In the bubble years of the late 1980s, the appreciation of the Japanese yen sent a flood of investment from corporate Japan to the fast-growing economies of Southeast Asia. Matsushita, as Panasonic preferred to be called back then, alone accounted for 2% to 3% of Malaysia’s gross domestic product as it exported consumer electronics to the world from factories there. Japanese auto companies built cars in Thailand. And the big trading houses such as Mitsui and Mitsubishi imported oil and gas from Suharto’s Indonesia back home to resource-starved Japan.

That, though, was before the rise of China as a manufacturing powerhouse in the 1990s.

Part of China’s formula, to be sure, was a huge and hungry labor force that had just begun the move from the sometimes inhospitable countryside to the cities. Another factor was leader Deng Xiaoping’s embrace of development. But the ultimate catalyst was having scale that no other country could match.

It could take half an hour to drive from one end of a steel plant to another. Factories of companies such as Taiwan’s Foxconn had up to 300,000 employees who believed tomorrow would be better than today and infinitely better than yesterday. And that was before China became a leader in certain technologies, especially in the trio of batteries, renewables and electric cars, widening the gap with its neighbors in Southeast Asia.

Today, the optimism accompanying the rise of China has waned. Few households believe tomorrow will be better than today. Too many people have lost money in the property and stock markets, and earn almost nothing on their bank deposits. Domestic demand is no longer robust enough to absorb the output of the phenomenally productive machine the country has created. Instead, demand from abroad has become the catalyst for mainland growth.

And that means China is more likely to compete with ASEAN economies than support them. (The current situation is vastly different from 2008-2009, when the U.S. financial meltdown triggered a global crisis. Back then, China filled the void with aggressive fiscal and monetary policies that aided Asia’s recovery.)

Nowhere is this reversal more apparent than in Thailand. Making about 2 million cars annually — with about 900,000 sold domestically and the rest exported — the sector historically accounted for between 10% and 12% of Thai GDP, 11% of its gross exports, and supported 1 million workers, or 16%, of the country’s labor force, according to data from Bank of America.

Last year, though, sales crumbled. That collapse “has evolved beyond the reflection of a cyclical affordability issue into a credit crunch, triggering a negative feedback loop” and leaving sales at a 14-year low, BofA analysts note in a recent report. The report attributes this development to “declining global competitiveness against China.”

Indonesia, which has vast natural and mineral resources, should also be doing better than it is.

“Over the past few months domestic momentum has turned down once more,” according to Emerging Advisors Group, a Beijing-based research group. “The incipient domestic recovery seems to have petered out again, the credit cycle has turned down, other local activity indicators are slowing or contracting. … Indonesia is not a particularly attractive equity story.”

Moreover, the challenge posed by mainland China to Asia coincides with the U.S. push to dismantle global — particularly Asian — supply chains and reshore production. Meanwhile, the Federal Reserve’s relatively high interest rates continue to support the dollar, discouraging most regional central banks from cutting rates to stimulate spending and growth. In the fourth quarter, Asia’s total reserve accumulation fell by $48 billion, while net portfolio inflows for 2024 amounted to less than $24 billion — down from nearly $62 billion the previous year — according to ANZ Research.

“Asia will face the double whammy of incremental tariffs on U.S.-bound final exports and weaker Chinese demand for their intermediate exports,” notes Helen Qiao, head of Asian research for BofA in Hong Kong.

Still, not all of Southeast Asia has lost its “Tiger” dynamism.

For example, Vietnam — which is to South Korea what Malaysia once was for Japan — has no surplus labor to staff the factories of the most successful manufacturers in the region. Seoul-based Youngone, which makes high-end winter wear, was one of the earliest companies to move into China and then Vietnam. But today, given that it has become impossible to find enough workers in Vietnam, the company is expanding its operations outside of ASEAN, to Bangladesh, and is now the largest private sector employer in that country, with over 70,000 people working at its garment factories.

Economists used to pity landlocked Laos, which had difficulty attracting direct foreign investment due to its lack of ports. But now Laos sells hydropower to its neighbors at a time when cheap power is an increasingly valuable competitive advantage.

Meanwhile, Malaysia has benefitted from its proximity to Singapore. Malaysia is “a structurally positive EM (emerging market) story” notes Johanna Chua, head of Asian economics in Hong Kong for Citigroup. Part of her optimism is based on the Johor Singapore Special Economic Zone, “especially if such integration further attracts MNCs (multinational companies) looking to diversify supply chains from China.”

Such diverse national circumstances suggest that, sadly, Southeast Asia remains less than the sum of its parts — its once-promising Tiger economies have mostly lost their roar.