Southeast Asia, the Arab Gulf states, and China are moving to deepen regional economic ties in a broad range of areas from capital markets to halal food, beverage, and tourism industries.

Among other initiatives to emerge from an inaugural summit of leaders from Asean, the Gulf Cooperation Council ( GCC ), and China last week are a possible regional business council and even a free-trade agreement between Southeast Asia and the Gulf.

The GCC – comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates ( UAE ) – was Asean’s seventh-largest trading partner with US$130 billion in two-way trade in 2023.

But direct GCC investment in Southeast Asia is relatively small – less than US$400 million, relegating the Gulf to 16th place among FDI sources.

That may be about to change, especially in the energy sector, according to a joint statement adopted by the 17 leaders attending the summit chaired by Malaysia's Prime Minister Anwar Ibrahim in Kuala Lumpur on May 27.

Energy infrastructure

The joint statement encourages private and public-sector investments and partnerships in energy infrastructure, including subsea power cables and cross-border transmission projects under Asean, GCC, and Chinese initiatives.

The aim is “to advance multilateral power trade for greater regional energy connectivity, resilience, and market integration, including through renewable energy generation and LNG terminals,” the joint statement says.

Beyond energy, a separate declaration on economic cooperation between Asean and the GCC calls for investment in other high-priority sectors such as advanced technologies, manufacturing, logistics, and tourism.

The declaration also notes “the growing role of sovereign wealth funds in advancing investment cooperation” and the “importance of building partnerships between these funds and their counterparts in both regions”.

Financial cooperation

The Asean-GCC-China statement, meanwhile, puts priority on “exploring regional financial cooperation, including capital markets” as well as local-currency and cross-border payments in a region with a combined GDP of  US$25 trillion and 2.2 billion people. 

For Southeast Asia and the Gulf states, Islamic banking is highlighted as an area of mutual interest with “immense potentials” along with halal food and beverages, and tourism – notably halal and medical tourism.

The digital economy, agriculture, and food security are also highlighted.

On a possible Asean-GCC free trade agreement, the declaration calls for a joint feasibility study consistent with an existing five-year cooperation framework from 2024 to 2028.

‘More than a symbolic gathering’

The inaugural summit last week came barely 18 months after the first-ever meeting of Asean and GCC leaders in Riyadh in 2023.

For Yeta Purnama and Muhammad Zulfikar Rakhmat of the Center of Economic and Law Studies in Jakarta, “it was more than a symbolic gathering. It marked a formalization of growing and increasingly institutionalized cooperation among the three regions”.

“Over the past decade, China’s relationships with both Asean and the Gulf countries have expanded steadily,” they say. “Likewise, connections between Asean and the Gulf, especially in trade and investment, have strengthened.

“This summit confirmed that these separate strands of engagement are converging into a structured trilateral framework based on shared interests and practical collaboration.”

As an example, they point to Indonesia’s partnership with China and the UAE that began during the Covid pandemic. That led to UAE and Chinese interest in a tourism project in Aceh and the development of Nusantara, the new Indonesian capital.

Such trilateral cooperation is “likely to deepen and extend into new sectors, reinforcing a pragmatic partnership model built on complementary strengths”,  the Indonesian researchers write in the China Global South Project. 

“This framework provides a solid foundation for regional collaboration, focusing on infrastructure, technology, and sustainable development, while striking a balance between economic growth and strategic flexibility."

‘Pivotal shift’

Still, the symbolism was not lost on the Malaysian host. “From the ancient Silk Road to the vibrant maritime networks of Southeast Asia to modern trade corridors, our peoples have long connected through commerce, culture, and the sharing of ideas,” Anwar said in his opening remarks at the summit.

“Historically, centres such as Malacca exemplified this tradition, serving as vital crossroads linking East and West and demonstrating the power of openness, exchange and strategic connectivity,” the Malaysian prime minister said.

Focusing on Anwar’s remarks, Peter T.C. Chang – a visiting senior fellow with Iseas-Yusof Ishak Institute in Singapore – reckons the summit went beyond underscoring Asia’s growing geo-economic prominence.

“It also served to position the continent as a catalyst for a cultural renaissance,” says Chang, also a research associate at the Malaysia-China Friendship Association.

“This is arguably the first time since the Ming dynasty and admiral Zheng He’s legendary voyages in the 15th century that Asia has witnessed such profound economic interconnectedness.”

“After centuries of Western colonial dominance, the Asia-Pacific is reclaiming its economic dynamism and driving a pivotal shift in the world’s economic centre – from the Global North to the Global South.”

Eurasian Economic Union

Elsewhere in the Global South, the UAE and Mongolia are scheduled to sign free-trade agreements with the Eurasian Economic Union ( EAEU ) in late June.

China, Iran, Serbia, and Vietnam already have free-trade agreements with the EAEU, and Indonesia is reportedly in the final stages of negotiations. Cambodia, Egypt, India, and Singapore have also expressed interest.

Based in Moscow, the EAEU comprises Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia with a combined GDP estimated at US$2.3 trillion.

Standing together

Meanwhile, in a separate statement, the Asean leaders note “the continued rise in unilateral actions relating to tariffs and other trade and investment restrictions and the growing risk of global fragmentation”.

“We stress our strongest resolve to stand together as Asean in safeguarding the region’s economic stability, resilience, and long-term growth trajectory,” says the statement.

“Asean underscores that unilateral and retaliatory trade actions are counterproductive and risk exacerbating global economic fragmentation, especially when these actions create indirect impacts on Asean.

“We instruct relevant officials to monitor the potential risk of trade diversion and engage with partners through established platforms for constructive solution. We also remain committed to a peaceful and constructive resolution with our partners through consultative dialogue, mutual respect, and adherence to international law, in line with the fundamental principles under the Treaty of Amity and Cooperation in Southeast Asia.

“To this end, we reaffirm Asean’s commitment towards regional unity, economic stability and practical cooperation in navigating external challenges.”

Photo: Leaders gather at  the Asean-GCC-China summit in Kuala Lumpur on May 27. ( myasean2025.my )