ASEAN countries recognized that escalating strategic competition between economies carried the risk of heightening policy uncertainty. This will undermine market confidence and dent the region’s long-term growth prospects. In addition, as member countries are extremely vulnerable to climate change, regional economic growth is also exposed to rising climate risks. In response to the above challenges, green and digital transition are identified as keys to sustaining ASEAN’s economic development. ASEAN’s Digital and Energy Transition – A Competitiveness Analysis was written against the above backdrop.

This volume presents the latest results of the ACI ASEAN Annual Competitiveness Analysis and the ASEAN+ Digital Competitiveness Analysis. It seeks to provide a better understanding of ASEAN’s development trajectory through quantitative assessments and the key policies adopted by the individual ASEAN member states in the context of the strengths and weaknesses highlighted by the Competitiveness Indices in Chapters 2 and 3. This is valuable for readers seeking to understand the broad range of developmental strategies, priorities and challenges facing the diverse grouping of ASEAN as they seek deeper integration.

Through the above exercise, two key areas of in-depth research, energy and digital transition were developed and presented. Chapter 1 features ASEAN’s progress in energy transition. It finds that both ASEAN and member countries have set explicit goals for the energy transition and there are policy efforts to achieve them. However, national energy transition goals and efforts in member countries fall short of the ASEAN-level regional’s. As for the regional goals, progress in renewable energy deployment is sluggish, requiring more coordinated efforts among member countries. The case study in the chapter further examines how climate legislation in the energy sector impacts cross-border public renewable energy investment. It shows that each additional climate policy in the energy sector increases the share of investment in renewable energy by 2%. This shows that national climate policies signal to foreign investors the commitment to developing renewable energy, which attracts investment.

Chapter 2 features the 2023 edition of the ACI’s Annual ASEAN Competitiveness. Vietnam stood out in the overall competitiveness, ranking ahead of the regional average for the first time. This successfully mitigated the development divide between the ASEAN 6 economies and the Cambodia, Laos, Myanmar, Vietnam (CLMV) group. Delving into sub-environments, we find a narrowing gap in six sub-environments, most notably in Labour Market Flexibility, Productivity Performance, Financial Deepening and Business Efficiency and Technological Infrastructure. This shows the effectiveness of governmental efforts, such as improving the quality of infrastructure, upskilling and reskilling the workforce, and improving the business environment to attract investment.

Chapter 3 presents the results of the latest edition of the ASEAN+ Digital Competitiveness Analysis. The environment Institutional Capacity sees a widening gap between the forerunners, such as Singapore and those lagging, such as the Philippines and Indonesia. As ASEAN advances its goal of fostering a more integrated digital economy through initiatives like the Digital Economy Framework Agreement, it becomes crucial for member states to bridge existing divides to fully capitalize on the region’s digital potential. Encouragingly, member countries are actively undertaking initiatives to achieve this goal. These efforts encompass investments in technological infrastructure and the R&D of frontier technologies, empowering private enterprises to participate in the digital economy, cultivating digital talent, and building a more efficient digital government.

By HUANG, Yijia