ASEAN-BASED companies are responding to trade shocks, geopolitical uncertainty and sustainability requirements by diversifying procurement, production and markets while investing in digital technologies, according to a joint study by the Economic Research Institute for Asean and East Asia, Japan External Trade Organization and Research Institute Network.
The study, based on interviews with local and multinational firms and three business surveys, examined how companies are responding to changing US trade policy, supply chain uncertainty, decarbonization and digital transformation.
Nearly two-thirds of Asean manufacturing firms surveyed by the Asean Business Advisory Council said recent US tariff measures affected their operations, mainly through supply chain disruptions, logistics delays, greater uncertainty and customer pressure to cut prices.
Despite this, Asean exports to the US rose about 30 percent year on year in 2025, while US imports from China declined sharply. Asean’s share of the US trade deficit increased to 26.5 percent, raising the likelihood of greater scrutiny of transshipment and rules-of-origin compliance.
Protectionism was the biggest concern among Asean firms, cited by 75 percent of respondents, followed by decarbonization requirements at 53.1 percent and geopolitical risks at 38.7 percent.
About 60.6 percent had changed procurement practices, with 76.5 percent emphasizing ESG compliance and 71.6 percent supplier diversification. Nearly 45 percent had diversified procurement across borders, with Asean the preferred destination for 93.2 percent.
Higher procurement costs and difficulties meeting sustainability requirements remained major challenges.
Decarbonization is also gaining ground, with 63 percent of Asean firms taking measures, rising to 75 percent among manufacturers. Energy efficiency was the most common initiative, followed by electric vehicles, renewable energy and greener packaging.
Digital adoption, however, remains uneven. More than half of Japanese firms surveyed had adopted digital technologies, while Asean companies continued to face financial constraints, uncertain returns, limited technical expertise and digital-literacy gaps.
The study said geographic diversification alone would not ensure resilient supply chains. It called for stronger national and Asean-level policy coordination to support regional integration, industrial upgrading, decarbonization and digital transformation. / PHILEXPORT NEWS AND FEATURES
