Geopolitical tensions can easily affect today’s global economy, and the negative consequences can quickly travel thousands of miles to supermarket shelves and fuel stations. Shipping lines, commodity markets and the financial system are all easily affected. 2026 is a reminder to Southeast Asia about the value of geopolitical stability to economic security.
The region’s increased reliance on imported energy and agricultural inputs has made it vulnerable to some structural problems that cannot be addressed in the short term through a policy solution. Although ASEAN economies were resilient in the past during the times of crisis, it has become evident that the region needs a more diversified and integrated strategy during the current crisis.
Energy Security Begins Beyond ASEAN’s Borders
The long history of Southeast Asia’s industrial development has been based on the importation of industrial energy sources, mainly fossil fuels. The developments in the Middle East cannot be ignored since many ASEAN economies are dependent on crude oil and liquified natural gas (LNG) from the Middle East.
The Strait of Hormuz is one of the world’s most important choke points, and is a major transit route for oil exports. War, increased military tensions or shipping insecurity in any part of Southeast Asia has an instant impact on the price of energy products. Oil price increases are rapidly felt in it prices and inflation as well as in transportation costs in countries like the Philippines and Vietnam, which are net importers of oil.
Emergency Measures Buy Time, Not Long-Term Security
Regional governments have taken varied actions to provide relief from the impacts of today’s short-term measures.
Strategic petroleum stockpiles are being ramped up to further bolster emergency stocks and several governments have promoted “work from home” policies for their public sector personnel to lower fuel usage during an emergency. There have also been short-term investments in coal fired electricity generation and expanded bio-fuel blending programmes to maintain power grids at a national level.
These measures are aimed in part at lowering the pressure in the immediate term, but they also highlight an unpalatable truth. Energy security remains incomplete in S.E. Asia and the policy makers are still at the whim of the world when supply chains are disrupted.
Food Supply Chain Faces a Parallel Crisis
The Middle East is of critical importance in providing inputs to the agriculture industry including energy and nitrogen fertilizers. Directly, the increasing prices of fertilizers affect the cost of production for rice farmers in Thailand and Vietnam and palm oil producers in Indonesia and Malaysia, too.
There’s a challenge in shipping, too. Transportation costs on ocean-going shipment of imports including wheat & soymeal increase due to higher insurance costs, higher fuel rates, and longer ocean shipping journeys. Those costs, of course, filter up through the supply chain with, on top of household food budgets.
Regional Cooperation Matters More Than Ever
A positive development has been the increased awareness of ASEAN’s members that it needs to work together during uncertain times in the world.
Governments are rolling out fuel subsidies and temporary price controls, and measures to support vulnerable households. Frameworks like the ASEAN Petroleum Security Agreement offer tools for emergency cooperation, and these continue to be applied.
In addition to crisis management, policymakers are more interested in investments in renewable energy, regional power interconnections, enhancing domestic biofuel production as well as agricultural resilience. These are more than just initiatives on climate policy, more than efforts at national interest, they are a growing part of a nation’s security.
Diversification Is Becoming a Strategic Necessity
Countries have been actively seeking alternative energy providers on the African Continent, U.S. and elsewhere to reduce the dependence on its energy sources while investing in local renewable energy sources. Comparable initiatives are proceeding to increase the capability of domestic food production, promote more efficient use of fertilisers and decrease reliance on imports of agricultural inputs.
Resilience of the supply chain relies not just on having multiple suppliers, but building resilience of regional supply chains, manufacturing systems, logistics and energy systems.
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