2020 has proven to be a tumultuous year for the world. The Association of Southeast Asian Nations (ASEAN), as a highly internationalized region, is naturally not spared from events. At the time of writing, vaccines for the virus have begun to be distributed worldwide in the hopes of containing the virus. Meanwhile, new and more contagious strains of the virus have emerged. There is no doubt that the outbreak of the COVID-19 pandemic has severely hampered the progress of development in the region. This edition of the Asia Competitiveness Institute’s Annual Competitiveness Analysis on ASEAN endeavours to analyse the impact of the first year of the COVID-19 pandemic on the ASEAN Member States through the use of ACI’s Competitiveness Framework. The repeated waves of COVID-19 infections and empirical findings highlight the importance of good governance and responsive policy in the future as economics are shown to be straining under pandemic restrictions and the pressure for reopening grows.

This volume features profiles of the ASEAN Member States’ economies, using data up to 2019 before the irregularity of the COVID-19 pandemic, and the impact of COVID-19 through various indicators subject to availability. It finds that ASEAN entered into 2020 and the COVID-19 pandemic on solid ground. Given the impact of US-China trade disputes, ASEAN has appeared to be an increasingly attractive destination for FDI. This FDI inflow and trends in exports provide an indicator of shifting global value chains and a pivot towards ASEAN as a production base for China and the US. It then summarizes the policy responses adopted by the ASEAN Member States to contain the pandemic. In the process of documenting developments in ASEAN, it becomes evident that a successful, coordinated and inclusive response by ASEAN will serve as a strong signal to a turbulent world that ASEAN is a region of stability, open and attractive to global trade and investment. It also finds a positive link between the level of urbanization and spread of the pandemic in ASEAN.

The results of the 2020 Annual Competitiveness Analysis find that the Overall Competitiveness rankings closely follow the rankings in previous years, with Singapore outpacing the rest of the ASEAN countries in most of the indicators. Malaysia is a far second, while Thailand has managed to retain the third position from Brunei after two years. Indonesia rounds out the top five countries that performed above average. The bottom five countries with below average performance are Philippines, Vietnam, Cambodia, Laos and Myanmar.

Over the full period of the study, we can see that the development gaps in ASEAN have changed noticeably. In the early periods from 2000 to 2005, the overall competitiveness of the ASEAN economies can be observed to cluster in distinct tiers – Singapore a clear front runner, Malaysia Thailand and Brunei formed a second tier, Indonesia, Philippines and Vietnam a third tier and finally Cambodia, Laos and Myanmar a fourth tier. This has, over time, morphed as Indonesia has pulled ahead of its third tier, moving much closer to the second-tier countries while Myanmar has exhibited a worrying trend of falling further behind.

By ZHANG Xuyao and TAN Kway Guan