When Malaysian Prime Minister Mahathir Mohamed announced that the Forest City project would be off limits to foreign buyers, critics had a field day taking aim at him. In so doing, they may have missed, or caused distraction from, the larger political-economic rebalancing at play.

Domestically, Mahathir is affirming his stance on the type of foreign direct investment that is welcome in Malaysia, and those “undesirables” that are not welcome. More important, at the regional level, he is addressing a more pressing challenge.

The current power rebalancing is not just a matter between the US and China. Japan is also a very powerful and sophisticated entity that is actively at play in the region. So are other economies, when their futures are at stake. Malaysia is no exception.

If Mahathir’s critics were right, China would have officially rebutted Malaysia. But there was no high-level protest by the Chinese.

The power play did not happen overnight, but has been brewing since the 1970s when China articulated its “Three Worlds Theory” at the United Nations.

When Mahathir advocated the East Asian Economic Caucus (EAEC) in the 1990s, critics wrote it off as irrelevant. But Mahathir was not bothered by those critics as he saw the strategic importance of the EAEC, and trusted in his own foresight that China would grow economically. He saw strategic value in engaging with a rising China, but the timing and opportunity were clearly not on his side during his earlier premiership.

While people criticized him over the years over the “failure” of the EAEC, no one could have imagined his historic return to power. The whole political and economic dynamics in Southeast Asia were suddenly revitalized. Timing and opportunity are afforded to him now.

What are characteristic about Mahathir are his unwavering tenacity, grit and consistency in pursuing whatever matters most to him. After his comeback, this conviction has shifted toward pursuing what is best for Malaysia. In so doing, Southeast Asia will also benefit tremendously if he plays his cards right.

While China may have drawn flak over its activities in the South China Sea, the worst mistake that any economy in the region could commit is to pander to it or, worse, try to oppose China’s rising power. Being fair and reasonable was among the key factors that underpinned the Three Worlds Theory.

Under Najib Razak, Malaysia almost got sandwiched by his pandering to the Chinese, and the Association of Southeast Asian Nations could have lost the golden opportunity to engage China effectively – to ensure peace, prosperity and progress for the region.

China’s Belt and Road Initiative (BRI) has many desirable aspects, and nations within ASEAN should not only embrace it but must engage China strategically to ensure an economic compact that ensures a fair, equitable and desirable outcome.

Such calibrated engagement should not be seen as challenging China. It has more pressing issues and challenges to manage, both domestically and internationally.

China has obviously seen strategic value in Mahathir’s foresight on fostering a win/win outcome. Both he and Chinese President Xi Jinping know well that a new chapter of mutually beneficial collaboration and engagement is about to unfurl. Careful calibration from both sides will be required.

In the context of the South China Sea and BRI, this strategic engagement will also be pivotal to the success of an awakened Indonesia.

Under Mahathir’s current leadership, the trust factor between him and Indonesian President Joko Widodo is sufficiently cordial for them to forge a new East Asia Economic Compact jointly with China. This new EAEC would addresses the concerns of not just economic prosperity, but also peace, a code of conduct and an explicit dispute-resolution mechanism that is applicable for the region. The new EAEC must be built on mutual trust and respect.

Such a tripartite engagement has a much higher probability of success than an outright ASEAN-wide engagement with China. Once an economic compact is forged, a win/win for all three can be construed to be a win/win for both ASEAN and China. This is not a zero-sum initiative and there is room for all.

As such, Japan also will need to also rethink its policies and refresh its priorities in engaging a changing ASEAN. The same is true for the European Union and, nearer home, Australia and New Zealand.

As for the US, it is without doubt still the world’s leading superpower despite its unpredictable current president. But as Donald Trump dismantles the progress of his predecessors on US-Asia relations, the rest of the world is not inclined to wait for a new occupant of the White House and is moving forward.

The next US president will have to make regaining the trust that was lost under Trump a priority and forge a new compact with the various regional powers. It will have to refresh its Asia policy, offering a high-value proposition to enhance the new economic compact that a new Asia aspires to.

The strategic collaboration that Malaysia, Indonesia and China can undertake to forge a new East Asia Economic Compact for ASEAN will be instrumental to the success of the BRI in the region. It will afford certainty and greater clarity, which China can use as the preferred working model to further its enhanced BRI in other regions. This will add value to China’s soft power.

For President Xi, the new option toward an accelerated BRI for the region is clearly much more desirable that its current approach. China knows that there are many hard questions and challenges that it must address in any eventuality. Sooner in this case may be the better option than later.

With both Mahathir and Widodo being highly respected within their own countries and in the region, Xi is presented with a golden opportunity, in one bold stroke, to consolidate and strategize all its past efforts and investments in the region, and finally to realize its BRI initiative for this region.

There is much benefit that China can derive from affording due respect to ASEAN’s most elderly statesman. It is also consistent with the long-held policies, harking back to the Three Worlds Theory, that underpin China’s diplomacy and Asian values in respecting elders.

The rise of a new Malaysia and an awakened Indonesia offer an exciting prospect for China and other major trading blocs to re-engage ASEAN from a new perspective. As such, it pays heed for vested powers to seize the opportunity and help forge a new East Asia Economic-Compact between China and ASEAN.

Against a backdrop of chaos, conflicts and failed economies elsewhere, investors may just find a new and safer haven in a revitalized ASEAN. The new East Asia Economic Compact as such may prove to be Mahathir’s most important legacy.