Southeast Asia Global Relations Outlook Part 4: The Gulf

by Institute

This is the fourth part in a short series exploring Southeast Asia’s relationships with key global powers and economic blocs. The series aims to give a snapshot at the beginning of 2024, looking at the events over the past months that have shaped the region’s global relationships, and the dynamics that will determine them moving forward.

Part 1 looked at Southeast Asia’s relationships with the US and China; Part 2 looked at the ‘next two’ global economic powers, the European Union and India. Part 3 looked at Southeast Asia’s relationships with its East Asian neighbors: Japan, South Korea, and Taiwan. Part 4 will look at Southeast Asia’s relationships with the Gulf countries

Introduction

Relations between the Gulf countries and Southeast Asia are evolving in both strategic and economic importance. Beyond petro-economic relations, several Southeast Asian countries such as the Philippines and Indonesia have significant diasporas in the Gulf region, while others maintain close religious and cultural ties.

Building on these foundations, the inaugural ASEAN-GCC Summit, held in Riyadh in October 2023, marked a significant milestone in diplomatic engagement between the Association of Southeast Asian Nations (ASEAN) and the Gulf Cooperation Council (GCC). The summit not only underscored the historical ties dating back to 1990 but also signaled a concerted effort to forge deeper economic, cultural, and strategic partnerships between the two regions.

Inaugural ASEAN-GCC Summit

The ASEAN-GCC Summit was the highest level of engagement between both blocs since the establishment of relations in 1990. The GCC was founded in 1981 and currently comprises six countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. The summit underscored efforts by both sides to connect with new partners beyond their traditional interlocutors.

Many individual ASEAN Member States also have their own interests in the Gulf states. The Philippines, Indonesia and others have large migrant diasporas in many Gulf economies; the remittances they send back play a significant economic role at home. Meanwhile, the Muslim-majority countries of Malaysia, Indonesia, and Brunei Darussalam maintain strong religious and cultural linkages with the region. Singapore, for its part, is the only ASEAN country with an individual FTA with the GCC.^[1]

The summit provided the space for new partnerships among each of the blocs’ members, especially those with a limited history of engagement, as well as supporting each bloc’s regional centrality.

As part of the Summit, a five-year Framework of Cooperation 2024-2028 was adopted. The framework calls for elevated relations through a wide spectrum of practical cooperation in the areas of countering terrorism and violent extremisms, food security, renewable energy, climate change adaptation, and innovation.^[2]

ASEAN-GCC FTA mooted

One notable outcome of the Summit was the proposal by Malaysian Prime Minister Anwar Ibrahim for an FTA to be negotiated between both blocs. This comes amidst a modest increase in trade and investment between both regions, with Gulf-ASEAN trade having grown by 44 per cent year-on-year to US$138 billion in 2022.

Research has observed that Gulf-ASEAN economic relations are shifting away from a foundation of trading in crude oil (from the GCC) and electronics and machinery (from ASEAN) into other strategic and high-growth sectors such as food, financial services, and e-commerce. Countries like Indonesia and Malaysia are looking to export more halal-related products to the Middle East, while Singapore as a financial hub is looking for more engagements with the Middle Eastern financial centers of Dubai, Abu Dhabi, Manama, and Riyadh in the areas of fintech innovation and blockchain.^[3]

As expected, energy cooperation was a big topic of discussion during the Summit, given that many ASEAN economies remain net oil importers. The clean energy transition is also another area of high potential, with possible cooperation in emerging low-carbon technologies, carbon markets, and climate financing.^[4]

Gaza War to see convergence of interests

The Israel-Hamas War having broken out two weeks prior, the outcomes of the Summit included a Joint Statement on developments in Gaza, which demonstrated some common views on the importance of humanitarian law and action, civil protection, and a two-state solution. The ongoing war, and the strong emotions it has elicited in the Muslim world, may serve to push both regions closer (particularly the Muslim-majority countries of ASEAN). Indeed, Malaysia, which has been internationally vocal on the war in favor of the Palestinians, will be hosting the next ASEAN-GCC Summit in 2025, when it will also hold the ASEAN Chairmanship. The relatively new Malaysian government of Anwar Ibrahim has identified the Middle East as a major region of interest in his administration’s foreign policy, and as such Malaysia may serve as a particularly strong proponent of closer GCC-ASEAN ties in the near future.^[5]

Conclusion

The inaugural ASEAN-GCC Summit and the five-year cooperation framework formalises a new dynamic towards closer economic and cultural ties between the two regions and their members. Through discussions on economic diversification, energy transition, and responses to regional conflicts, the summit laid the groundwork for a more robust and comprehensive partnership. As nations of both blocs navigate geopolitical shifts and economic transformations, the prospects for enhanced collaboration across various sectors remain an interesting space to watch.

About the Southeast Asia Public Policy Institute

The Southeast Asia Public Policy Institute is a research institute based in Bangkok and Singapore, working across the region. Our mission is to support the development of solutions to the most pressing public policy challenges facing Southeast Asia in the 21st century. The Institute undertakes in-depth research to develop actionable policy solutions on a range of issues across sustainability, technology, public health, trade, and governance. We convene dialogues with stakeholders and decisionmakers to drive discussion on the challenges and opportunities facing markets across the region. The Institute draws on a network of in-market researchers, advisors, and partners to provide insights and recommendations for governments, policymakers, and businesses.

^[1] Lin, J. (2023), ‘ASEAN-GCC Summit: The Need to Keep it Going’ in Fulcrum, Singh, G. (2023), ‘ASEAN-GCC Summit: Forging new partnerships’ by the Observer Research Foundation,

^[2] Lin, J., ‘ASEAN-GCC Summit: The Need to Keep it Going’

^[3] Asia House, ‘Inaugural ASEAN-GCC Summit marks a new era in relations between the two blocs, including a call to begin Free Trade Agreement negotiations’, Economist Impact, ‘Uncharted Territory: Deepening trade and investment between ASEAN and the GCC’ by Economist Impact,

^[4] Singh, G., ‘ASEAN-GCC Summit: Forging new partnerships’, Al-Sarihi, A. and Seah, S. (2023), ‘Will Asean-GCC Summit Revive Bloc-to-Bloc Relations?’ by the National University of Singapore’s Middle East Institute Singapore,

^[5] Ali G. (2023), ‘The Significance of the Maiden GCC-ASEAN Summit’ in The Diplomat, Tan, A. (2023), ‘Recapping the First Year of Malaysia’s Foreign Policy Under Anwar Ibrahim’ in The Diplomat,