ASEAN, PH beat China, South Asia in EU firms’ growth outlook
European businesses are increasingly looking to ASEAN for growth, trade and investment, with 78% of surveyed EU business representatives expecting trade and investment in the region to increase over the next five years, according to the 2026 EU-ASEAN Business Sentiment Survey.
The outlook places ASEAN ahead of China and South Asia as the region offering the strongest economic opportunities, with the Philippines among the ASEAN markets positioned to benefit from expanding European business activity.
The survey, conducted by the EU-ASEAN Business Council (EU-ABC) among around 150 European business leaders, found that 61% rank ASEAN as offering the strongest economic opportunities among major emerging markets, up from 56% in 2025.
ASEAN has held the top position for four consecutive years, despite continuing global trade uncertainty.
PH among key ASEAN expansion markets
European companies are maintaining a strong appetite for expansion across Southeast Asia, with 78% of respondents planning to expand operations in at least one ASEAN market. More than half, or 54%, intend to expand in three or more markets.
Vietnam leads the expansion rankings at 64%, followed by Indonesia at 57%. Malaysia and Thailand each recorded 49%, while Singapore and the Philippines posted 44% and 43%, respectively.
The Philippines therefore remains among the region’s key markets for European businesses, with more than four in 10 respondents planning to expand in the country.
Vietnam and Indonesia also attracted the highest interest among companies not yet operating in those markets, with 34% considering entry into Vietnam and 32% into Indonesia.
Economic recovery and growth opportunities were the strongest drivers of expansion, cited by 66% of respondents. Investment-friendly laws and regulations, a more diversified customer base and reasonable production costs were also among the major considerations.
ASEAN gains as supply-chain hub
The survey also highlights ASEAN’s growing importance as companies reassess global supply chains amid trade uncertainty.
Among businesses recalibrating their supply chains, 67% are considering ASEAN, compared with 29% for South Asia and 24% for China.
This presents an opportunity for ASEAN economies, including the Philippines, to attract investment as companies seek greater supply-chain diversification.
However, significant barriers remain. Some 73% of respondents cited excessive barriers to efficient supply-chain use, while 67% identified a lack of harmonised regulations as a major challenge.
Customs procedures were also flagged, with 32% describing them as overly burdensome and only 12% considering them speedy and efficient.
Chris Humphrey, EU-ABC Executive Director, said European businesses remain firmly committed to ASEAN despite the challenging global environment.
“Investment appetite has increased, with most companies planning to expand within the region,” Humphrey said, adding that ASEAN remains central to business growth as companies rethink their investment and operational strategies.
Tariff uncertainty remains concern
Despite the positive outlook, US tariff policy uncertainty continues to weigh on business confidence.
Some 81% of respondents said tariff uncertainty has weakened their confidence in ASEAN.
Nevertheless, the survey indicates that companies are responding to uncertainty through diversification rather than withdrawing from the region.
Humphrey said ASEAN’s market size, strategic location and connectivity provide strong fundamentals for the region to become an even more important supply-chain hub.
Reducing regulatory and cross-border barriers, he added, would help businesses take greater advantage of ASEAN’s combined market scale.
EU urged to deepen ASEAN engagement
European businesses are also calling for a stronger EU trade strategy toward ASEAN.
Nearly nine in 10 respondents, or 88%, believe European companies face a disadvantage against competitors from countries with regional trade agreements with ASEAN. Meanwhile, 74% favour an EU-ASEAN region-to-region free trade agreement over a series of bilateral agreements.
Only 18% consider the current level of EU engagement in ASEAN sufficient to support European businesses, while 43% want greater engagement from EU institutions.
The EU and ASEAN are approaching the 50th anniversary of their diplomatic relations in 2027. Nearly half of respondents, or 49%, want the launch of region-to-region FTA negotiations to be announced as part of the milestone.
The EU is also pursuing bilateral trade agreements with ASEAN member states. Negotiations with Indonesia were concluded last year, while talks with Malaysia, Thailand and the Philippines are targeted for conclusion by 2027.
For the Philippines, the survey underscores an opportunity to capture a larger share of European investment as companies diversify operations and supply chains across ASEAN.
With 43% of surveyed European businesses planning to expand in the Philippines, the country has a clear opening to strengthen its position as an investment, manufacturing and supply-chain destination—provided it can address regulatory, infrastructure and cross-border trade constraints that businesses continue to identify across the region.
The EU-ABC’s 2026 survey reinforces a broader message: European businesses continue to see ASEAN as a long-term growth market, and the Philippines is among the economies that can benefit from that expanding regional interest.
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