Germany’s New Government Should Deepen ASEAN Engagement as a Strategic Priority
Germany’s recent federal election marked a turning point in the country’s political landscape, bringing the conservative CDU/CSU bloc back to power under Friedrich Merz, in coalition with the center-left SPD. After years of political fragmentation and economic stagnation, voters endorsed a mandate for pragmatic reform and renewed growth. Merz’s coalition agreement focuses heavily on economic revitalization, infrastructure investment, and restoring Germany’s status as an industrial powerhouse. With a €150 billion investment fund and new fiscal flexibility, the government has laid the groundwork for an assertive economic and foreign policy agenda—one that includes a sharpened focus on external partnerships, particularly in Asia.
With Friedrich Merz now at the helm of Germany’s new coalition government, a shift toward reinvigorated economic diplomacy is clear—and nowhere is this more urgently needed than in Southeast Asia. The ASEAN region, with its 680 million people and $3.6 trillion GDP, offers Germany a valuable counterbalance to the uncertainties of transatlantic trade and the looming shadows of protectionism. As Berlin commits to rebooting its own “growth engine,” ASEAN represents both an opportunity and a necessity—particularly in the face of slowing domestic momentum and increasing geopolitical risk.
The new German Economy Minister, Katherina Reiche, has emphasized the importance of diversifying trade beyond traditional partners, particularly as tensions with the United States simmer over tariffs. While the US remains Germany’s largest trading partner, its unpredictability under policies like Trump’s “reciprocal tariffs” has underlined the dangers of dependency. Reiche’s call for broader free trade agreements reflects a consensus that Europe—and Germany in particular—must look eastward with more resolve. ASEAN should therefore count on Merz’s support to expeditiously conclude FTA negotiations with Indonesia within his term, as well as to maximise progress with Thailand, Philippines, and Malaysia. Vietnam and Singapore should also push for Merz’s government to push for the ratification of their Investment Protection Agreements with the EU, which has not been approved by the German Parliament yet.
Germany already has one of the strongest economic relationships with ASEAN among all EU member states, but Merz’s administration could potentially set to elevate it to a new level. In 2023, total two-way trade between Germany and ASEAN reached US$67.51 billion, and German foreign direct investment in the region amounted to US$3.32 billion—an increase of nearly 18% from the previous year. Germany has built a solid foundation in ASEAN through development cooperation. From disaster management and biodiversity to governance, human rights, and technical training, Berlin has been a committed and effective partner. The institutionalized ASEAN-Germany Development Partnership and the Practical Cooperation Areas plan through 2027 give Merz’s government a tested framework to deepen ties. These programs are more than diplomatic gestures—they’re a blueprint for sustainable, inclusive growth that benefits both sides. Moreover, German tourism to ASEAN rebounded sharply post-pandemic, with nearly 1.8 million visitors in 2023, more than doubling 2022 figures. The revival of Germany’s own Indo-Pacific Strategy and the intent to build a Comprehensive Strategic Partnership with ASEAN show that Berlin is willing to think big and long term about ASEAN, reflect not only economic interdependence but also deepening social and cultural engagement, laying a strong foundation for Merz’s government to expand cooperation further.
Ultimately, Germany’s new government must view ASEAN not merely as an emerging market, but as a pillar of its foreign and economic policy. As Berlin confronts internal economic challenges and an evolving global trade order, it has an opportunity to lead with strategic foresight. By cementing a stronger ASEAN partnership, Germany can bolster its economic resilience, project influence in the Indo-Pacific, and support a rules-based multilateral order that remains under strain. The moment to act is now—and the Merz government appears ready to do just that.
Photo from the Seventh ASEAN-Germany Development Partnership Committee (AG-DPC) Meeting on 7 November 2023. Photo credits: ASEAN Secretariat Website www.asean.org
