By Aimee Levitt, Contributor
In the past, most conversations about the Asian economy have centered around the glittering excesses of the upper classes, or the grinding poverty in rural areas. But not much has been said about the growing middle class in the region’s mid-sized cities.
Until now. On the sidelines of the 2025 Association of Southeast Asian Nations (ASEAN) Summit last week in Kuala Lumpur, the Mastercard Center for Inclusive Growth held its inaugural ASEAN Inclusive Growth Summit, where the burgeoning middle class was hot topic, despite reports in the international press of impending stagnation or even decline. “It may rise a bit slower, but the momentum is still on for the global middle class and the Asian middle class to rise,” said Wolfgang Fengler, CEO of World Data Lab.
Most of that growth will be in Southeast Asia, a region that comprises 11 nations, with Indonesia, Thailand and the Philippines as its largest economies. Fengler projects that by 2032, 112 million Southeast Asians will join the middle class: 50 million in Indonesia and another 50 million in the Philippines and Vietnam. “So, if you would sell a bicycle or a motorcycle or a cheap airline ticket and you want to have a new customer, not one that is already established,” Fengler concluded, “you should go to ASEAN rather than to China.”
Also top of mind: How government and business leaders can strengthen this group’s aspirations and help them thrive while ensuring no one gets left behind. “For growth to be considered truly inclusive, it must be shared, resilient, sustaining,” said HRH Sultan Nazrin Muizzuddin Shah, the deputy king of Malaysia. “Without inclusion, progress may be more fragile as inequality rises and trust in institutions erodes. The triple bottom line — people, planet, profit — must become central to our decision-making.”
The summit — an outgrowth of The Mastercard Center for Inclusive Growth‘s annual Global Inclusive Growth Summit in Washington, D.C. — brought together business partners, customers, private and public sector leaders, policymakers and social changemakers from across Southeast Asia and beyond. With over 680 million people and a rapidly expanding middle class, Southeast Asia stands at a pivotal moment, poised to become the world’s fourth-largest economy in the next five years. This momentum is driven by digital transformation, entrepreneurial spirit and cross-border collaboration.
“There is so much energy in this region,” said Jon Huntsman, Mastercard vice chair and president, Strategic Growth, “but to translate these trends into sustainable success, we must build an economy where everyone can contribute and connect to the benefits of growth.”
Here are three ways this evolution is already underway.
To grow small businesses, give them a microphone
Micro-, small and medium-size businesses form the backbone of the Southeast Asian economy, comprising 85% of employment and contributing 45% of GDP across the region.
“The future of our region, the future of Southeast Asia, it’s not going to be built by a few large mega businesses,” said Pei Ying Chua, LinkedIn APAC head economist. “It’s going to be built by millions of small ones, because when small medium enterprises do well and they thrive, the region grows together.”
And these businesses grew exponentially during the pandemic, as owners discovered they didn’t need to pay rent on brick-and-mortar premises. Instead, thanks to expanded broadband access across the region, they could sell their goods online from their homes. The digital economy is also providing greater opportunities for artisans in rural areas to connect with customers in other parts of the world.
But as these businesses started to grow, entrepreneurs realized that they lacked the marketing tools to help them get greater visibility, said Chanida Klyphun, director of Southeast Asia public policy at TikTok. TikTok joined with the ASEAN Foundation and the ASEAN Business Advisory Council to launch the ASEAN Store Together program earlier this year.
It works primarily with woman-led and rural entrepreneurs, and to date, it has trained 50 MSMEs and taught them how to list, livestream, and share information about their products on the TikTok Shop. TikTok also subsidized part of their revenue and provided discount codes to draw in more customers.
The results have been astounding. For example, after Magkawi, a woman-led cosmetics brand from the Philippines joined the TikTok Shop, its revenue increased by 80%. “In the first live stream,” Klyphun said, “they made more money than what they made offline for the whole month.”
The digital transformation has helped the playing field for smaller businesses and the gig economy, said Alex Hungate, the president and chief operating officer of the superapp Grab, but more work needs to be done — from enabling more access to critical to helping them transition into an AI-enabled world, “where they benefit from it and don’t become victims of it,” he said.
Growing the economy sustainably
Whether it’s accelerating the EV transition, embedding circularity in business models, or reimagining tourism to deliver shared prosperity, sustainability is becoming a larger factor in how industries in Southeast Asia are evolving. Conversations at the summit underscored a shared challenge: how to align policy, investment and innovation to balance economic growth with environmental responsibility.
When Indonesia singer and actress Maudy Ayunda co-founded her skin care line From This Island two years ago, she made a decision to return a portion of the revenue of her hero products back to the communities in which they were sourced. But she is also making sure she is not just sourcing, but innovating from Indonesia, she said.
“It has always historically been known as a place of laborers or raw materials suppliers,” she said. “And I wanted to tell a different story with From This Island. I wanted Indonesia to have a stronger voice in terms of innovation and science and technology, so we are investing in R&D to develop extraction methods that lead to much more powerful skin care effects.”
Recently, electric vehicles (EVs) have become more popular in the region: They pollute less, and they don’t need to be fueled by large quantities of imported gas and oil. Both Yinson Holdings Berhad, based in Malaysia, and ACMobility in the Philippines, are betting on EVs as the transportation of choice for the rising middle class. And so, both companies are working to create a more affordable EV infrastructure across the region. And to do so, said
Jaime Alfonso Zobel de Ayala, CEO of ACMobility, “we needed to participate in all parts of the lifecycle of the vehicle.”
This includes parts, like batteries as well as repairs and maintenance. And it also includes providing services for drivers. For instance, to allay fears of range anxiety — that the batteries will die before they get drivers to where they need to go — both companies have been instrumental in installing networks of charging stations throughout their home countries.
Two years ago, Ayala said, the penetration rate of EVs in the Philippines was 1%, but it’s since risen to 4% to 6%. “We’re hoping to cross the 50% threshold over the next five years,” he said.
Fostering regional cooperation always pays off
As the region’s economy continues to grow, ASEAN countries have recognized the growing importance of working together, from an ASEAN Tourism Sectoral Plan scheduled to launch in January to allow easier travel around the region to an ASEAN-Australia cyber dialogue started earlier this year.
Cybercriminals don’t acknowledge borders, so cybersecurity is a prime area for cross-border collaboration. “These issues impact every one us, and it’s going to take every one of us to get after it,” said Michelle McGuinness, Australia’s national cybersecurity coordinator. “No one sector, no one nation is going to be able to deal with it on their own. The cost of cybercrime, the intrusions, the insecurities, the vulnerabilities that it causes is, we are all in this together.”
Regional efforts have also expanded to include private companies. For example, over the past 30 years, governments in Southeast Asia have been collaborating on the ASEAN Power Grid, a major project that provides seven and a half gigawatts of power interconnections in the region.
“It’s about economic integration,” said Winfried Wicklein, director general of the Southeast Asia department of the Asian Development Bank. “It captures the imagination, and you can see that when ASEAN energy ministers come together.”
The collective goal is to double the power of the ASEAN Power Grid over the next 15 years to bring more people online — broadband coverage in some rural areas lags by as much as 30% — and accommodate more digital technology, including AI. But to achieve that ambition, Wicklein said, governments will have to work with private enterprise. ADB has joined forces with the World Bank on the ASEAN Power Grid Financing Initiative, which will bring together the governments, the investors, the sponsors, and the financiers. ADB has already committed $10 billion to the project.
“We used to be measured by how much we lend for impact,” Wicklein said. “Now, increasingly, we really get measured by how much we mobilize for impact.”
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