ASEAN’s Rising Middle Class: Key Drivers of Inclusive and Sustainable Growth
For years, discussions about Asia’s economic landscape tended to focus either on the lavish lifestyles of society’s elite or on the persistent poverty in rural regions. Far less attention has been given to the rising middle class in the region’s secondary cities.
That began to change last week. During the 2025 ASEAN Summit in Kuala Lumpur, the Mastercard Center for Inclusive Growth hosted its first ASEAN Inclusive Growth Summit — and the emerging middle class became a central theme. This stood in contrast to global news reports predicting economic stagnation. “Growth may ease slightly, but both the global and Asian middle classes are still expanding,” noted Wolfgang Fengler, CEO of World Data Lab.
Much of that expansion is happening in Southeast Asia — a bloc of 11 nations led economically by Indonesia, Thailand, and the Philippines. Fengler estimates that by 2032, 112 million people in the region will enter the middle class: roughly 50 million from Indonesia and another 50 million combined from the Philippines and Vietnam. “If you’re looking for new customers — for a bicycle, motorcycle, or a low-cost airline ticket — ASEAN is where you should be, not China,” he said.
Another major focus of the summit was how governments and businesses can uplift this demographic while ensuring equitable growth. “For growth to be truly inclusive, it must be shared, resilient, and sustainable,” said Malaysia’s Deputy King, HRH Sultan Nazrin Muizzuddin Shah. “Without inclusion, rising inequality and declining trust weaken progress. The triple bottom line — people, planet, profit — must guide our choices.”
The event, inspired by the Center’s annual Global Inclusive Growth Summit in Washington, D.C., brought together leaders from business, government, civil society, and the social-impact sector. With more than 680 million people and a rapidly expanding consumer base, Southeast Asia is on track to become the world’s fourth-largest economy within five years — powered by digital innovation, entrepreneurship, and cross-border cooperation.
“There is tremendous momentum in this region,” said Jon Huntsman, Mastercard’s vice chair and president of Strategic Growth. “But turning that energy into sustained success requires an economy where everyone can participate and benefit.”
Below are three key ways this transformation is already taking shape.
1. Strengthening small businesses by amplifying their voices
Micro, small, and medium enterprises (MSMEs) form the economic backbone of Southeast Asia, accounting for 85% of jobs and contributing 45% of the region’s GDP.
“The future of Southeast Asia won’t rest on a handful of large corporations,” said Pei Ying Chua, LinkedIn’s APAC head economist. “It will be built by millions of small businesses. When MSMEs thrive, the whole region rises.”
The pandemic accelerated this trend as entrepreneurs discovered they could run online businesses without the expense of physical storefronts. Expanding broadband access allowed countless small sellers to reach customers both locally and globally, including artisans from rural communities.
However, many entrepreneurs soon realized they lacked the marketing tools to stand out online. To address this, TikTok partnered with the ASEAN Foundation and the ASEAN Business Advisory Council to launch the ASEAN Store Together program. The initiative primarily supports women-led and rural MSMEs, training 50 businesses so far on listing, livestreaming, and promoting their products through TikTok Shop. TikTok also subsidized part of their earnings and offered customer discount codes.
The impacts have been dramatic. Magkawi, a women-led cosmetics brand in the Philippines, saw its revenue jump by 80% after joining the TikTok Shop. “During their first livestream alone,” said TikTok’s Chanida Klyphun, “they earned more than their entire offline revenue for the month.”
Alex Hungate, president and COO of Grab, noted that digital transformation has helped level the playing field for MSMEs and gig workers, but more needs to be done to support access to essential services and prepare these businesses for an AI-driven future — one in which they gain from the technology rather than be displaced by it.
2. Building sustainable growth models
Whether through promoting electric vehicles, integrating circular practices, or reshaping tourism to be more equitable, sustainability is increasingly central to Southeast Asia’s economic evolution. Summit discussions highlighted a shared challenge: creating policies and partnerships that balance growth with environmental stewardship.
