Get the integration piece right, and the bloc can cement itself as the resilient, diversified alternative to China-centric supply chains
By Chris Humphrey, Executive Director, EU-ABC for the Business Times | Published 18 September 2025 | Article link
GLOBAL trade is in upheaval. Tariffs are back in fashion, protectionism is increasing, and “de-risking” and “decoupling” are on the rise. Around 13 per cent of European companies are considering relocation in response to US tariffs – and of these, nearly four in 10 are looking at ASEAN as their destination. This finding, from the latest EU-ASEAN Business Sentiment Survey, shows that this region stands on the cusp of an exceptional opportunity.
But it also comes with a stark warning: If ASEAN does not accelerate integration and cut barriers, it risks losing ground to competitors.This is ASEAN’s moment – the question is whether it can, and will, seize it.
A region rising in importance
The numbers tell a compelling story. Seventy-three per cent of European businesses say ASEAN has become more important to their global revenues over the past two years, with 71 per cent expecting to increase trade and investment in the region over the next five years.
The majority still view ASEAN as the region with the best economic opportunities, far outpacing India and China. Its attraction is not hard to understand.
First, it is big – the region is home to 670 million people, larger than the European Union’s population by more than 200 million. Second, it is young – it boasts a workforce that is energetic, driven and increasingly skilled. Third, it is strategically located – a natural hub linking the Pacific and Indian oceans, with sea lanes that carry much of the world’s trade.
Add in rising consumer power, expanding digital economies, and relative political stability – compared to other emerging markets – and it is no wonder that boardrooms in Frankfurt, Paris and Milan are doubling down on ASEAN.
Barriers that bite
But the path to becoming Europe’s next super partner is paved with obstacles. While companies want to deepen their presence in ASEAN, the region itself is making it too hard to deliver.
The survey’s results are blunt: 77 per cent of European businesses still report too many barriers to efficient supply chains in the region. That is certainly an improvement from last year’s 88 per cent, but hardly a figure to celebrate.
Even more concerning, 58 per cent say non-tariff barriers are increasing, up from just 40 per cent a year ago.
A silver lining here is in customs efficiency, where there are finally some signs of improvement. For the first time since the topic was introduced in 2020, most respondents find customs procedures in ASEAN acceptable, albeit with room for improvement.
In previous years, opinion was split evenly between “acceptable” and “overly burdensome”. It is a small but important step forward.
The share of respondents who call customs “speedy and efficient” even ticked up slightly – from 2 per cent in 2024 to 3 per cent this year. Not exactly a victory lap, but progress nonetheless.
Standards still diverge widely, procedures remain inconsistent, and only 9 per cent of businesses believe ASEAN will achieve its 2025 goal of becoming a single market and production base. The credibility gap remains.
If the region does not fix these bottlenecks, companies will simply take their supply chains elsewhere. It does not have to be this way, and the potential prize is enormous. According to the survey, a whopping 93 per cent of respondents say their companies would increase or establish supply chains in ASEAN if barriers were removed.
That is an overwhelming signal. The private sector is practically banging on the door, asking the region’s governments to let them in. Get the integration piece right, and ASEAN can cement itself as the resilient, diversified alternative to China-centric supply chains.
The playbook for action
So what must ASEAN do?
First, businesses are calling for harmonised standards and regulations. Too often, companies find themselves wrestling with 10 different sets of rules across the bloc. That fragmentation adds cost, delays and complexity, undermining ASEAN’s ambition to present itself as a single market.
Take sustainable finance as an example: five ASEAN member states – Indonesia, Malaysia, the Philippines, Singapore and Thailand – have developed their own national taxonomies for classifying green economic activities.
A recent United Nations Environment Programme Finance Initiative analysis found that while these national frameworks are gradually aligning with the regional ASEAN Taxonomy, differences remain in priorities, sector coverage and assessment methods.
For investors, this patchwork complicates efforts to channel capital into the net-zero transition and impedes ASEAN’s claim to be a coherent single market.
Second, they are demanding that customs procedures keep pace with modern trade. Yes, there has been some progress – firms acknowledge improvements compared to past years. But “acceptable” still falls far short of what’s needed.
When goods are held up at borders, ASEAN cannot expect to be taken seriously as a world-class logistics hub. The region’s own customs committees have also stressed the need to streamline rules of origin, valuation and classification, while fully operationalising the ASEAN Single Window.
Yet, as recent coverage shows, red tape and clearance delays remain a major drag on intra-regional trade.
Third, there is rising frustration with non-tariff barriers and market access restrictions. Too often, protectionist instincts are allowed to trump regional integration, undermining ASEAN’s longstanding claim to be a champion of open trade.
These take many forms: In agrifood, exporters face inconsistent labelling and food-safety rules across the bloc, driving up compliance costs.
Malaysia’s own trade ministry acknowledged in May 2025 that there are more than 9,600 non-tariff barriers across ASEAN, with no clear enforcement mechanism to reduce them.
These restrictions not only increase operational costs, but also erode ASEAN’s credibility in advocating open trade.
Fourth, companies are looking for investment in logistics and digital frameworks. The ASEAN Digital Economy Framework Agreement is a start, but businesses want delivery, not just dialogue. They want real progress on cross-border data flows, interoperability and smoother trade.
Finally, the region must show results under the new ASEAN Economic Community Strategic Plan 2026-2030. On paper, the ambition is impressive. In practice, credibility will depend on whether governments finally follow through.
These are not abstract demands. They are what companies face every day as they try to build and expand supply chains in the region. The road map is well-known. What ASEAN needs now is the political will to act.
ASEAN’s once-in-a-generation chance
The world is actively searching for alternatives. The trade wars, new tariff regimes, and a drive for “China plus one” diversification have created a unique opening.
Competing regions across the world are moving quickly to position themselves as attractive alternatives. But ASEAN has a stronger case than most – if it can move beyond words to action.
Europe, too, is looking for partners. With geopolitical uncertainty on the rise, ASEAN offers Europe more than just a market, but also a production base, a logistics hub, and a trusted ally in ensuring resilient and diversified supply chains. That is a powerful proposition, one that could deepen EU-ASEAN ties for decades to come.
The choice is clear. Either ASEAN accelerates integration and breaks down barriers, or it risks being bypassed by hungrier rivals. The opportunity is ASEAN’s to lose – and if seized, it will not only share in global supply chain realignments, but also shape them.
