The 9th annual EU-ASEAN Business Sentiment Survey (BSS) revealed a positive outlook for European businesses in Southeast Asia (SEA), underscoring growing importance of ASEAN-European Union (EU) relations.
The survey is a vital barometer to gauge European business outlook on key issues including macroeconomic conditions, policy and regulatory environment in Southeast Asia, and the development of bilateral and plurilateral free trade agreements in the region.
The findings from this year’s survey, which had nearly 600 responses from the European private sector, indicate an overall optimistic outlook for ASEAN.
Some 80 per cent of respondents believe that ASEAN markets will become more important in terms of worldwide revenues over the next two years, highlighting the region’s growing significance in the global economy, a 15 per cent jump from 2022.
Eighty-four per cent of respondents expressed their intention to boost levels of trade and investment in ASEAN, a seven per cent increase from 2022. Meanwhile, 65 per cent of respondents anticipate an increase in profits in ASEAN for 2023, showing a continued positive trend in the region’s business landscape. This percentage remains robust despite a slight decrease from last year’s figure of 69 per cent.
The survey also revealed that around two thirds of respondents view ASEAN as the region for best economic opportunities over the next five years, reflecting a consistent perspective compared to the previous year.
The positive sentiments from European businesses in the ASEAN region, including that ASEAN will play a more significant role in their global revenue streams, emphasised the strategic importance of strengthening relationship between ASEAN and the EU.
Nearly all respondents (99 per cent) want the EU to expedite the negotiation of trade deals with ASEAN, while a substantial majority (85 per cent) believes the EU should pursue a region-to-region Free Trade Agreement with ASEAN.
The results reflect a strong desire by the European private sector to see economic ties enhanced between the two regions.
“SEA is not just an economic opportunity to be taken advantage of. It is also now clearly one of the engines of the global economy,” said Chairman of the EU-ASEAN Business Council and Regional Head Asia/Pacific at LBBW Jens Rübbert.
“Christine Lagarde, then of the International Monetary Fund, referred to it as ‘an auxiliary engine of global economy’ a few years ago. I think that it is fair to say that the region has every right to discard the term ‘auxiliary’ at this point.”
The survey also identified critical challenges European businesses face across ASEAN. An overwhelming 92 per cent disagree that non-tariff barriers to trade in the region are decreasing.
Nearly three quarters of respondents (72 per cent) cited excessive barriers hindering the efficient use of supply chains.
The outlook is also bleak on ASEAN’s economic integration, with only 14 per cent believing that it is progressing at a satisfactory pace, while less than 10 per cent feel that the objectives outlined in the ASEAN Economic Community Blueprints have been achieved. Less than half of respondents believe that ASEAN is making adequate progress in meeting its sustainability goals – for instance, not a single respondent surveyed fully believes that ASEAN is doing enough to green its supply chains.
There are also calls for ASEAN to establish a region-wide harmonised approach to ESG reporting standards (82 per cent), as well as a single enforceable taxonomy (62 per cent). – Azlan Othman