Indonesian singer and actress Maudy Ayunda illustrated this through her skincare company, From This Island. From the start, she committed to returning part of the revenue from key products to the communities where ingredients are sourced. But she also aims to shift perceptions of Indonesia from a supplier of raw materials to a center of innovation. “We want Indonesia to have a stronger voice in science and technology,” she said, pointing to the company’s investment in R&D and new extraction methods.
Electric vehicles have also gained traction due to lower emissions and reduced dependence on imported fuel. Malaysian-based Yinson Holdings Berhad and the Philippines’ ACMobility are banking on EVs becoming the preferred option for the emerging middle class. To support this transition, they are working across the entire EV ecosystem — from batteries to maintenance to services for drivers.
A critical piece has been reducing range anxiety. Both companies have helped build extensive charging networks in their respective countries. In the Philippines, EV adoption has risen from about 1% two years ago to between 4% and 6% today. “We hope to surpass 50% within the next five years,” said ACMobility CEO Jaime Alfonso Zobel de Ayala.
3. Regional cooperation continues to deliver value
As ASEAN’s economy grows, collaboration among member states has become increasingly vital. Initiatives include a new ASEAN Tourism Sectoral Plan launching in January to promote easier travel, and an ASEAN-Australia cyber dialogue established earlier this year.
Cybersecurity is a major area requiring joint action, as cybercriminals ignore national borders. “These threats affect all of us, and we must tackle them together,” said Australia’s national cybersecurity coordinator, Michelle McGuinness. “No single country or sector can do it alone.”
Cooperation between governments and private companies is also expanding. For example, ASEAN countries have spent three decades developing the ASEAN Power Grid, which currently delivers 7.5 gigawatts of interconnected power across the region.
“It’s a powerful symbol of economic integration,” said Winfried Wicklein, director general for Southeast Asia at the Asian Development Bank (ADB). Energy ministers regularly meet to advance the project, which aims to double its capacity within 15 years. This expansion will increase rural broadband access — which can lag by up to 30% — and support new digital technologies, including AI.
Achieving this will require strong partnerships with private investors. To support the effort, ADB and the World Bank have launched the ASEAN Power Grid Financing Initiative, uniting governments, financiers, and industry stakeholders. ADB has already pledged $10 billion. “We used to measure our impact by our lending volume,” Wicklein said. “Increasingly, we’re measured by how much capital we mobilize.”
That began to change last week. During the 2025 ASEAN Summit in Kuala Lumpur, the Mastercard Center for Inclusive Growth hosted its first ASEAN Inclusive Growth Summit — and the emerging middle class became a central theme. This stood in contrast to global news reports predicting economic stagnation. “Growth may ease slightly, but both the global and Asian middle classes are still expanding,” noted Wolfgang Fengler, CEO of World Data Lab.
Much of that expansion is happening in Southeast Asia — a bloc of 11 nations led economically by Indonesia, Thailand, and the Philippines. Fengler estimates that by 2032, 112 million people in the region will enter the middle class: roughly 50 million from Indonesia and another 50 million combined from the Philippines and Vietnam. “If you’re looking for new customers — for a bicycle, motorcycle, or a low-cost airline ticket — ASEAN is where you should be, not China,” he said.
Another major focus of the summit was how governments and businesses can uplift this demographic while ensuring equitable growth. “For growth to be truly inclusive, it must be shared, resilient, and sustainable,” said Malaysia’s Deputy King, HRH Sultan Nazrin Muizzuddin Shah. “Without inclusion, rising inequality and declining trust weaken progress. The triple bottom line — people, planet, profit — must guide our choices.”
The event, inspired by the Center’s annual Global Inclusive Growth Summit in Washington, D.C., brought together leaders from business, government, civil society, and the social-impact sector. With more than 680 million people and a rapidly expanding consumer base, Southeast Asia is on track to become the world’s fourth-largest economy within five years — powered by digital innovation, entrepreneurship, and cross-border cooperation.
“There is tremendous momentum in this region,” said Jon Huntsman, Mastercard’s vice chair and president of Strategic Growth. “But turning that energy into sustained success requires an economy where everyone can participate and benefit.”
Below are three key ways this transformation is already taking shape.
