KUALA LUMPUR: Economic shocks such as high inflation, as well as rising interest rates and debt crises have pushed global leaders to reassess their approaches to international trade and economic development.
Deputy Investment, Trade and Industry Minister Liew Chin Tong said global supply chain's restructuring is one of the most significant shifts and new realities emerged.
Liew said the era of cheap outsourcing has increasingly given way to concerns about supply chain resilience and diversification.
The Covid-19 pandemic, coupled with recent geopolitical conflicts such as the Red Sea crisis, showed the vulnerabilities of a globally interdependent supply chain.
"Gone are the days when many thought the world was constituted by a single global supply chain," he said at the Asean Economic Opinion Leaders Conference 2025 here today.
There is a growing consensus that supply chains will increasingly be structured along regional lines or according to geopolitical considerations, rather than relying on a single global network, he added.
Another important shift concerns the intertwining of economics, politics and security.
Liew said the once widely-held belief that these spheres could be kept separate is no longer tenable.
As seen in the aftermath of the 2024 elections in the US, national politics now directly impact economic decisions.
With governments worldwide dealing with rising populism and instability, there is a pressing need for economic policies that ensure both domestic stability and robust social outcomes.
Liew also spoke about the limitations of Asia's long-standing export-oriented industrialisation model.
He said from Japan's post-war rise to the rapid industrialisation of the "Asian Tigers" (South Korea, Taiwan, Singapore, Hong Kong), and later, China's explosive growth after joining the World Trade Organisation, Asia's economy has been heavily reliant on exports to the United States and Europe.
However, with shrinking middle classes and populations in these markets, Asean must pivot and develop internal consumer markets to sustain economic growth.
"Asian economies cannot forever think of the United States as the export destination of the first and last resort.
"We will have to create more consumer markets, especially in Asean. These massive changes bring home a simple message: business as usual won't cut it."
Asean needs to be bold to face the challenges while taking advantage of the opportunities presented, he added.
Envisaging the region in 2045, Liew highlighted three key elements: Asean as a regional supply chain, as a middle power and as a prosperous middle class society thus an important market.
"If we leave it to the major powers, the supply chain will probably eventually bifurcate as the United States and China extricate themselves from each other.
"It is not in the interest of the rest of the world to see the supply chain bifurcates, and therefore, Asean - together with European Union, the Global South and the rest - need to do the heavy lifting to ensure that the middle ground or the common ground is big enough to resist bifurcation," he said.
This is also the time that Asean member states should see each other not as competitors but complementing each other to form a resilient regional supply chain.
In this context, Liew said the Johor-Singapore Special Economic Zone has the potential of creating an exciting future and a role model.
More Asean-wide joint investment projects or sub-regional cooperation will help to make the regional supply chain stronger.
Over the next two decades, he said, Asean should emerge as a middle class society and thus becoming a sizeable consumer market, and not just production sites in the old formulation of export-led industrialisation.
"To do so, we must ensure that Asean member states do not enter into a race to the bottom in terms of wages, tax cuts or tax holidays.
"Instead, Asean must uphold environmental standards. It is used to the old export-led industrialisation model in which we help multinationals to suppress wages to make us a cheap destination to produce," Liew said.