ASEAN’s ability to act with clarity will be tested more than ever in 2026. (Image courtesy of Bernama)
European businesses are calling for a comprehensive free trade agreement (FTA) between the European Union and ASEAN, arguing that a region-wide framework would offer greater economic benefits than separate bilateral agreements and strengthen Europe’s competitiveness in Southeast Asia.
According to the 2026 EU–ASEAN Business Sentiment Survey, 74 per cent of respondents favoured a region-to-region FTA, while half supported launching negotiations in 2027, marking 50 years of EU–ASEAN diplomatic relations. Conducted between 16 April and 3 July, the survey gathered responses from 148 senior European business representatives, reflecting approximately 800 reported business presences across ASEAN.
The findings also revealed competitive concerns, with 88 per cent of respondents believing European companies face disadvantages compared with businesses from countries benefiting from regional trade agreements with ASEAN. While the EU already has FTAs in force with Singapore and Vietnam, Indonesia concluded negotiations on its Comprehensive Economic Partnership Agreement (IEU-CEPA) in 2025, with signing targeted for late 2026.
Amid global trade tensions and geopolitical uncertainty, ASEAN is becoming increasingly important for supply-chain diversification. Among companies considering adjustments to their supply chains, 67 per cent identified ASEAN as a potential destination, compared with 29 per cent for South Asia and 24 per cent for China.
Indonesia ranked second among ASEAN markets targeted for European business expansion, with 57 per cent of respondents planning to expand operations in the country over the next five years, behind Vietnam at 64 per cent. Furthermore, 32 per cent of businesses without an existing presence in Indonesia expressed interest in entering the market.
Despite this positive outlook, challenges remain. Local-content requirements, regulatory complexity and non-tariff barriers continue to affect market access, particularly in electric vehicles, pharmaceuticals and renewable energy. Across ASEAN, 73 per cent of respondents identified barriers to efficient regional supply chains, while 83 per cent indicated they would expand regional operations if such barriers were reduced.
The findings underscore Indonesia’s potential to attract further European business expansion, while highlighting the importance of regulatory improvements, stronger regional integration and a more predictable investment environment.
Written by: Ruth Dea Juwita (The Jakarta Post)
This article was published in thejakartapost.com with the title “European businesses want ASEAN FTA despite bilateral trade progress”. Click to read: https://www.thejakartapost.com/business/2026/09/09/european-businesses-want-asean-fta-despite-bilateral-trade-progress
