Welcome to Foreign Policy’s Southeast Asia Brief.
The highlights this week: The Philippines pushes for a South China Sea deal, Indonesian stocks tumble, the Philippines’ president and vice president face impeachment, and Cambodia quietly rebuilds ties with the United States.
The Philippines Pushes for a South China Sea Deal
The Philippines wants to conclude negotiations on a South China Sea code of conduct between the Association of Southeast Asian Nations (ASEAN) and China this year, Foreign Secretary Maria Theresa Lazaro said at an ASEAN retreat last week. The Philippines is chair of ASEAN for 2026.
A code of conduct would be aimed at managing disputes in the crucial waterway. China’s “nine-dash line” claims swathes of the South China Sea, which overlaps with the claims of five ASEAN countries: Brunei, Indonesia, Malaysia, the Philippines, and Vietnam.
Various ASEAN claims also overlap. But most of the trouble is with China, whose expansive claims and aggressive conduct weigh particularly heavily on the Philippines.
Talks on the issue have dragged for decades. In order to make a breakthrough, Lazaro said an ASEAN working group will hold monthly meetings on the matter. China has not agreed yet to join the meetings.
Points of contention include geographic scope, legally binding elements, and definitions of “self-restraint.”
Historically, two major issues for talks have been China’s reluctance to negotiate with ASEAN as a bloc and ASEAN’s own internal divisions on the matter.
To make matters worse, relations between China and the Philippines are at a low ebb.
The Chinese Embassy in Manila has embarked on a messy and public row over comments made by Philippine Coast Guard officer Jay Tarriela. The embassy has accused him of defaming China and Chinese President Xi Jinping.
The Philippines’ political reaction has been furious, with some calling for China’s ambassador to be expelled. However, Philippine President Ferdinand Marcos Jr. rejected that idea.
This comes against the backdrop of years of raised tensions between China and the Philippines. Marcos’s strengthening of security ties with the United States has provoked ire from Beijing, and the rate of incidents in the South China Sea has escalated.
The other major development at the retreat was an increasingly clear split over Myanmar following the junta’s recent election there.
Thailand is leading the charge for ASEAN to soften its position on the junta, which the grouping has refused to recognize as a legitimate government following the 2021 coup.
At a press conference, Lazaro said that ASEAN does not endorse the legitimacy of the recent junta-run election and remained committed to the five-point consensus, which calls for negotiations and an end to the violence in Myanmar.
However, Lazaro acknowledged that, after the recent election, some ASEAN members might engage with the junta on a bilateral basis.
Thailand’s push for engagement is because it needs to manage its troublesome border with Myanmar. In a press statement following the retreat, Thailand’s Ministry of Foreign Affairs said it “emphasized the need for ASEAN to adjust its approach” on Myanmar.
What We’re Watching
Dual Philippines impeachment attempts. Philippines President Ferdinand Marcos Jr. and Vice President Sara Duterte are both facing impeachment attempts.
On Monday, a coalition of progressive legislators and civil society groups filed two impeachment complaints against Duterte.
Prior attempts to impeach Duterte in 2024 and 2025 were dismissed by the Philippine Supreme Court on the grounds of being improperly filed, which forced critics to wait another year before trying again.
Meanwhile, Marcos is facing two separate impeachment attempts—a third was stalled over procedural questions.
The Philippines elects presidents and vice presidents separately, leading to situations where the winners of each office loathe each other.
Marcos and Duterte started as allies their relationship has degraded dramatically.
In 2025, Marcos arranged the extradition of Duterte’s father, former President Rodrigo Duterte, to the International Court of Justice. Sara Duterte said that she had hired an assassin to kill Marcos and his wife, Liza Araneta, should she herself be killed.
Drama between presidents and deputies is not new. During the previous administration, allies of Rodrigo Duterte attempted to impeach the liberal vice president.
This latest acrimony comes amid enormous anger about corruption and economic growth, which slowed to 4.4 percent in 2025.
Malaysian military corruption scandal hits top brass. Former military intelligence head Mohd Razali Alias was charged on Jan. 29 with three counts of graft relating to military procurement.
