The UAE’s process of economic diversification is progressing dynamically, which is reflected in the CEPA agreements being concluded with Southeast Asian states. This year, a series of talks and meetings were held with the European Union and the United States, and new trade agreements with Asian countries came into force, demonstrating the UAE’s growing global reach across multiple areas.
Over the past few years, Gulf countries have strengthened their strategic partnerships with various countries, including China, the United States (US), European states, as well as in Africa, South America, and East and Southeast Asia. This cooperation aligns with their national visions, which prioritize economic diversification and establishing a significant presence in multiple sectors. As a result, they have entered into numerous economic and trade agreements and participated in international economic initiatives, such as BRICS and the India-Middle East Economic Corridor. The Gulf was the first destination of Donald Trump’s visit after winning the presidential election, during which strategic areas of cooperation — including artificial intelligence (AI) – were discussed. The European Union is also holding talks with the United Arab Emirates on signing a free trade agreement. If finalized, it would be the first agreement of its kind between the EU and a Gulf state.
The UAE has developed its economy to a level that makes it competitive through the adoption of innovations, investments in strategic sectors such as AI, and ensuring economic stability, among other measures. More countries in the Gulf subregion, mainly Qatar and Saudi Arabia, are pursuing a similar path, creating optimal conditions for both economic development and the inflow of foreign direct investments (FDI). By combining these efforts with active engagement on the international stage, the region has become a particularly significant area of interest, demonstrating its importance in the global economy. Although they are among the main sources of hydrocarbons and supply vast amounts of crude oil and natural gas to the global market, as a result of diversification, they have focused on alternative sources of revenue, thereby securing both the future of coming generations and the positions they have managed to achieve in a relatively short period of time. Conversely, it is worth noting that in situations where the two major economic powers, the US and China, compete, their actions may, to some extent, impact the global market’s economic stability and the continuity of supply chains. Creating alternative solutions, such as relocating parts of production to other countries and strengthening strategic economic partnerships, are examples of policies currently pursued by the US, Asian states, and the Gulf.
It is worth exploring the UAE’s economic partnerships with Southeast Asian states. Malaysia, Indonesia, Cambodia, and Vietnam have intensified their efforts and presence in developing their economies, thereby becoming an alternative destination for FDI and supply chains. The UAE’s engagement with this region has been enhanced by signing the Comprehensive Economic Partnership Agreements (CEPAs), with the aim of reducing trade tariffs, enhancing bilateral trade, improving market access, and creating better investment conditions.
The Global Outreach of Southeast Asia
The geopolitical significance of Southeast Asian states that are members of the Association of Southeast Asian Nations (ASEAN) has been steadily increasing, as they play a crucial role in maintaining stability, fostering economic cooperation, and serving as strategic transportation hubs.
A few examples picture the importance of this region. The first one alludes to the Strait of Malacca, through which nearly 30% of global trade passes, hydrocarbons included. As Anas Rakha highlights, it is a critical chokepoint that links the Middle East with Asia, specifically China, South Korea, Japan, and Taiwan. Amol Gogate and Xavier Hovasse refer to the increasing opportunities the Southeast Asia countries can offer, such as “qualified workforce, higher quality and growing infrastructure, political stability and access to key commodities”.
In the current situation – characterized by the ongoing shift in US-China relations and the uncertain trajectory of trade – several ASEAN states are becoming alternative destinations for the relocation of certain manufacturing activities in the Outsourced Semiconductor Assembly and Test (OSAT) industry as part of a global tech supply chain. Among the countries in this region, Indonesia and Vietnam stand out for their particular potential, while Malaysia is making a gradual contribution. In a McKinsey & Company study, they were identified as the largest exporters in Southeast Asia. Furthermore, foreign direct investment has been noted for its role in the manufacturing sector, especially in electronics, minerals, metals, and chemicals.
