This article is part of the Future Forecasting series. We’ve asked experts to identify crucial trends – from a shortlist of categories – that will influence national security out to 2035 and how those trends might intersect in a future scenario.

In this article, which explores the future of globalisation, Ben Bland concludes that economic growth in Southeast Asia will taper off, regional integration will stagnate and Southeast Asian governments will move closer to China.

Key trends

1Economics: Growth in Southeast Asia will taper as the export-led manufacturing model loses relevance and much-hyped ‘new economy’ jobs prove elusive

Export-led manufacturing will cease to be a significant driver of future economic growth for Southeast Asian nations because technological changes such as the rise of industrial automation and 3D printing will erode their competitive advantage of an abundant, cheap labour supply.

Many nations are pinning their hopes on generating ‘new economy’ jobs in technology, the service sector and e-commerce. However, developing countries such as Indonesia, the Philippines and Vietnam do not have the necessary soft and hard infrastructure base to attract significant high-tech jobs. At the low-end, e-commerce platforms and ride-hailing apps will provide insecure incomes and minimal skills development to informally employed workers.

As growth and the creation of quality jobs slow, additional economic challenges such as inequality and climate change will multiply the pressures on governments and societies.

2Sovereignty and Identity: Nationalism, unilateralism and internal identity conflicts will rise as Southeast Asian nations struggle to answer foundational questions about who controls state power, how the economy is oriented and who can be a citizen

Several important nations in Southeast Asia will continue to be embroiled in protracted political crises, as they struggle to answer key questions that have been hanging over them for decades.

As has been the case since independence, Indonesia will be held back by intractable battles over the role of Islam in the state, the balance between economic openness and protectionism and the advantages of democratic versus authoritarian styles of government. In Thailand, the seemingly endless power struggle between the monarchy, military and masses will continue. Myanmar will remain in disarray because of enduring conflicts over who can be a citizen and who, apart from the military, can keep the country together. Significant progress in Malaysia will not be possible until it can reach a consensual and fair resolution to the tensions between its main ethnic groups.

Without any easy technocratic fixes that can drive their economies and societies forward, governments will rely on nationalism to maintain their legitimacy. And they will turn inward as they become subsumed by complex problems. This will intensify the trend toward unilateralism in international affairs. Rising nationalism is also likely to feed back into deeper internal identity conflicts in these countries.

3Connectivity: The internet will become the ‘splinternet’ as tight national regulation over online news, social media and e-commerce becomes the norm

China’s support for cyber sovereignty – the idea that national governments should control and censor the internet – will become the norm across Southeast Asia. This is not because Beijing is ‘exporting’ its system but because control of the internet appeals to Southeast Asian governments, which are all either authoritarian or, in the case of the rare democracies like Indonesia and the Philippines, have authoritarian instincts running deep in their bureaucracies and political cultures.

This trend will be accelerated by pressures from liberal democracies, led by Australia, France and Germany, to exert control over large internet platforms such as Facebook and Google. Needing to maintain market access, the companies are likely eventually to comply with the mushrooming local regulations, good or bad, authoritarian or democratic.

While western nations will maintain strong protections for free speech and individual legal rights, in Southeast Asia the splintering of the internet will undermine one of the few outlets for political opposition, critical journalism, independent research and civil society organisation. The building of more tightly-controlled national cyber domains will also limit the potential for cross-border e-commerce to become a transformative economic force.

2035 future forecast

Economic growth in Southeast Asia will taper off, regional integration will stagnate, and governments will move closer to China.

Southeast Asia’s economies will face a double whammy as rates of growth slow and they face new challenges from climate change to widening social inequality. Rising nationalism will curb governments’ already limited enthusiasm for opening their economies through foreign-investor friendly reforms. Subsumed by domestic political difficulties, they will struggle to implement alternative development strategies. Governments will increasingly turn to state-led capitalism, limiting opportunities for western private sector investors and presenting opportunities for rivals in China and Japan who are happier operating in statist environments.

Long-awaited regional integration will stagnate as under-pressure governments become more nationalistic and act more unilaterally. With governments maintaining an interventionist economic stance at home, the dream of an Association of Southeast Asian Nations (ASEAN) Economic Community based on borderless trade and investment will remain just that. As tensions between Southeast Asian governments rise, ASEAN will mostly succeed in maintaining peace and stability. At the same time, it will fail to come up with coherent regional responses to the main geo-political challenges, including intensifying US-China rivalry. Thus, ASEAN will continue to be indispensable but inadequate as an organisation.

Failure to develop a more unified ASEAN and to deliver on promises of high economic growth will push Southeast Asian nations closer to China. Unable or unwilling to jointly balance against China,, they will instead seek ever greater individual accommodations with Beijing. Their economic weaknesses will prompt them to rely increasingly on Chinese investment, which can be implemented more quickly and comes without the ceaseless demands for reform beloved by Western governments. These growing interdependencies with China will generate new frictions but, given Beijing’s growing dominance, Southeast Asian governments will push back sparingly and with due deference. There is a higher chance that South China Sea claimant states will cut China-friendly deals with Beijing than there is of them going to war with their mighty northern neighbour over their long-running territorial disputes.

What would this mean for Australia?

Australia’s strategic outlook is built on hopes for a Southeast Asia that is growing faster, liberalising economically and moving towards more effective and accountable forms of governance. This forecast suggests the region is more likely to move in the opposite direction. That puts the Australian government and Australian companies at a disadvantage and suggests Canberra may need to re-think its strategy for the region.

Paradoxically, the best way to balance China in Southeast Asia is to avoid framing engagement with the region through the lens of competition with China.

As Southeast Asian governments and societies struggle with the challenges of nation-building, Australia is in a good place to help them, alongside allies such as the United States and Japan. But this assistance will be ineffective if it’s designed as a response to what Beijing is doing or an incentive to make Southeast Asian nations ‘stand up’ to China on the regional stage.

Instead, the mission should be to help Southeast Asian nations become stronger and more effective states, which are more resilient to all outside pressure. However, this will be difficult to justify within Australia if these nations are becoming less democratic and, potentially, less welcoming of western investment.

Ben Bland is the author of the forthcoming book, “Man of Contradictions: Joko Widodo and the struggle to remake Indonesia”.