SINGAPORE — As tariffs, export controls and geopolitical rivalry complicate corporate decisions, Southeast Asia is presenting itself as something increasingly scarce in the global economy: a large, growing region that wants to remain open to nearly everyone.

Tan See Leng, Singapore’s minister for trade and industry, made that case on Friday at the inaugural U.S.-ASEAN Strategic Business Forum. ASEAN, he argued, offers companies a “compelling answer” because it is deepening regional integration while maintaining economic relationships with both established and emerging partners.

The message was directed particularly at American businesses reassessing where they manufacture, source components and invest. But it also captured ASEAN’s broader strategy: not choosing between the United States and China, but making itself too commercially important—and too interconnected—to be easily excluded by either.

The 11-member bloc now has a combined economy of roughly $4 trillion and a population of about 700 million. Its economy expanded by approximately 4.5 percent in 2025, while foreign direct investment exceeded $240 billion, representing about 15 percent of worldwide flows, according to Singapore’s Ministry of Trade and Industry.

The Asian Development Bank has projected Southeast Asian growth of 4.4 percent in 2026, supported by exports, domestic demand and technology investment, though performance remains uneven—from rapid expansion in Vietnam to considerably slower growth in Thailand. ADB’s regional outlook also pointed to household debt, infrastructure constraints and weak investment in some economies.

A Beneficiary of Fragmentation—And a Target of It

For years, multinational companies treated Southeast Asia as the central destination for “China-plus-one” strategies. Production shifted or expanded into Vietnam, Malaysia, Thailand and Indonesia, while Singapore consolidated its role as a center for finance, logistics and regional management.

That diversification has accelerated as governments place greater emphasis on supply-chain security. Trade between the United States and ASEAN surpassed $550 billion in 2025, while American investment flows into the region reached about $30 billion, according to Singapore’s government.

Yet the same trade realignment that benefits ASEAN also exposes it to closer scrutiny.

Washington is increasingly concerned that Chinese products may be routed through Southeast Asian countries to evade American duties. Vietnam said last month that it would address U.S. concerns over transshipment after Washington estimated that such practices—primarily involving Chinese goods—could be costing it $19 billion to $26 billion annually in tariff revenue. Hanoi promised dialogue and tighter enforcement while defending an open investment environment, Reuters reported.

The difficulty is separating illegal relabeling from legitimate regional manufacturing. Chinese components are deeply embedded in Southeast Asian factories, but local production contributes most of the value in the region’s exports. Research by Australia’s Lowy Institute estimated that domestic production accounts for roughly two-thirds of the value contained in ASEAN exports, while warning that aggressive U.S. origin rules could force regional governments into politically difficult choices between their two largest economic partners. Lowy’s analysis concluded that openness and diversified partnerships—not economic separation—have been central to the region’s resilience.

Integration Is the Real Test

ASEAN’s strongest selling point is scale. Its principal weakness is that businesses still encounter 11 different regulatory, customs and institutional environments.

The bloc is trying to narrow those differences. An upgraded ASEAN Trade in Goods Agreement, signed in October 2025, is intended to improve customs procedures, transparency and oversight of non-tariff measures. Governments are seeking to bring it into force by the end of this year.

A proposed Digital Economy Framework Agreement could be more consequential. Negotiations concluded in May, and ASEAN aims to sign the accord at its November summit. It would establish common approaches to cross-border data transfers, electronic payments, digital trade and cooperation on artificial intelligence.

ASEAN’s electronic Single Window has already provided a practical demonstration of integration. More than one million digital certificates of origin issued since 2022 have saved companies an estimated $150 million and six million working days, Singapore’s trade ministry said.

But agreements will matter only if regulations are applied consistently. The International Monetary Fund has estimated that deeper trade integration and lower non-tariff barriers could raise ASEAN’s combined economic output by as much as 4 percent over the medium term. It has also warned that overlapping trade agreements and inconsistent standards continue to increase costs. The IMF’s assessment underscores the gap between ASEAN’s ambition and its present-day operating reality.

Business confidence will increasingly depend on institutional reliability rather than inexpensive labor alone. Companies deciding where to place advanced manufacturing, sensitive data or artificial-intelligence systems need predictable regulation, enforceable contracts and credible intellectual-property protection, according to a recent World Economic Forum analysis.

Singapore’s Coming Chairmanship

Singapore will assume ASEAN’s rotating chairmanship on Jan. 1, 2027, as the organization marks its 60th anniversary. Its priorities are expected to include collective resilience, economic integration and stronger partnerships beyond Southeast Asia.

The agenda is already visible. ASEAN is pursuing an energy-security agreement to coordinate responses to oil and gas disruptions, expanding the regional power grid and broadening its network of trade relationships. Its agreement with Australia and New Zealand has been upgraded; negotiations continue with Canada, while discussions are under way to modernize the ASEAN-South Korea pact and explore closer trade ties with the Gulf states.

This is not an attempt to insulate Southeast Asia from global rivalry. It is a strategy for managing exposure to it.

ASEAN’s attraction rests precisely on that balance: access to Chinese industrial capacity, American capital and technology, regional consumer growth and an expanding web of trade agreements. Whether it becomes a durable center of global business will depend less on the number of agreements it signs than on whether companies can experience the region as one connected marketplace.

For now, ASEAN offers businesses options. Its next challenge is to offer certainty.