The Philippines began its term as chair of the Association of Southeast Asian Nations (ASEAN) in 2026 facing significant headwinds, including a major corruption scandal and a challenging trade environment. These issues present immediate tests for President Ferdinand "Bongbong" Marcos Jr. as he leads the 11-nation bloc.

Investor confidence in the Philippines has declined following the revelation of a $2 billion corruption scandal involving government funds earmarked for flood management projects. Investigations since September uncovered the misappropriation of funds, close ties between politicians and contractors, the use of substandard materials, and the existence of "ghost projects," according to government auditors. The scandal has led to a decrease in Marcos's approval ratings and increased public outrage, particularly given the Philippines' vulnerability to natural disasters.

Malaysia, the previous ASEAN chair, navigated a complex 2025, dealing with the repercussions of U.S. President Donald Trump's tariffs on Southeast Asian economies and a violent border conflict between Thailand and Cambodia. Marcos aims to advance regional digital economic integration through a new pact during his chairmanship. However, the domestic economic challenges threaten to overshadow these regional ambitions.

The ASEAN chairmanship rotates annually, giving each member state the opportunity to guide the bloc's agenda. The Philippines' term comes at a crucial time, as ASEAN seeks to maintain its relevance in a rapidly changing geopolitical landscape. The bloc faces ongoing challenges related to trade, security, and regional stability.

The ongoing investigations into the corruption scandal are expected to continue throughout the first quarter of 2026. The Marcos administration has pledged to hold those responsible accountable and to implement measures to prevent future corruption. The success of these efforts will be critical in restoring investor confidence and bolstering the Philippines' standing within ASEAN.