The year 1996 served as a reminder, if any was needed, of the crucial importance of great power relationships to the stability and prosperity of Southeast Asia. The region heaved a sigh of relief when U.S.–China tensions over the Taiwan Straits crisis abated. The reaffirmation of the U.S.–Japan defence alliance and the U.S. decision to keep troop levels in the Western Pacific to around 100,000 were reassuring to most countries. China remained a vexing issue in the minds of many in Southeast Asia notwithstanding the economic opportunities it presents, and the genuine desire on the part of Southeast Asians to have good neighbourly relations with their giant neighbour. Its actions in the South China Sea continued to cause concern.

In the shadow of these great power manoeuvres, Southeast Asian regionalism seemed on track despite some anxieties related to the admission of Myanmar into ASEAN and the desire of some countries to seek more exemptions from the proposed regional tariff cuts to establish the ASEAN Free Trade Area. Still the ASEAN Six are well on the way to meeting the 2003 deadline: by the year 2000, 88% of CEPT products will already have 0–5% tariffs and by 2003, 40% will have zero tariffs. The informal ASEAN summit in November ruled out phased admission of the remaining three Southeast Asian countries (Cambodia, Laos, and Myanmar) — they would all be admitted together, more likely in 1997 than later.

ASEAN had its hands full, not only with issues of expansion and those related to the ASEAN Free Trade Area, but also with the ASEAN Regional Forum (ARF) and Asia-Europe matters. The ARF acquired two new members in 1996, India and Myanmar, and maintained its coherence as the only official Asia-Pacific wide security forum. ASEAN also continued to play a leading role in Asia-Europe relations, following the historic summit meeting between the leaders of the two continents in Bangkok in December 1995.

Economic growth in Singapore, Thailand, Malaysia, and Indonesia slowed down in 1996, mostly for cyclical reasons.