©2015,Taylor & Francis. Abstract: Since the late 1990s, the Association of Southeast Asian Nations (ASEAN) has widened policy-making to include civil society organisations (CSOs), paralleling developments in other regional and global governance institutions where the inclusion of CSOs in policy-making is considered necessary to address these institutions’ ‘democracy deficit’. A rich empirical literature documents this trend, highlighting the range of participatory mechanisms and their challenges. However, theoretical explanations for why governance institutions engage CSOs and the limitations of these processes are lacking. This paper harnesses political economy analysis to explain this trend. Examining the form and function of civil society engagement in ASEAN, this article demonstrates that ASEAN's inclusion of civil society functions in legitimating its market-building reform programme, while its participatory mechanisms are structured to include amenable interests and marginalise non-compatible groups. Thus, ASEAN's engagement of CSOs and the broader trend of participatory policy-making should be considered as creating sites for contestation, rather than being implicitly democratising.