[SINGAPORE] In the wake of US tariffs, Asean is gaining renewed attention from European companies as both an investment location and a source of demand, said business groups.
Nele Cornelis, executive director of the European Chamber of Commerce in Singapore, said: “The current trade environment has led European businesses to pay closer attention to South-east Asia as a strategic growth market.”
Earlier in April, US President Donald Trump slapped a 20 per cent “reciprocal” tariff on the European Union (EU). Though on hold for 90 days from Apr 9, the rate rise makes the US less attractive to exporters – who now seek markets elsewhere.
“As seen in recent high-level visits and policy pushes from the EU, South-east Asia is increasingly viewed as a key alternative for diversification and long-term resilience.”
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Concurring, Chris Humphrey, executive director of the EU-Asean Business Council (EU-ABC), believes recent developments will only “strengthen the position of Asean in the global economy”.
From olive oil to machinery
Singapore-based European business chambers told The Business Times that more companies are seeking information about opportunities in South-east Asia.
The Spanish Chamber of Commerce Singapore has seen renewed interest in Asean, particularly from companies facing increasing challenges in accessing the US market, said general manager Laura Sualdea Lazaro.
In particular, European food and beverage (F&B), automotive, as well as machinery and industrial equipment manufacturers are more likely to seek opportunities in the region, as they are hardest hit by the tariffs.
Said Lazaro: “We believe that the food and wine sectors will be among the first to explore Asean opportunities.”
Spain is a leading producer of pork, olive oil, wine, fruits and vegetables – which could be “significantly impacted” by the tariffs and are “well suited for export to South-east Asia”, she added.
In Finland, the pivot towards Asean is seen especially in export-oriented sectors such as manufacturing, machinery and technology, said Finnish Business Council chairman Pasi Haatainen.
For Portugal, there has been interest from firms in the digital economy, fintech and renewable energy sectors, said Jacinthe Tay, president of the Singapore-Portugal Innovation Alliance.
Giacomo Marabiso, managing director of the Italian Chamber of Commerce in Singapore, noted increased interest from medium-sized firms in recent months.
This is not just about the tariffs, but an awareness of the opportunities offered by an area with political stability and a growing middle class, he added.
Continued importance
Various chambers said that Singapore remains the top hub destination for firms, with many companies seeing it as a base to expand further into the region. Indonesia was also cited by many chambers for its consumer market, and Vietnam as a manufacturing base.
Malaysia, Thailand and the Philippines could move further up the agenda, said EU-ABC’s Humphrey, since their ongoing FTA negotiations with Europe are “likely to be accelerated in the current geoeconomic climate”.
German businesses “have consistently regarded Asean as a vital region for growth, and this strong interest continues today”, said Lakshmi Swarnam, head of membership, events and communications at the Singaporean-German Chamber of Industry and Commerce.
In a business sentiment survey conducted in February and March, respondents ranked Asean as the destination with the greatest growth potential over the next three years, followed by India and then China.
This suggests that companies here plan to deepen their presence and expand operations in the years ahead,” said Swarnam.
But she cautioned that it is still too early to identify clear sectoral shifts resulting from US tariffs.
While key German exports to the US – such as cars, chemicals and machinery – have a significant regional presence, it remains to be seen if German firms will engage further with the US or turn increasingly to Asean, she added.
Uncertainty remains
Other chambers agreed that ongoing uncertainty makes it too early to tell if companies will pivot further.
“In the short term, it is too early to see any changes,” said Swedish Chamber of Commerce Singapore president Fredrik Hahnel.
“Swedish companies have already had a big interest in Asean markets for a long time, thanks to its fast economic growth and its attractiveness as a manufacturing base, or more recently for ‘China-plus-one’ strategies,” he said.
As it is hard to tell how the trade war will play out, most Swedish companies are still cautious, he added. If anything, investment decisions may be delayed until there is more clarity.
“Many are worried that Asia will be broadly impacted as a manufacturing base with the new tariffs and that economies may be hit economically when the US is raising tariffs.”
The Czech-Singapore Chamber of Commerce also anticipates more interest in trade relations with Asean, said president Marcel Bednar. “It’s a logical outcome, as it will be necessary to seek new Asian markets for Czech products and technologies.”
But he noted that it is too early to quantify this, with Czech companies still trying to navigate the current chaos and uncertainty.
Similarly, Advantage Austria commercial counsellor David Bachmann said: “It would be a bit too early to find immediate business interest in Asia after the recent tariff developments.”
Still, the trade promotion organisation continues to promote Asean to Austrian companies – and so do other business chambers.
More mission trips
So far, EU-ABC had record levels of European companies and delegates joining their business missions to Indonesia and Thailand this year. Humphrey expects “further record levels” for planned trips to the Philippines and Vietnam later in the year.
Similarly, business missions remain a “key activity” for German chambers across Asean, said Swarnam.
She added that these missions are often industry-focused and have seen high participation, with interest in topics such as optics and photonics, fintech, biotech, medtech and energy.
Various German states have also planned visits to the region this year, including to Singapore, Indonesia, Malaysia and Thailand.
Meanwhile, a Czech delegation will visit Singapore in June, including both traditional businesses as well as tech companies and startups.
In addition to a hospitality forum and an F&B trade event, the Italian Chamber of Commerce is planning delegations on pharmaceuticals and medical devices.
And the Spanish Trade Office is launching new trade missions and offering consulting services to support companies entering the region. “The response from companies has been very positive and enthusiastic,” said Lazaro.
