Across the region, a sizeable proportion of firms, especially those deeply embedded in cross-border trade, favour a more streamlined and supportive ASEAN Economic Community (AEC).
Recent moves out of the ASEAN Summit to double-down on intra-regional free trade is absolutely what these firms want to see happen and actualised, according to findings of a survey conducted in Southeast Asia (SEA) over the past two years.
The World Trade Organization (WTO) has struggled to advance a new multilateral trade round of negotiations, even as the South-east Asian region is now the third largest economy in Asia and fifth largest globally, with a Gross Domestic Product (GDP) of some US$3.8 trillion (S$4.86 trillion) in 2023.
This was the backdrop to a two-year multi-university survey led by the National University of Singapore (NUS) that started at the beginning of 2023. It studied the manufacturing and related companies in Singapore and six other Association of South-east Asian Nations (ASEAN) members comprising Cambodia, Laos, Vietnam, Indonesia, Malaysia and the Philippines. In Singapore, the firms surveyed include domestic and foreign-owned firms with manufacturing activities in sectors that make up Singapore’s core manufacturing sectors.
The study, concluded at the end of 2024, was carried out during a period of heightened global trade instability and disruptions. It aimed to understand the challenges facing manufacturing firms in SEA including Singapore.
The Institute of Policy Studies (IPS) led the data gathering for Singapore-based firms, while other on-site survey companies managed data collection in the other countries.
The survey attempted to answer two questions:
First, whether the AEC could enhance regional integration to drive economic integration and increase intra-regional trade component of the broader ASEAN community, aiming to create a single market and production base among member states.
The community envisions a free flow of goods, services, investment, capital, and skilled labour, while fostering a more competitive and inter-connected region. However, it also faces significant challenges as it strives for deeper regional integration.
These include economic disparities among member states, the potential negative impact on certain sectors and workers, and the need for effective ways to address these issues and ensure inclusive growth. The AEC would also need to navigate a complex global landscape characterised by rising protectionism, geo-political tensions, and ongoing technological advancements.
Secondly, the survey wanted to find out if effective governance is key to greater regional integration and building its economic resilience in an unstable global market environment. For instance, the survey found that Singapore-based firms prioritised “structural competitiveness” with “lowered tax rates for various industries” as their primary concern, followed by “changes to the regulations that govern various sectors”.
This preference for systemic, industry-wide changes over firm-specific tax breaks or regulatory exceptions (which rank lower) signals a mature business environment where broader competitive advantages are sought.
Thirdly, Singapore-based firms also exhibit a strong preference for institutional co-operation, with over 86 per cent allocating more than a quarter of their efforts towards working with business associations or Trade Associations and Chambers (TACs). This suggests a confidence in these formal intermediaries for collective action and policy advocacy.
Conversely, there was less interest in unstructured, direct firm-to-firm co-operation (64.3 per cent reported low efforts), indicating a preference for collaboration through established organisations.
While maintaining a notable level of independent activity (some 26 per cent allocated between 81 per cent to 100 per cent effort to “working alone”), the reliance on TACs underscores their critical role in a complex regulatory landscape.
For policymakers, empowering these associations is a highly effective strategy for understanding private sector needs and facilitating policy feedback, particularly for Small and Medium Enterprises (SMEs).
The following table compares the top governance priorities for Singapore firms with the Asean average:
Table 1: Top Governance Priorities for Singaporean Firms vs. ASEAN average (1=Most Important)
| Issue Area | Singapore (Avg. Rank) | ASEAN Average (Avg. Rank) |
| Lower tax rates for firms in your industry | 1.95 | 1.76 |
| Changes to the regulations that govern your sector | 2.10 | 2.65 |
| Securing tax breaks or tax incentives specific to your firm | 2.64 | 2.18 |
| Securing a regulatory exception for your firm | 4.09 | 3.82 |
| Affecting the content or signing of international trade or investment agreements | 4.39 | 4.41 |
Source: States, Markets, and Regional Integration Report, 2025
The table above illustrates the primary concern of Singapore-based firms; a clear prioritisation of systemic competitiveness that ranks industry-wide tax cuts and sector regulations higher than firm-specific issues or international agreements.
By comparing Singapore’s average rankings with the overall ASEAN average, the table highlights where Singapore’s priorities align with, or diverge from the broader regional trend, underscoring the special policy needs and strategic orientation of Singaporean businesses.
Charting a Resilient Future: Collective Action for ASEAN
The challenges confronting Singaporean and ASEAN businesses – from geopolitical shifts and trade fragmentation to climate change and technological disruptions – suggest a demand for a holistic, forward-looking strategy.
The research study identifies deepening digital connectivity, building climate resilience, and systematically reducing non-tariff barriers as critical future priorities.
Businesses should pro-actively embrace digital transformation and strategic sustainability investments as fundamental competitive advantages. Concurrently, the survey results also suggest that policymakers should cultivate an agile approach, supporting regional eco-systems by streamlining regulations, empowering institutional support (especially TACs), and ensuring that trade agreements evolve to meet modern economic needs.
The widespread appetite for ASEAN Economic Community reform, particularly for greater inter-operability and skilled labour mobility, provides a clear mandate for action.
ASEAN’s collective strength lies in its ability to adapt, innovate, and integrate. By addressing these multi-faceted challenges through concerted effort and strategic collaboration, Singapore and its regional partners can not only navigate current volatility but emerge stronger, more resilient, and more prosperous, collectively charting a course for sustained growth and global leadership.
In conclusion, while the ASEAN Economic Community has scored clear benefits to many firms across the region, the research study reveals a widespread sentiment: that is, the AEC framework must evolve to remain effective in a rapidly changing global economy.
Singapore-based firms are particularly vocal in this regard. Virtually nine in ten (89 percent) among the Singapore firms surveyed believe the AEC should be reformed to better address the needs of the private sector.
This aligns with their forward-leaning focus on digital infrastructure, investment facilitation, and regulatory efficiency, areas where regional frameworks must evolve to stay competitive. The call for reform is not limited to Singapore.
Dr Faizal Yahya is senior research fellow at the Institute of Policy Studies, National University of Singapore.
Dr Soo Yeon Kim is Associate Professor, Korea Foundation Chair, and editor of Pacific Affairs at the University of British Columbia.
The full survey findings are released in a report titled “States, Markets, and Regional Integration”, at the IPS-SBF Conference – Global-City Singapore: SG60 and Beyond, during the Pre-Conference Forum on 22 July 2025.