Enhancing ASEAN’s Intra-Regional Trade Need Not Require Bells and Whistles

It is just shy of six months since President Trump’s Liberation Day tariffs were unleashed. This highly volatile period for the global trading system has witnessed on-and-off tariff announcements as well as tit-for-tat protectionist measures. In the current geopolitical context, countries and regions need to form faster and firmer strategic alliances than previous attempts. With this in mind, ASEAN’s efforts to forge stronger ties amongst its Member States and other allies would benefit from concerted efforts to enhance the trade facilitation aspects integral to the operational efficiency of existing rules-based mechanisms rather than the introduction of new and sophisticated frameworks and rules.

During the current period of trade uncertainties, ASEAN has opened its doors to enhancing existing and new strategic partnerships. These include the conclusion of the ASEAN-China FTA upgrade negotiations as well as the launch of the Joint Declaration on Economic Cooperation Between the ASEAN and the Gulf Cooperation Council (GCC). Additionally, there has been a reiteration of the call to strengthen intra-regional trade activities to increase economic resilience as a bloc against downside risks to global uncertainties. With intra-regional trade relatively stagnant at 21.8 per cent over the past five years, the disruption to the global trading order may be the catalyst needed to provide an extra push to strengthen economic integration further. In the 2025 State of Southeast Asia Survey, 23.8 per cent of respondents from Southeast Asia had the most confidence in ASEAN to champion the global free trade agenda. Even then with the best intentions, success in achieving stronger trade ties within the bloc will require ASEAN mechanisms related to trade and investments, such as the ASEAN Trade in Goods Agreement (ATIGA), to increase their operational efficiency so that firms are more likely to leverage on them.

On 16 September, 14 small and medium trade-dependent countries, including Singapore and Brunei, established a new strategic alliance known as the Future of Investment and Trade (FIT) Partnership. Although details on this initiative are scant at this juncture, one underlying characteristic of particular interest is the expected positioning of the FIT Partnership as a non-binding arrangement to “develop solutions-oriented initiatives to strengthen the rules-based trading system”. Essentially, this new strategic platform would aim to focus on boosting the efficiency of trade arrangements.

Upholding a rules-based mechanism is important, and ideally would facilitate seamless trade through harmonisation. However, below the surface, other operational impediments may need to be addressed before the broader objective can be achieved. Estimates cite the utilisation rates of FTAs in ASEAN at less than 50 per cent. This could be due to the presence of non-tariff barriers (NTBs) such as stringent product standards requiring specific certifications or import quotas on specific items. These NTBs are more complicated to overcome as they may touch on local sensitivities (commonplace in food standards) or are related to highly protected industries. On the other hand, low utilisation could also be due to trade frictions stemming from inefficiencies in trade facilitation (see Table 1).

The OECD Trade Facilitation Indicators provide a global view on how countries perform with respect to key trade facilitation elements such as procedural requirements and fees. At the same time, these results can also help to identify weaknesses in trade facilitation measures which essentially become impediments to trade. Table 1 summarises trade facilitation index values across the ASEAN region. The vast majority of ASEAN Member States (AMS) fall below the best practice benchmarks in the indices capturing aspects such as the involvement of the trade community, fees and charges, and documentation formalities. That said, all AMS score above the best practice benchmark for external border agency cooperation. The automation of formalities sub-index exhibits interesting characteristics, with six out of the ten AMS having sub-index values below the ASEAN average and this indicator registering the widest dispersion of values in the region (indicated by the highest standard deviation value). Essentially, individual AMS performance with respect to this factor is the most variable amongst all the trade facilitation aspects. Amongst the AMS, Singapore, Malaysia and Vietnam perform relatively better, and Myanmar and Lao PDR comparatively worse.

Table 1. Trade Facilitation Indices for ASEAN Member States and Analysis

This analysis of the region’s weak spots in trade facilitation identifies some credible first steps to help make trade more seamless and efficient. Firstly, improvements in information dissemination and consultation with the trade community with respect to trade policies and reduction in cumbersome fees related to trade activities would provide firms more access to these preferential provisions in trade agreements. The ease of trading activities would be enhanced by streamlining customs documentation requirements, and especially by increasing the automation of these documentation formalities.

From the evaluation of the trade facilitation frictions, the disparity in performance between the AMS is notable. Cambodia, Lao PDR and Myanmar, in particular are lagging their ASEAN peers in automation of documentation formalities.

Table 2. Components of the Automation of Documentation Formalities Sub-Index

Countries may be lacking in certain components of the automation sub-index due to processes that have yet to be digitalised and integrated with the existing customs clearance systems, or shortage of digital capabilities, or both. Digital infrastructure could be under-developed or unreliable, and the skills required to develop robust electronic systems for the required automation may be inadequate. Notably, Cambodia, Lao PDR and Myanmar also have the slowest broadband download speeds in the region and are amongst the lowest ranked in terms of digital skills and talent as measured by the ASEAN Digital Integration Index (ADII). Alleviating trade frictions would need to go hand in hand with broader digital development objectives, especially where countries are lagging in interoperability capacities and in implementation of the necessary regulatory frameworks, such as digital signatures.

Eliminating trade facilitation frictions is not a new area for ASEAN. The ASEAN Economic Community (AEC) 2025 Blueprint contains a Trade Facilitation Strategic Action Plan, and trade facilitation capacity building remains at the core of the Initiative for ASEAN Integration (IAI) Work Plans. However, implementation of the required reforms for customs processes and regulatory development for digital enablers remain uneven across the region. The AEC Strategic Plan 2026-2030, which forms the next phase of ASEAN’s economic integration efforts, reiterates the importance of strengthening trade facilitation to bolster intra-ASEAN trade.

ASEAN does not need bells and whistles to accomplish this. Practical considerations such as greater information dissemination and consultation with the relevant stakeholders, the removal of unnecessary documentation or processes, as well as concerted efforts to digitalise customs processes for greater automation and procedural efficiency could be practical next steps, yet game-changing all the same.

Editor’s Note:
ASEANFocus+ articles are timely critical insight pieces published by the ASEAN Studies Centre.