The Takeaway
On January 1, Malaysia assumed the role of chair of the Association of Southeast Asian Nations (ASEAN). Over the course of the year, Malaysia will oversee more than 300 meetings, steering the bloc at a critical geopolitical juncture. Under the stewardship of Prime Minister Anwar Ibrahim, Malaysia confronts two major challenges that have long tested ASEAN’s unity and resilience: the ongoing civil conflict in Myanmar and China’s increasingly assertive actions in the South China Sea. In addition, the bloc, under Malaysia’s leadership, will confront newer challenges such as the broader ramifications of U.S. President Donald Trump’s Asia policy.
In Brief
- Under the theme of “Inclusivity and Sustainability,” Malaysia’s chairmanship will prioritize fostering regional collaboration in trade and investment, sustainability, and embracing digital transformation.
- In December 2024, Anwar announced the formation of an informal advisory team to ASEAN, signaling a proactive approach to regional challenges. So far, only one member — former Thai prime minister Thaksin Shinawatra — has been officially confirmed. Other potential advisers reportedly include two former foreign affairs ministers: George Yeo of Singapore and Retno Marsudi of Indonesia. These distinguished leaders could use their expertise and influence to drive progress and foster consensus on pressing issues, such as the ongoing conflict in Myanmar and the protracted negotiations surrounding the South China Sea Code of Conduct (COC) — a set of guidelines designed to mitigate tensions in the disputed waters. Currently, four ASEAN member states — Brunei, Malaysia, the Philippines, and Vietnam — have overlapping claims with China in the disputed waterway.
- Malaysia’s commitment to economic co-operation is evident in its growing trade partnerships. In 2023, Malaysia emerged as Canada’s fourth-largest trading partner in the region, with bilateral trade reaching C$4.7 billion. In late 2022, Malaysia joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which is projected to boost the country’s total trade to C$910 billion by 2040.
Implications
Progress on a Myanmar peace plan and South China Sea guidelines could shore up ASEAN centrality. Malaysia’s chairmanship comes at a pivotal moment for ASEAN centrality — the belief that ASEAN should be the primary platform for addressing regional problems and engaging external powers. Limited progress on the ASEAN Five-Point Consensus (5PC), the peace plan that the bloc proposed for Myanmar shortly after that country’s 2021 military coup, has undermined confidence in ASEAN’s ability to address such issues. Malaysia is under growing pressure to invigorate the adoption of the 5PC. Anwar’s establishment of an informal ASEAN advisory group that includes Thaksin appears to be a strategic move to leverage the former prime minister’s expertise on Myanmar’s political landscape and revitalize peace efforts.
Additionally, negotiations on the South China Sea COC remain deadlocked, heightening tensions within ASEAN. While claimant states such as the Philippines push for a swift resolution, others with closer ties to Beijing, such as Laos and Cambodia, are hesitant to confront China. Anwar has tried to carefully balance affirming sovereignty over Malaysia’s claims while downplaying tensions and advocating for peaceful solutions. As ASEAN chair, Malaysia has pledged to resolve disputes through “appropriate forums and diplomatic channels” aligned with the United Nations Convention on the Law of the Sea, a UN treaty that governs maritime activities.
U.S. President Donald Trump’s proposed tariffs and more erratic foreign policy pose additional threats to ASEAN. Trump’s proposed tariffs — 10 per cent on Chinese goods and 10 to 20 percent on all other imports — could pose further risks to ASEAN. With ASEAN members accounting for close to 16 per cent of China’s total foreign trade volume in 2023, such measures could disrupt supply chains and exacerbate trade surpluses for certain members. In response, ASEAN is likely to accelerate the diversification of its trade partnerships, expanding ties with Japan, South Korea, the European Union, and the Middle East.
Japan is attempting to maintain and strengthen U.S.-ASEAN ties. In January, Japanese Prime Minister Ishiba Shigeru visited Malaysia and Indonesia to deepen economic and security ties in the region. Discussions included the fostering of partnerships in clean energy, rare earth processing, disaster mitigation, and development aid for Palestinians and Gaza. As one of Southeast Asia’s longstanding partners and a key strategic ally of the U.S., Japan has often served as a liaison for strengthening U.S.-ASEAN relations and consistently ranks as Southeast Asia's "most trusted" major regional power.
Notably, on January 15, the foreign ministers of Japan and the Philippines announced their intention to call on Trump to uphold the rule of law in Southeast Asia, a region at the frontlines of growing security concerns from China. The statement comes amid Trump’s return to an "America First" approach, with Japan growing increasingly concerned about Washington’s declining interest in Southeast Asia.
What’s Next
1. Opportunities for expanding Canada-Southeast Asia trade
Canadian policymakers and private sector stakeholders will want to keep a close eye on how Malaysia steers economic initiatives in ASEAN. Negotiations towards a Canada-ASEAN Free Trade Agreement are on track to conclude by 2025, marking a pivotal milestone in strengthening economic ties between Canada and Southeast Asia. According to a 2018 economic model, when implemented, this agreement could contribute an additional C$3.66 billion to Canada’s GDP and boost Canadian exports to ASEAN countries by as much as C$3.84 billion.
In May 2025, Canada’s trade minister Mary Ng is scheduled to lead Team Canada trade missions to Cambodia and Thailand, building on the success of trade missions to Indonesia and the Philippines in late 2024.
2. Phase three of Canada’s response to the crisis in Myanmar
On January 6, Canada, together with other nations, released a joint statement expressing grave concern over the worsening humanitarian crisis in Myanmar, calling on the military regime to curb the violence, protect civilians, and permit humanitarian access. Canada is set to release the next phase of its engagement in Myanmar in 2025. Building on its Strategy to Respond to the Rohingya and Myanmar Crises, the next phase will focus on improving the self-reliance of Rohingya refugees while supporting inclusive and sustainable peace initiatives.
• Edited by Vina Nadjibulla, Vice-President Research & Strategy, Erin Williams, Senior Program Manager, and Ted Fraser, Senior Editor, APF Canada
