Sunway University economics professor Dr Yeah Kim Leng
KUALA LUMPUR: A conclusive economic partnership between ASEAN and the European Union (EU) could help cushion the impact of global trade uncertainties, an economist said.
Sunway University economics professor Dr Yeah Kim Leng said the EU is likely to continue strengthening its trade and investment presence in Southeast Asia through bilateral free trade agreements (FTAs) before a comprehensive EU-ASEAN region-to-region deal can be achieved.
He said deeper EU-ASEAN cooperation would help shield both regions from spillover effects of the intensifying United States (US)-China rivalry.
Yeah noted that EU-ASEAN ties have gained importance as an affirmation of multilateralism and as a counterweight to the US’s shift towards inward-looking policies.
He added that both regions are seeking stronger partnerships to offset continued weakness in the global economy, particularly in the US and China.
"The closer ties will enable countries in both regions to cope with the likely fragmentation of world markets and the reconfiguration of global supply chains," he said.
He was speaking to Bernama in conjunction with the upcoming 57th ASEAN Economic Ministers’ Meeting and Related Meetings, scheduled for 22-26 September at the Malaysia International Trade and Exhibition Centre (MITEC), which will also include meetings with dialogue partners.
Nevertheless, Yeah also opined that it may still be too early to finalise the EU-ASEAN FTA due to ASEAN’s diverse and varying development stages, despite ongoing formal negotiations.
"Instead, the EU has forged bilateral FTAs with Singapore and Vietnam, while talks with Indonesia, Malaysia, the Philippines and Thailand are either ongoing or in exploratory stages.
"It is likely that more bilateral FTAs will need to be concluded before the region-to-region FTA can be realised through a domino effect when more ASEAN members gain benefits from an FTA with the EU," he added.
Meanwhile, a recent EU-ASEAN Business Sentiment Survey revealed that Malaysia has emerged as one of the four most attractive ASEAN markets for European businesses, alongside Vietnam, Indonesia and Thailand.
According to ASEAN statistics, the total value of two-way merchandise trade between ASEAN and the EU reached US$292.57 billion (US$1 = RM4.21) in 2024.
In addition, foreign direct investment (FDI) inflows from the EU to ASEAN amounted to US$20.40 billion in 2024, placing the EU as ASEAN’s third-largest trading partner and second-largest external source of FDI.
Commenting further, Yeah believed that ASEAN and the EU possess strong potential and growth opportunities to further enhance trade and investment relations between the two regions, with various sectors set to benefit.
Beyond trade in goods, Yeah said investment flows are expected to rise, particularly in manufacturing, green technology and digital economy sectors, where European companies hold technological advantages.
He also observed that ASEAN countries’ commodity exports, such as oil, gas, palm oil, rubber and timber, will have easier access to EU markets.
"Subsequently, the EU's advanced technology in renewable energy, pharmaceuticals, biotechnology and manufacturing products such as medical devices, electronics and telecommunications equipment will see rising demand in ASEAN," he added. - Bernama
