Southeast Asia 2026 : A Regional Outlook for NZ

As New Zealand continues to strengthen its ties with Southeast Asia through trade agreements and diplomatic partnerships, 2026 presents a year of significant political and security developments across the region.

From border conflicts to disputed elections and major leadership transitions, Southeast Asia faces tests that will shape its direction for years to come – so what’s going on, and what’s coming up in 2026 ?

CAMBODIA AND THAILAND: A FRAGILE CEASEFIRE

On 27 December, Cambodia and Thailand agreed to end nearly three weeks of intense fighting along their 817-kilometre shared border. The conflict claimed at least 100 lives and displaced close to a million people on both sides, pushing bilateral relations to their lowest point in decades.

Under the ceasefire agreement, both nations have committed to hold their current positions, refraining from reinforcing military positions, and allowing displaced civilians to return home. Thailand has also released 18 Cambodian soldiers captured in late July. During talks hosted by Chinese Foreign Minister Wang Yi in Yunnan, both sides have pledged to build "mutual confidence" and restore stability.

The border dispute traces back to treaties signed between French Indochina and the Kingdom of Siam in 1904 and 1907 and has resurfaced numerous times ever since. Tensions escalated through the first half of 2025, beginning with an incident in February involving Cambodian women singing patriotic songs at a disputed Angkor temple. This culminated in five days of fighting in late July.

Following intervention by Malaysian Prime Minister Anwar Ibrahim and US President Donald Trump, a ceasefire was signed on 28 July and reaffirmed in October through a peace declaration in Malaysia. However, Thailand scrapped the agreement in November after Thai soldiers were injured in a landmine explosion along the border. Fighting resumed on 7 December following a skirmish that each side accused the other of starting.

Whether the current ceasefire holds carries significant consequences not just for Cambodia and Thailand, but for the wider region and ASEAN. The Philippines picks up the ASEAN chairmanship for 2026, so responsibility for managing the dispute now rests with Manila.

Given the breakdown of earlier agreements and the rising nationalist sentiment the conflict has stirred on both sides, there's no guarantee this ceasefire will last. During December's fighting, the Royal Thai Army seized small but strategically important parcels of territory along the Dangrek Mountains that it claims under the 1907 treaty, as well as pockets of land in two disputed frontier settlements long inhabited by Cambodians.

 Even if the new ceasefire holds, the bitterness and mistrust generated by the conflict is likely to taint bilateral relations for years.

MYANMAR: JUNTA'S SHAM ELECTION

On 28 December, Myanmar's military junta held the first phase of its controversial election, with further phases scheduled for 11 and 25 January. The election has been split into phases due to the conflict that has engulfed Myanmar since the military's seizure of power in February 2021, pitting the military against dozens of ethnic armed groups and new People's Defence Forces.

Military chief Senior Gen. Min Aung Hlaing, who led the 2021 coup, has urged his opponents to put down their weapons and participate in the electoral process. He's also promised that the military administration will transfer power to whatever government emerges after the poll.

However, the elections have been widely viewed as a sham designed to entrench military rule with a civilian facade. The military-backed Union Solidarity and Development Party (USDP) claimed to have won 80 percent of the vote on 28 December, which covered 102 of the country's 330 townships. The Irrawaddy reported that most other parties contesting the first phase "sank without a trace."

According to Richard Horsey of the International Crisis Group, the elections "are not intended to be a genuine popular poll. They are a procedural mechanism, required by the military-drafted 2008 constitution in order for the junta to shift from the post-coup state of emergency back to constitutional rule." The Special Advisory Council for Myanmar described the polls as "a reversion to military dictatorship under the guise of a make-believe civilian government."

The elections are also intended to rehabilitate the country's diplomatic status by giving foreign governments – particularly neighbours like China, Thailand, India, and other ASEAN members – a pretext for engaging more openly with the new political arrangement in Naypyidaw.

The New Zealand governmnet described the election process as "significantly flawed".

Labour Party MP Phil Twyford visited the Thai-Myanmar border in September, and called on the regime to release all political prisoners, end attacks against civilians, allow inclusive political dialogue with all stakeholders, and ease the humanitarian crisis by allowing aid deliveries

Whatever happens, the polls haven't resolved the grievances underpinning the armed resistance to military rule that is widely embedded through the country. The junta may have won the election, but they are a long way from prevailing in the bitter civil war.

VIETNAM: COMMUNIST PARTY CONGRESS

Later this month, the Communist Party of Vietnam (CPV) will hold its 14th National Congress. The quinquennial gathering, convening from 19-25 January in Hanoi, will involve around 1,600 delegates representing some 5 million CPV members across the nation. The Congress will review the Party's achievements, elect its leadership for the 2026-2030 term, and set the country's strategic and economic direction through the decade's end.

The CPV's National Congresses are tightly scripted events, with most decisions and appointments determined in secretive plenary sessions and backroom factional dealings in the year leading up to the event. However, it's widely expected that the Congress will see the reappointment of To Lam as general secretary of the CPV, the most important of the "five pillars" leadership positions.

Lam, who is now 68, took over the top post after the death in mid-2024 of General Secretary Nguyen Phu Trong, whom he served as minister of public security and the main enforcer of Trong's sweeping anti-corruption campaign.

Trong has announced reforms aimed at making the party-state "lean, compact, strong, efficient, effective, and impactful" and launching Vietnam into "an era of growth and resurgence." This has involved merging ministries, CPV commissions, and National Assembly committees, as well as a radical slimming of the state that eliminated an entire layer of administration and reduced the number of provincial and city administrations from 63 to 34. According to Reuters, nearly 150,000 officials lost their jobs in the overhaul.

