Trillions, tigers and turnarounds

New Straits Times

a day ago

Southeast Asia's economic journey is one of the great plot twists of modern development. In the late 1960s, the region was a patchwork of newly independent nations—some hopeful, some fragile, and all facing the hard task of nation-building after centuries of colonial rule.
Back then, the Philippines led the economic pack, buoyed by American institutions, a cosmopolitan capital, and an educated, English-speaking elite. Indonesia and Thailand were still predominantly agrarian but rich in demographic energy.
Malaysia was just finding its industrial footing after formation. And Singapore, bereft of natural resources and separated from Malaysia, seemed an unlikely contender for regional dominance.
Fast forward to the present, and that economic order has been turned on its head. Indonesia now leads the region with a trillion-dollar economy, Singapore has become a high-income global hub, and both Thailand and Malaysia have transitioned into mid-sized industrial powers. Meanwhile, the Philippines, once the early mover, has struggled to keep pace—its growth real but outstripped by those once in its shadow.
So, what explains this reversal of fortunes? The answer isn't just about who grew fastest—it's about how they grew and what that reveals about the deeper engines of transformation in Southeast Asia.
1. Scale Without Strategy is Just Potential Energy
Indonesia's population gave it tremendous latent power, even in the 1960s. But scale alone is never destiny. It took decades of reform, difficult political transitions, and a renewed national focus on infrastructure and deregulation—especially under President Joko Widodo—to turn potential into sustained output. Investments in logistics, digitalisation, and industrial upgrading have made Indonesia not just big, but increasingly strategic in global value chains.
The Philippines, by contrast, was long a story of untapped potential. A vast diaspora, cultural links to the West, and a service-oriented workforce should have been assets. But policy inconsistency, weak institutions, and chronic underinvestment in infrastructure kept productivity low. The country became a reliable exporter of workers, but not of high-value goods or innovation.
2. Location Helps, but Governance Wins
Singapore is the clearest example of how governance trumps geography. With no natural hinterland and few resources, it focused instead on institutional excellence. It didn't just operate a port—it became a platform for finance, logistics, arbitration, and innovation. Bureaucratic efficiency became a national export. Foreign investment wasn't just welcomed—it was strategically deployed. While others debated tariffs, Singapore streamlined customs. While others politicised education, it produced a globally competitive workforce. Its rise was not miraculous—it was meticulously engineered through decades of compounding good policy.
3. Reform is Not a One-Off; It's a Reflex
Malaysia and Thailand rode the early waves of globalisation, leveraging export-led growth, attracting Japanese and Western capital, and building strong manufacturing ecosystems—especially in electronics. But both now face the "middle-income trap": where gains from cheap labour have plateaued and higher productivity hasn't yet emerged. In Malaysia's case, institutional complacency and political turbulence have dimmed the reform flame. In Thailand, frequent coups and uncertain rule of law have dulled investor confidence.
The lesson is this: reform isn't a speech—it's a system of reflexes that must evolve over time. And in some corners of Asean, that muscle memory has faded.
Beyond Growth: A Region Rewriting Its Own Playbook
What Southeast Asia is experiencing today is not just a race for GDP milestones—it's a recalibration of what economic success looks like in a post-globalisation era. Once seen through the lens of Cold War alliances and postcolonial recovery, the region now sits at the intersection of global supply chain shifts, technological disruption, and geopolitical realignment.
This situation demands a shift in mindset. Asean must stop being a passive beneficiary of global trade and become an active architect of its own destiny—by building regional value chains, accelerating digital integration, and embracing bold, sometimes uncomfortable, governance reforms.
The prosperity seen today didn't emerge by accident. It was forged through hard choices, long-term planning, and a willingness to adapt. But the future will demand even more—especially as AI reshapes labour markets, climate change tests resilience, and geopolitical pressures tighten.
Yes, Indonesia now wears the trillion-dollar crown. Singapore remains the region's startup nation. Malaysia and Thailand still punch above their weight. And the Philippines? Its story isn't finished. But the next chapter will require more than remittances and resilience. It will require reinvention.
Because in Southeast Asia, history doesn't repeat—it recalibrates. And the region's most enduring truth remains: leadership isn't inherited. It's built.
Samirul Ariff Othman is an economist, adjunct lecturer at Universiti Teknologi Petronas, international relations analyst and senior consultant with Global Asia Consulting. The views expressed here are his own.