The New Southbound Policy turns ten in 2026. A decade is long enough to judge it. Tsai Ing-wen launched the policy in 2016 with two aims: reduce Taiwan's dependence on the Chinese market, and build standing in a region that withholds formal recognition. The instruments were trade, investment, education and people-to-people exchange across eighteen countries in South and Southeast Asia. Lai Ching-te has kept the project running. At the 2025 Yushan Forum he placed it inside a wider New Southbound Policy+ and Indo-Pacific framing. The policy is usually assessed as trade diversification, or as a hedge against Beijing. On those terms it has worked. But ten years also allow a harder question. What can economic statecraft actually deliver for a state that lacks the recognition on which conventional diplomacy runs?

The answer cuts both ways: Taiwan is more deeply embedded in Southeast Asia’s economies than at any point in its history, but it is no closer to a seat in the region’s institutions. It sits inside the economy and outside the order. ASEAN is where this becomes visible. The bloc is not one audience among several for the New Southbound Policy. It is the core of it. Ten of the eighteen partner countries are ASEAN members, and the bloc absorbs most of the trade, investment and labor migration the policy has generated. Asking what the policy achieved therefore means asking what it achieved in ASEAN. Indonesia, the largest economy in the bloc, is where the limits bite hardest.

The regional ceiling

The economic record is strong. Taiwanese exports to ASEAN rose 35.6 per cent in 2025. In the same year, and for the first time in roughly twenty-six years, the United States displaced mainland China and Hong Kong combined as Taiwan's largest export market. Southeast Asia now carries a growing share of Taiwanese supply chains, outward investment and labor recruitment. That density has bought Taipei no institutional space. Taiwan is not in the Regional Comprehensive Economic Partnership, the ASEAN-centred agreement linking the ten member states to China, Japan, South Korea, Australia and New Zealand. Taiwan's own foreign ministry treats accession as effectively closed while China is a member. The CPTPP tells the same story more slowly. Taipei filed its application in September 2021 and still has no accession working group. Others have moved. Negotiations on Costa Rica's accession were substantially concluded in May 2026. Uruguay's working group is under way. In June 2026 the Commission opened preparatory discussions with Indonesia, the Philippines and the United Arab Emirates. Taiwan appears on none of these lists. The obstacle is structural rather than circumstantial. All eleven ASEAN member states maintain one-China policies, Timor-Leste included: it joined the bloc in October 2025 already committed, in its own joint statements with Beijing, to no official contact with Taipei. The bloc decides by consensus and prizes its own centrality, which means it moves together or not at all. A body that acts only by consensus cannot act for Taipei unless one member breaks with Beijing, and none intends to. This reverses a common reading. ASEAN centrality is usually described as the region's defense of its autonomy. It is also the mechanism that keeps Taiwan out. The New Southbound Policy can deepen ties with member states one at a time. It cannot pass the collective wall, because that wall is how the region governs itself.

The Indonesian case

Indonesia condenses the problem. It is the region's largest economy and, under Prabowo Subianto, its most assertive foreign policy actor. Jakarta joined BRICS as a full member in January 2025, the first Southeast Asian state to do so, while continuing the OECD accession process begun under Joko Widodo. Prabowo made China his first destination after taking office. Months later he skipped the G7 summit to keep a planned trip to Russia. This is a state widening its room for maneuver by refusing to be tied to any single pole. Within that strategy, the one-China policy is an asset rather than a chip to be traded. Recognizing Taipei would tear the fabric that allows Jakarta to be everyone's partner. Nothing Taiwan can offer, semiconductors included, is worth that tear. Indonesian agency is real, and it extends to the order of recognition itself. The most autonomous state in the region is also one of the most dependable guarantors of Taiwan's diplomatic invisibility. Below the diplomatic surface the relationship is dense. Jakarta hosts no Taiwanese embassy, but it does host the Taipei Economic and Trade Office, which performs most embassy functions without the title. Roughly 300,000 Indonesians work in Taiwan's factories, care institutions and private households. Taiwanese firms have manufactured in Indonesia for decades. The relationship is also profoundly asymmetric. Indonesian trade with China exceeded US$160 billion in 2025, dwarfing commerce with Taiwan. Jakarta can absorb a deterioration in ties with Taipei far more easily than Taipei can absorb one with Jakarta. Economic density, on its own, does not become political leverage. The composition of the exchange matters as much as its volume. Indonesia sends Taiwan coal, metals, natural rubber and agricultural commodities. It imports machinery, electronics and more technologically complex manufactures. It also supplies labor, through a transnational recruitment system linking states, brokers, employers and households, which sustains both Taiwan's manufacturing base and its ageing care economy. None of this makes every exchange exploitative, and dependency cannot be read off a trade deficit. The useful questions are where value is created, who controls technology and production, and who carries the costs of social reproduction. Trade and investment can expand for years without delivering technological upgrading or a better position in the regional division of labor. Vietnam shows what a different arrangement looks like. Taiwanese capital is embedded in Vietnamese export manufacturing, which has produced denser industrial linkages and deeper participation in regional production networks. Dependency and labor exploitation persist there too. The form of incorporation, however, rests on export manufacturing rather than on the mix of resource extraction and labor provision that characterizes much of the Indonesian case. The difference is qualitative. It concerns the terms on which each economy enters Taiwanese capital's regional accumulation circuit. Three structures therefore operate at once without converging: the diplomatic order of recognition, an unequal pattern of economic interdependence, and the regional division of labor.

Conclusion

Taiwan can work around the first through the second, substituting commerce, investment and social exchange for formal diplomacy. That maneuver pushes it further into the third, where relations are organized by uneven capacities and unequal control over production. Indonesia, for its part, helps reproduce the diplomatic order that constrains Taipei while benefiting from Taiwanese capital, technology and demand for labor. This is the contradiction the New Southbound Policy exposes after a decade. Economic substance can compensate for diplomatic form. It cannot convert into it. A state can spend ten years thickening a relationship without acquiring the political authority that would normally come with it. Recognition is not distributed according to economic usefulness. It is allocated inside a hierarchy that other states reproduce through their own diplomatic choices. The question worth asking is not only how well the policy has served Taiwan. It is which regional order that service has helped keep in place, and how long a relationship built on unspoken asymmetries can still be called a partnership between equals.