Vietnam’s parliamentary elections are set down for a three month period (March to May) this year.  

THAILAND: ELECTION SEEKS RETURN TO STABILITY

Thai voters head to the polls in early February to elect a new government, after Prime Minister Anutin Charnvirakul dissolved parliament in mid-December with a promise to  "return power to the people."

In theory, the election offers an opportunity to end the instability that has affected Thai politics since the 2023 general election, which has seen four prime ministers and led to the formation of a shaky coalition government led by the Pheu Thai party. Anutin, leader of the conservative Bhumjaithai party, became prime minister last September after his Pheu Thai predecessor, Paetongtarn Shinawatra, was removed from office over an ethics violation.

Heading into the election, the Bhumjaithai party has attracted defectors from various parts of the Thai political spectrum and hopes to gain enough public support to reinvent itself as a viable governing party. Anutin is particularly hoping to capitalise on nationalist sentiment stirred up by the ongoing border conflict with Cambodia, which has played into his strategy of being seen as a defender of Thai sovereignty.

The People's Party also has reason to be confident of victory. Its predecessor, Move Forward, won the most seats in parliament at the 2023 general election on a  progressive agenda that included promises to break up powerful monopolies, abolish military conscription, and reform Thailand’s harsh lèse-majesté law.

Also vying for a return to office is Pheu Thai, still recovering from the disastrous collapse of its coalition in September and the imprisonment of its patriarch and patron, former Prime Minister Thaksin Shinawatra.

The whirlwind political turbulence of the past two decades of Thai history – which has seen 10 elected prime ministers and two military coups – suggests a swift return to a stable political consensus is hardly likely.

INDONESIA: PRABOWO'S FIRST YEAR

Indonesia’s President Prabowo Subianto began 2025 dominating Indonesian politics, leveraging his power to recentralise fiscal authority and fund flagship public programs.

However, the social consequences of widespread budget cuts quickly eroded popular support, culminating in widespread protests in late August. While a stimulus package and direct cash transfers provided temporary relief, underlying economic concerns, democratic backsliding, and radical changes to the legal system have left Indonesia on uncertain ground heading into 2026.

A key focus in 2026 will be renewed efforts to use upcoming electoral law revisions to abolish direct elections for local executive offices – an idea Prabowo himself has endorsed. Such a move would mark a milestone in the ongoing reversal of key democratic reforms from the post-Suharto era, consistent with a centralising trend that has accelerated in 2025.

Tax increases and further service cuts imposed by cash-strapped local authorities could fuel further discontent in 2026, particularly if voters attribute local government funding issues to decisions made by Prabowo.

Indonesia also faces persistent structural economic challenges, and private sector confidence has been affected by Prabowo's approach to relations with big business and his pursuit of a greater economic role for state-owned enterprises, now directly accountable to him through a new mega-fund, Danantara, which was unveiled in early 2025.

 THE PHILIPPINES: ASEAN CHAIRMANSHIP AND REGIONAL LEADERSHIP

The Philippines assumes the chairmanship of ASEAN in 2026, presenting both opportunities and challenges for President Ferdinand "Bongbong" Marcos Jr.'s administration. The chairmanship comes at a historic time, coinciding with the tenth anniversary of the 2016 ruling on the South China Sea amid heightened tensions with China.

President Marcos officially launched the Philippines' 2026 ASEAN chairmanship in December, outlining three key priorities under the theme "Navigating Our Future, Together": peace and security anchors, prosperity corridors, and people empowerment.

Under the peace and security pillar, the Philippines will highlight the responsible and ethical use of artificial intelligence for new and evolving security challenges, early warning mechanisms, and disaster risk reduction.

The chairmanship will also seek to finalise the long-stalled Code of Conduct for the South China Sea, though progress appears challenging given ASEAN's consensus-based mechanisms.

In the economic space, the Philippines aims to harness AI to advance the region's transition into a digitally empowered community, promoting safe, ethical, and sustainable AI adoption in trade facilitation, digitalisation, and innovation. The goal is to enhance regional competitiveness, support micro, small, and medium enterprises, and unlock opportunities for inclusive and sustainable growth.

Under the socio-cultural pillar, the Philippines will champion responsible AI use to enhance healthcare, education, and youth empowerment by broadening access to essential services.

Beyond its stated priorities, the Philippines' chairmanship must also handle issues kicked on from Malaysia's 2025 chairmanship, including managing the uncertain post-election landscape in Myanmar and addressing the Thailand-Cambodia border conflict.

The Philippines' approach to its ASEAN role comes as Manila continues to strengthen defence partnerships around the Pacific, particularly with the United States, Australia, and Japan, to deter Chinese escalation in the South China Sea. This dual approach – upholding ASEAN principles while advancing Philippine national interests – will test President Marcos's diplomatic skills throughout 2026.

 IMPLICATIONS FOR NEW ZEALAND

These developments carry implications for New Zealand's interests in Southeast Asia. The region represents a number of crucial trading partners, with ASEAN nations as a group being New Zealand's second-largest trading partner after China, and ahead of Australia.

The instability in Thailand and Myanmar, democratic backsliding in Indonesia, and tensions between Cambodia and Thailand all pose risks to regional stability and economic certainty. New Zealand's commitment to rules-based order in the region, particularly regarding maritime security in the South China Sea, aligns with the Philippines' approach during its ASEAN chairmanship.

The year ahead will test whether ASEAN's consensus-based approach can effectively address the region's mounting challenges, or whether member states will increasingly look to "minilateral" partnerships outside the bloc to advance their security and economic interests.

Asia Media Centre