi-alignment” that is drawing record levels of trade and investment.

The strategy has played out against a turbulent backdrop. The Trump administration imposed 25 percent tariffs on Malaysia and varying duties across six ASEAN members, part of a broader attempt to recalibrate U.S. trade. Yet the bloc’s response has been strikingly pragmatic. Rather than choosing sides, ASEAN has widened its network. In 2024, trade with China rose 15 percent, U.S. trade grew 12 percent, and commerce with the European Union held steady at €258.7 billion, making ASEAN the EU’s third-largest trading partner outside Europe.

For Malaysian entrepreneur Vijay Eswaran, who has spent more than two decades building businesses across the region, the results reflect what he calls the “strategic multiplication of options,” a method of economic engagement that allows middle powers to thrive amid geopolitical rivalry.

 

Investment Surge Under a Flexible Framework

 

The numbers are clear. Foreign direct investment into ASEAN topped $400 billion over two years, with a record $230 billion in 2023 alone. Unlike Cold War-era non-alignment, which emphasised neutrality, today’s approach actively seeks out overlapping partnerships.

Vietnam illustrates this shift. It sources 23 percent of FDI from China, 19 percent from Japan, 15 percent from South Korea, and 12 percent from the United States, figures that would have been unthinkable under traditional alignment models.

Singapore has signed $8.2 billion in new agreements with China while simultaneously deepening defense ties with Washington and broadening its trade links with Brussels. Malaysia continues to record $80.2 billion in annual trade with the U.S., even as it pursues $10 billion in technology and energy agreements with Russia.

“This is not avoidance, but engagement on multiple fronts,” Eswaran observes. “Countries are learning to benefit from all sides, not simply to steer clear of conflict.”

 

Regional Integration Gains Momentum

 

Institutional frameworks are reinforcing the strategy. The Regional Comprehensive Economic Partnership (RCEP), which took effect in 2022, has already reduced tariffs on 65 percent of goods traded within the bloc.

The ASEAN–Gulf Cooperation Council (GCC) partnership is projected to generate $50 billion in trade by 2027, while last year’s ASEAN–GCC–China Summit created a platform linking 2.15 billion people and a combined GDP approaching $25 trillion.

Middle Eastern sovereign wealth funds, flush with capital from high energy prices, are increasingly targeting Southeast Asia. Investments span infrastructure, manufacturing, and digital technologies, diversifying the region’s financing base beyond traditional Western and Chinese investors.

 

Building Economic Resilience

 

ASEAN’s economy expanded 4.3 percent in 2024, outpacing US growth of 1.8 percent and the EU’s 1.1 percent. That resilience reflects both structural advantages and deliberate diversification. The Philippines has attracted $12 billion in manufacturing relocations since 2023, as companies seek alternatives to China while still remaining in Asia.

The maritime sector alone contributes $2.4 trillion annually to ASEAN GDP, with Singapore leading in maritime technology and Indonesia innovating in sustainable fisheries. The region’s digital economy, meanwhile, is forecast to reach $1 trillion by 2030. Gulf sovereign wealth funds have become major backers of digital infrastructure, complementing US and Chinese tech capital.

 

Institutionalising Stability

 

The challenge now lies in institutionalising this balancing act. Standardised trade protocols, permanent secretariats, and integrated supply chain frameworks are needed to ensure stability across political cycles. RCEP offers a blueprint, with mechanisms designed to endure beyond the tenure of individual governments.

Eswaran notes that ASEAN boardrooms are shifting their focus. “The question is no longer how to avoid taking sides,” he says, “but how to maximise the benefits of engagement with every side.”

That pragmatic stance will be tested as global competition intensifies. Washington’s tariff measures are one example of external pressure that could destabilise trade flows. Yet ASEAN’s diversified portfolio of partners has so far insulated it from major shocks.

For now, the bloc stands as a case study in how middle powers can chart their own course in a multipolar economy. If the model holds, ASEAN’s multi-alignment strategy may offer a template for regions far beyond Southeast Asia.