Southeast Asia: Navigating a New Geopolitical Environment

Contrasting Investment Dynamics in ASEAN

Hans Vriens first noted the volatility of investment flows within ASEAN. Some countries clearly stand out. Malaysia, for example, attracts diverse and fast-growing foreign direct investments (FDI), while Singapore remains the top capital destination in the region. However, both countries are in direct competition, mainly due to significant cost differentials, with Malaysia offering much more competitive conditions.

In contrast, Vietnam continues to record particularly high levels of FDI, especially in the industry and construction sectors. On the other hand, Thailand is going through a tougher period, marked by persistent political instability and high energy vulnerability, which has already led to a significant increase in energy prices.

A Geopolitical Shock with Long-lasting Implications

The outbreak of war in Iran has deeply shaken global energy balances. The Arabian Peninsula, the main oil supplier for Southeast Asia, now faces supply difficulties. According to Hans Vriens, the conflict could be prolonged without any guarantee of stabilization, even in the event of a favorable outcome for the United States.

In this context, ASEAN countries are forced to rethink their energy strategies. Vietnam stands out as one of the economies most exposed to these disruptions.

Vietnam: Between Energy Vulnerability and Swift Adjustments

Samuel Pursch highlighted Vietnam’s main weakness: its heavy dependence on oil imports, mainly from the Middle East. This dependence contrasts with a political stability considered higher compared to some neighbors, like Thailand.

Facing the crisis, fuel prices fluctuated sharply, initially increasing by 52% before stabilizing around 30%. Initially, authorities utilized the oil price stabilization fund, but with no lasting success. Ultimately, reducing environmental taxes on gasoline helped contain inflation.

While the government remains relatively confident in the short term, especially until the end of April, the outlook for May and June remains uncertain. In this context, China is gradually establishing itself as a key energy partner, intensifying diplomatic initiatives to strengthen its position in the region.

The aviation sector also appears as one of the most vulnerable, with some companies already having to reduce their number of flights.

Furthermore, the increase in diesel costs poses a direct risk to the construction sector, a pillar of Vietnamese economic growth alongside the industry. Prolonged price pressures could lead to the suspension of numerous infrastructure projects.

A New Government Facing Economic Challenges

Beyond energy issues, speakers also discussed recent political developments in Vietnam. The new National Assembly is characterized by a generational renewal: a majority of its members were born after 1970, with less exposure to Soviet influence and a stronger international openness.

The profile of decision-makers is also changing. Technocrats (lawyers, doctors, senior officials, and private sector actors) now play a more significant role, at the expense of historical party figures. This transformation could favor a more pragmatic handling of economic challenges.

The new political landscape revolves around key figures for the 2026-2031 term. Truong Le, the Party’s General Secretary, was recently elected as President, further consolidating his influence. Despite being largely honorary, the position retains strong symbolic and diplomatic significance.

The Prime Minister, Pham Minh Chinh, also embodies this new generation. Trained in Japan and influenced by a more liberal economic approach, he previously led the Central Bank from 2016 to 2020.

However, Samuel Pursch cautioned against excessive economic zeal. According to him, prioritizing a 10% growth target could exacerbate inflationary pressures in a context weakened by global energy tensions.