Other high-ranking officers have also been ensnared in the growing scandal—such as the former head of the defense forces, a former army chief and his wife, and the current joint forces chief of staff—as part of an ongoing investigation into military corruption.
Revelations about alleged debauchery by officers during parties on bases have further tarnished the military’s reputation.
Prime Minister Anwar Ibrahim has promised to clean up, calling corruption in this area a “direct threat to national security.”
Indonesia’s stock market panic. Indonesia’s stock exchange took a beating after MSCI, a major financial information provider, threatened last week to downgrade Indonesia’s assets over market manipulation concerns.
Stocks sold off sharply, and the market was down 16.5 percent, though it has since recovered somewhat. The head of the stock exchange resigned and reforms were announced, including increasing minimum free floats to try stave off the downgrade.
The incident is embarrassing for the Indonesian government on a number of levels. Indonesia’s new finance minister was recently boasting about the market’s strong performance. He claimed that it was proof of investors’ confidence in Indonesia at a time when many have criticized the government’s economic and fiscal policies.
The problem of price manipulation on the exchange, if perhaps not its scale, has been known for a while. Indonesia’s president, Prabowo Subianto, even referred to it in a 2024 speech.
Photo of the Week
A Malaysian Hindu devotee carries a milk pot as she walks to a temple at the Batu Caves in Malaysia, on Feb. 1.Annice Lyn/Getty Images
The annual Hindu festival of Thaipusam commemorates when Lord Murugan received a sacred spear from the goddess Parvati, signifying the victory of good over evil. Devotees make the pilgrimage to the Batu Caves bearing ornate ceremonial burdens and milk pots as offerings, and some pierce their body to show penance and devotion.
What We’re Reading
How are Southeast Asian exporters continuing to grow their trade surpluses with the United States despite tariffs? Kentaro Takeda takes a look under the hood in Nikkei Asia.
How does sanctioned Iranian oil end up on a jet that’s striking civilians in Myanmar? A top-notch piece of investigative work by Gavin Finch, Devjyot Ghoshal, Han Huang, and Adolfo Arranz in Reuters.
A team of reporters from the Straits Times offers a snapshot of Chinese-Malaysian life in the state of Kelantan, which is ruled by the Malaysian Islamic Party that is gaining momentum nationally.
Number of the Week
2,100. The number of megawatts of data center capacity that Malaysia is projected to have by the end of 2026, according to real estate group Jones Lang LaSalle. This would roughly double its current capacity. Malaysia remains a small player by global standards, but it is one of the biggest in Southeast Asia and one of the fastest-growing.
A key driver is neighboring Singapore. Singapore currently has more than 1,400 MW of capacity, and it is aiming to add 2,000 MW. But expansion is tricky in the small and densely populated city-state, which is pushing investors to set up shop in the Malaysian state of Johor, just across the strait.
In Focus: Cambodia Strengthens U.S. Ties
On Jan. 26, the USS Cincinnati, an Independence-class littoral combat ship, visited Ream Naval Base in Cambodia. The visit underlines Cambodia’s push to strengthen relations with the United States after years of being seen as strongly leaning toward China.
Ream Naval Base became the center of a great deal of U.S. anxiety after it was refurbished and expanded largely at China’s expense. In 2019, the United States claimed that a secret agreement allowed China’s navy to use the base for up to 30 years.
The symbolic access will not allay U.S. concerns about China’s apparent ongoing presence in the port. But the visit by the USS Cincinnati is still a show of trust that follows other signs of rapprochement.
During the 2025 border war with Thailand, Cambodia welcomed intervention from U.S. President Donald Trump, who was pushing for a cease-fire.
Since then, Cambodia has moved to accommodate the Trump administration in other ways. In 2025, it was announced that the United States and Cambodia would resume joint military exercises, which were last held in 2017. Cambodia will also join Trump’s Board of Peace.
Notably, this warming of ties has continued despite the U.S. crackdown on Cambodian scam centers and state-linked mafias behind them.
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