Malaysia Ranks Joint Third For European Business Expansion In ASEAN

Malaysia ranked joint third with Thailand among ASEAN markets targeted for business expansion by European companies, with 49% of respondents planning to increase their operations in the country, according to the EU-ASEAN Business Council’s 12th Business Sentiment Survey.

Viet Nam led the six major ASEAN markets covered, with 64% of European business leaders planning to expand there, followed by Indonesia at 57%. Singapore and the Philippines recorded 44% and 43% respectively.

Among European businesses not currently operating in Malaysia, 20% are considering entering the market, highlighting continued interest in the country despite wider trade uncertainty.

Across ASEAN, 78% of respondents expect their companies to increase trade and investment in the region over the next five years, up from 71% in 2025. The survey involved around 150 European business leaders.

ASEAN was also identified as the region offering the strongest economic opportunities by 61% of respondents, ahead of China and South Asia. This marked the fourth consecutive year ASEAN held the top position, with the figure rising from 56% last year.

Supply-chain diversification is another area where ASEAN continues to attract interest. Among companies recalibrating their supply chains because of trade uncertainty, 67% are considering ASEAN, compared with 29% for South Asia and 24% for China.

However, US tariff policy uncertainty remains a concern, with 81% of respondents saying it has weakened business confidence in ASEAN.

The survey also highlighted regulatory and trade barriers across the region. Nearly three-quarters of respondents said there were too many non-tariff barriers for efficient supply-chain use, while 67% identified a lack of harmonised regulations as a key challenge.

Despite these constraints, the survey found that expansion plans remain concentrated in ASEAN’s major economies. While 78% of respondents plan to expand in at least one ASEAN market, the proportion has fallen from 87% in 2025. Plans to contract operations also declined, from 39% to 29%.

EU-ASEAN Business Council Executive Director Chris Humphrey said the results pointed to a stabilising European presence in the region rather than a withdrawal.

The survey also found growing support for stronger EU-ASEAN economic integration. Nearly nine in 10 respondents said European businesses face a disadvantage against competitors from countries with regional agreements with ASEAN, while 74% favoured a region-to-region free trade agreement over a series of bilateral deals.

Only 18% viewed the current level of EU engagement in ASEAN as broadly sufficient, while 43% called for greater engagement from EU institutions.

With the EU and ASEAN set to mark the 50th anniversary of diplomatic relations in 2027, 49% of respondents said they would like region-to-region FTA negotiations to be announced to mark the milestone.

Source: Business Today