The strategic location has been utilized by countries such as Singapore, which has led to the dynamic development of the aviation sector. Singapore, as a city-state, has leveraged its soft power by establishing a premium-class carrier, Singapore Airlines. They rank among the world’s top airlines, alongside Qatar Airways, Cathay Pacific Airways, and Emirates. Also, when evaluating the category of “most connected airports,” which refers to the highest number and frequency of flights that can be offered by an airport, Malaysia and Singapore rank first and fourth in the Asia Pacific region, and fourth and eleventh globally, respectively.
UAE’s Cooperation with Southeast Asian States
In line with the UAE’s foreign trade strategy and its cooperation with various countries, the total value of the state’s trade is expected to reach $1 trillion by 2031. Abu Dhabi has so far signed CEPA agreements with four countries – Indonesia (2022), Cambodia (2023), Malaysia (January 2025), and Vietnam (October 2024). The first three agreements have already entered into force, while the deal with Vietnam is still pending. According to media reports, these are the first trade agreements that the aforementioned Southeast Asian states signed with the Arab Gulf country. It is expected that the economic cooperation of the Emirates with individual countries will develop in the following sectors:
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- Indonesia: agriculture, energy, infrastructure, logistics. It is also anticipated that non-oil trade will amount to $10 billion by 2028.
- Cambodia: tourism, logistics, infrastructure, renewable energy; the total amount of non-oil trade is expected to reach $1 billion by 2028.
- Malaysia: healthcare, artificial intelligence, renewable energy, logistics; the total amount of non-oil trade is projected to rise to $13,5 billion by 2032.
- Vietnam: UAE enterprises have shown increased interest in technology, renewable energy, health care, and smart cities. The total value of non-oil trade reached $8 billion in 2022, and $71 million in total investments allocated to Vietnam. Emirates’ enterprises such as DP World, Mubadala, Emirates Investment Authority, and Borouge are also actively involved in the country’s economy. Furthermore, according to the Emirates News Agency, Vietnam remains the UAE’s largest non-oil trading partner in the ASEAN region.
In light of the data provided, the signatories of this agreement are focused on enhancing cooperation in strategic sectors, particularly in artificial intelligence. They also aim to increase their share in bilateral trade, infrastructure development, and the energy sector, which are crucial to enhancing connectivity and ensuring energy security amid decarbonization efforts. It is important to note that, according to the World Bank, the UAE’s leading export and import partners in 2022 included Saudi Arabia, India, the United States, China, Iraq, and Japan. As a result, it may take several years for the Southeast Asian countries to improve their standing among the UAE’s top trade partners. The trade agreements are only now coming into effect, so it will take time to see how quickly the Southeast Asian states will strengthen their economic partnerships with the Gulf region and the broader Middle East.
Although today it is too early to predict the trajectory and effects of developing policies, the CEPA agreements serve as a boost to strengthening bilateral relations with the prospect of diversifying their economies and attracting foreign capital. In 2024, the UAE was the largest Gulf investor in Indonesia. In line with the vision of the UAE, its presence in Southeast Asia is becoming increasingly visible, confirming the assumption that it is developing not only a regional position among competing economies but also strengthening its presence on the international stage.
It is also reflected in economic forums and formal meetings, as exemplified by this year’s ASEAN-China-Gulf Cooperation Council summit in Kuala Lumpur, Malaysia, and the invitation of the UAE to the Asia-Pacific Economic Cooperation (APEC) forum that was held in Gyeongju, South Korea, on October 31-November 1, 2025. The main topic of the summit revolved around three key terms: “connect, innovate, prosper”, including advanced technologies. The UAE delegation, headed by Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed al Nahyan, held separate talks with the President of South Korea, Lee Jae-myung. The World Korea online media platform reports that the representatives of the respective states put an emphasis on “artificial intelligence, smart cities, renewable energy, and next-generation technologies”. As evidenced by the discussion, they have expressed interest in continuing their cooperation in the long-term perspective, as demonstrated by the planned initiatives in the field of cutting-edge technologies. The UAE’s expanding cooperation in Southeast Asia is also extending to other Asian countries, reflecting its broader strategy to strengthen global strategic partnerships.
