ASEAN remains favoured over China and South Asia for economic opportunities, investment appetite increases with many looking to expand within the region, even as global disruption weakens confidence.SINGAPORE, 8 SEPTEMBER 2026 — European businesses continue to see ASEAN as the region of strongest economic opportunity, with 61% of business leaders ranking it ahead of China and South Asia, according to a survey published today by the EU-ASEAN Business Council.This puts ASEAN in the pole position for the fourth consecutive year, even as global trade uncertainty weighs on business confidence. Trade and investment sentiment has also recovered from last year, and the region is gaining ground as a supply-chain diversification hub.Around 150 European business leaders participated in the survey, a yearly exercise that takes stock of business sentiment towards Southeast Asia. Key findings from this year include:Despite concerns around tariff uncertainty, the findings point to a resilient outlook for ASEAN, with stronger trade and investment expectations and sustained confidence in the region’s longer-term growth prospects.“The global situation has certainly proved challenging, but European businesses have shown a firm commitment to ASEAN. Investment appetite has increased, with most companies planning to expand within the region. That tells us ASEAN remains central to business growth, even as companies rethink their investment and operational strategies,” said Mr Chris Humphrey, EU-ABC Executive Director.The findings come amid renewed momentum in EU-ASEAN trade and investment ties, with the EU surpassing the US to become ASEAN’s largest external source of foreign direct investment in 2025. The bloc is also pushing to conclude free trade agreement talks with the Philippines, Malaysia and Thailand by next year.

Nearly four in five (78%) respondents plan to expand in at least one ASEAN market, with more than half (54%) looking to scale up in three or more markets.

While the expansion share has declined from 87% in 2025, plans to contract operations have also fallen from a share of 39% in 2025 to 29% this year.

“With both expansion and contraction plans declining, the findings point more towards a stabilising European presence, rather than withdrawal from the region. This is further supported by stronger investment expectations and an improved perception of economic opportunities,” said Mr Humphrey.

Plans for expansion are concentrated within ASEAN’s six biggest markets, led by Vietnam, with 64% of respondents looking to expand in the country. Indonesia ranked second at 57%, followed by both Malaysia and Thailand at 49%, and finally Singapore and the Philippines at 44% and 43% respectively.

Vietnam and Indonesia also attracted the highest interest from companies not yet present in those markets, with around a third considering entry — 34% in Vietnam and 32% in Indonesia.

The strongest driver of expansion was economic recovery and growth opportunities, with two-thirds (66%) of respondents placing it among the top three reasons. Investment-friendly laws and regulations, a more diversified customer base, and reasonable production costs were also significant factors, with each cited by over 40% of respondents.

Although business sentiment was broadly positive, respondents were clear that trade and investment conditions in ASEAN remain challenging.

Growing non-tariff barriers and regulatory unpredictability were ranked as the biggest constraints on trade and investment and similarly cited as the greatest pain points in supply chain usage.

At the same time, some 32% of respondents said customs procedures were overly burdensome, while only 12% found them speedy and efficient.

Despite this, ASEAN still emerged as the leading destination for companies looking to shift supply chains, with 67% of relevant respondents considering the region — far ahead of South Asia at 29% and China at 24%.

“What this means is that ASEAN is sitting on an untapped opportunity. The region has strong fundamentals that make it an attractive supply-chain hub — market heft, a strategic location, and regional connectivity. Addressing regulatory and cross-border frictions will strengthen market integration, allowing businesses to derive greater value from ASEAN’s combined scale and encouraging more commercial activity,” said Mr Humphrey.

The findings show a clear push for a broader EU trade agenda towards ASEAN.

Nearly nine in 10 respondents (88%) believe European businesses face a disadvantage against competitors from countries party to regional agreements with ASEAN, while almost three-quarters (74%) favour a region-to-region FTA over a series of bilateral agreements.

In addition, just 18% of respondents consider the current level of EU engagement in ASEAN broadly sufficient to support European businesses in the region, with 43% calling for greater engagement from EU institutions.

This comes even after significant progress on several bilateral agreements with ASEAN member states. Negotiations with Indonesia were concluded last September, while talks with Malaysia, Thailand and the Philippines are targeted for conclusion by 2027.

With the EU and ASEAN approaching the 50th anniversary of diplomatic relations in 2027, nearly half of respondents (49%) would like to see the launch of region-to-region FTA negotiations announced to mark the milestone.

“The message is clear: if Europe wants to remain competitive in one of the world’s fastest-growing regions, it needs a broader and more ambitious economic strategy towards ASEAN. The 50th anniversary next year is an opportunity to move beyond symbolism and set a clear path towards deeper region-to-region trade and economic integration,” said Mr Humphrey.