The EU-Asean Business Council, the primary business body for European businesses in Asean, on September 1 published its 8th Business Sentiment Survey during the Council’s Trade and Investment Mission to Indonesia.
Key highlights of this year’s survey include: 63 percent of respondents see Asean as the region with the best economic opportunity (2021– 63 percent); 69 percent of respondents expect to Asean Markets to become more important in terms of worldwide revenues over the next two years (2021 – 58 percent); Only 6 percent of respondents feel that Asean Economic Integration is progressing fast enough (2021 – 2 percent); 81 percent of respondents believe that non-tariff barriers to trade in Asean are not decreasing (2021 – 97 percent), whilst 23 percent say they are increasing (2021 – 38 percent); Only 9 percent of respondents have faith that Asean can deliver on Circular Economy Concepts whilst less than half think that Asean is serious about meeting its sustainability goals; 97 percent of respondents would like the EU to accelerate FTA negotiations with Asean and its members (2021 – 98 percent); 73 percent of respondents believe that the EU should pursue a region-to-region FTA with Asean now (2021 – 49 percent).
Commenting on the Survey outcomes, Martin Hayes, Chairman of the EU-ABC said, “This year’s Survey demonstrates that the sentiments of European businesses towards ASEAN remain strong, perhaps stronger than ever before. Optimism about economic recovery in the region is also strong, despite ongoing concerns around geopolitical tensions and supply chain bottlenecks.”
“However, this good news for Asean is tempered by continuing concerns around lack of action on removing non-tariff barriers to trade, the slow pace of trade deal negotiations with the EU, and the need to do more on climate action. The latter is vital if Asean wants to continue to attract Foreign Direct Investment at the record breaking levels it has been doing for the last few years,” he continued.
Speaking further about the outcomes in the Survey, Noel Clehane, Global Head of Regulatory and Public Policy at BDO, Chairman of the European Services Forum and Member of the EU-ABC Executive Board said, “As European businesses respond to the lessons of the pandemic and ongoing geopolitical tensions in the IndoPacific, there are enormous opportunities for Asean countries to benefit from continued diversification of those businesses’ supply chains and future intended FDI. To fully capitalize on these opportunities however, the Survey highlights yet again, the enduring impediments to inter-regional (EU-Asean) and intra-regional (within Asean) trade and investment. Making progress on these issues is imperative for all businesses active in the high-potential region, both of European and Asean origin, but particularly so for midmarket and SME businesses.”
This year’s Survey saw the perception of Asean as the region of best economic opportunity improve with the gap to the next best location, China, widening significantly. The Survey notes that the enthusiasm to grow operations in Asean by European businesses remains strong, whilst also noting disappointment on the lack of progress on Asean regional economic integration with only one in 10 of respondents believing the Asean Economic Community Objectives have been met. The Survey also highlighted the need for Asean to do more on tackling environmental and sustainability issues, including the greening of supply chains.
Chris Humphrey, Executive Director of the EU-ABC commented, “Despite ongoing pressure from the private sector in Asean and oft-repeated statements from Asean to take action, the fact that 81 percent of our respondents do not perceive a decrease in non-tariff barriers to trade, demonstrates a continuing failure of Asean in this area. Removing such barriers will only help innovation, drive competition, boost economies, and lower prices. At a time of increasing inflation, and supply chain disruptions, it is vital that more meaningful action on eliminating NTBs is taken, and seen to be taken.”
On the development of trade deals between the EU and Asean, Humphrey finally said, “Our respondents this year are sending a clear signal to both the EU and Asean: they want more trade deals, and they want them now.”