1. Strengthening small businesses by amplifying their voices
Micro, small, and medium enterprises (MSMEs) form the economic backbone of Southeast Asia, accounting for 85% of jobs and contributing 45% of the region’s GDP.
“The future of Southeast Asia won’t rest on a handful of large corporations,” said Pei Ying Chua, LinkedIn’s APAC head economist. “It will be built by millions of small businesses. When MSMEs thrive, the whole region rises.”
The pandemic accelerated this trend as entrepreneurs discovered they could run online businesses without the expense of physical storefronts. Expanding broadband access allowed countless small sellers to reach customers both locally and globally, including artisans from rural communities.
However, many entrepreneurs soon realized they lacked the marketing tools to stand out online. To address this, TikTok partnered with the ASEAN Foundation and the ASEAN Business Advisory Council to launch the ASEAN Store Together program. The initiative primarily supports women-led and rural MSMEs, training 50 businesses so far on listing, livestreaming, and promoting their products through TikTok Shop. TikTok also subsidized part of their earnings and offered customer discount codes.
The impacts have been dramatic. Magkawi, a women-led cosmetics brand in the Philippines, saw its revenue jump by 80% after joining the TikTok Shop. “During their first livestream alone,” said TikTok’s Chanida Klyphun, “they earned more than their entire offline revenue for the month.”
Alex Hungate, president and COO of Grab, noted that digital transformation has helped level the playing field for MSMEs and gig workers, but more needs to be done to support access to essential services and prepare these businesses for an AI-driven future — one in which they gain from the technology rather than be displaced by it.
2. Building sustainable growth models
Whether through promoting electric vehicles, integrating circular practices, or reshaping tourism to be more equitable, sustainability is increasingly central to Southeast Asia’s economic evolution. Summit discussions highlighted a shared challenge: creating policies and partnerships that balance growth with environmental stewardship.
Indonesian singer and actress Maudy Ayunda illustrated this through her skincare company, From This Island. From the start, she committed to returning part of the revenue from key products to the communities where ingredients are sourced. But she also aims to shift perceptions of Indonesia from a supplier of raw materials to a center of innovation. “We want Indonesia to have a stronger voice in science and technology,” she said, pointing to the company’s investment in R&D and new extraction methods.
Electric vehicles have also gained traction due to lower emissions and reduced dependence on imported fuel. Malaysian-based Yinson Holdings Berhad and the Philippines’ ACMobility are banking on EVs becoming the preferred option for the emerging middle class. To support this transition, they are working across the entire EV ecosystem — from batteries to maintenance to services for drivers.
A critical piece has been reducing range anxiety. Both companies have helped build extensive charging networks in their respective countries. In the Philippines, EV adoption has risen from about 1% two years ago to between 4% and 6% today. “We hope to surpass 50% within the next five years,” said ACMobility CEO Jaime Alfonso Zobel de Ayala.
3. Regional cooperation continues to deliver value
As ASEAN’s economy grows, collaboration among member states has become increasingly vital. Initiatives include a new ASEAN Tourism Sectoral Plan launching in January to promote easier travel, and an ASEAN-Australia cyber dialogue established earlier this year.
Cybersecurity is a major area requiring joint action, as cybercriminals ignore national borders. “These threats affect all of us, and we must tackle them together,” said Australia’s national cybersecurity coordinator, Michelle McGuinness. “No single country or sector can do it alone.”
Cooperation between governments and private companies is also expanding. For example, ASEAN countries have spent three decades developing the ASEAN Power Grid, which currently delivers 7.5 gigawatts of interconnected power across the region.
“It’s a powerful symbol of economic integration,” said Winfried Wicklein, director general for Southeast Asia at the Asian Development Bank (ADB). Energy ministers regularly meet to advance the project, which aims to double its capacity within 15 years. This expansion will increase rural broadband access — which can lag by up to 30% — and support new digital technologies, including AI.
Achieving this will require strong partnerships with private investors. To support the effort, ADB and the World Bank have launched the ASEAN Power Grid Financing Initiative, uniting governments, financiers, and industry stakeholders. ADB has already pledged $10 billion. “We used to measure our impact by our lending volume,” Wicklein said. “Increasingly, we’re measured by how much capital we mobilize.”
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