ASEAN must close trade gaps to unlock full economic potential

ASEAN’s economic resilience hinges on its ability to strengthen intra-regional trade and investment, Malaysia’s Minister of Investment, Trade and Industry, Tengku Zafrul Abdul Aziz, said at the opening of the 39th ASEAN Free Trade Area (AFTA) Council Meeting today.

“Intra-ASEAN trade has remained stagnant at around 20 to 22 percent — a figure that falls well short of the region’s true potential,” he said. “Strengthening intra-ASEAN trade is not merely an economic aspiration; it is now a strategic imperative to build a more resilient, self-reliant, and globally competitive ASEAN.”

While ASEAN continues to perform well in attracting global capital, recording a nine percent increase in foreign direct investment (FDI) in 2024 to USD226 billion, Tengku Zafrul stressed that internal trade and investment linkages within the bloc must be significantly improved.

“ASEAN has retained its position as a top FDI destination among developing regions, particularly in digitalisation, sustainable energy, high-value manufacturing and financial services,” he said during his remarks at both the 39th AFTA Council and the 57th ASEAN Economic Ministers’ (AEM) Meeting.

He also pointed out that micro, small and medium enterprises (MSMEs) — which form the backbone of ASEAN’s economy — remain disproportionately affected by non-tariff barriers and inconsistent implementation of trade rules across the region.

“These barriers weigh most heavily on our MSMEs, the largest employers of our workforce. We must not burden them with unnecessary obstacles but rather empower them to innovate, grow and integrate seamlessly into regional and global value chains.”

Tengku Zafrul called for faster implementation of trade facilitation mechanisms such as the ASEAN Single Window, ASEAN Customs Transit System, and the ASEAN Authorised Economic Operator Mutual Recognition Arrangement. These, he said, are “strategic enablers that will lower transaction costs, enhance operational efficiency, and strengthen business confidence.”

He welcomed the conclusion of negotiations for the upgraded ASEAN Trade in Goods Agreement (ATIGA), which he described as a flagship deliverable under Malaysia’s 2025 ASEAN Chairmanship.

“The upgraded ATIGA will modernise and future-proof our trade rules, close long-standing implementation gaps, and unlock new opportunities for businesses of all sizes across our region. Once signed, our collective priority must be to ensure its timely ratification — without delay.”

Tengku Zafrul said this step would signal ASEAN’s seriousness in delivering tangible outcomes for businesses and citizens alike.

The 39th AFTA Council Meeting, held at the Malaysia International Trade and Exhibition Centre (MITEC), marks the beginning of a week-long series of high-level ASEAN economic engagements under the theme “Inclusion and Sustainability”.

The minister was joined by Deputy Minister Liew Chin Tong and Indonesia’s Deputy Minister of Trade, Dyah Roro Esti Widya Putri. - September 23, 2025