KUALA LUMPUR: With global trade tensions escalating, most notably the United States’ recent tariff hikes, Southeast Asia finds itself at a critical inflection point.
EU-Asean Business Council executive director Chris Humphrey said the region is no longer just a growth engine, but it is becoming a strategic necessity for economies and institutions seeking stability, openness and diversified partnerships.
“European institutions are clearly paying more attention to Southeast Asia. In this environment, your old friends may not be as reliable. Protectionism is rising, and if you are looking for growth and like-minded partners, Asean stands out,” he told SunBiz after a media briefing on cigarettes and alternative nicotine products use, behaviour and attitudes today.
He said the wave of US tariffs has underscored the fragility of existing trade dependencies. It has accelerated the global shift towards supply chain diversification, a trend that could benefit Asean if the bloc can position itself more cohesively.
“This should be a wake-up call for Asean. We need to stop being passive and start acting like a truly integrated economic bloc.”
Despite its solid fundamentals – growing middle class, urbanisation and consistent 5% gross domestic product growth – Asean risks missing the moment unless it fast-tracks regional agreements and infrastructure, Humphrey said.
“Significant progress on the Asean Trade in Goods Agreement upgrade, the Digital Economy Framework Agreement and a post-2025 vision could set the stage for a truly unified market and production base,” he added.
Humphrey said Malaysia has already made notable moves, especially in semiconductors, in response to global concerns over supply concentration in Northeast Asia.
“The government’s push for more local semiconductor manufacturing has been widely welcomed – but competition is fierce. Everyone in the region is chasing the same opportunities. Malaysia must keep climbing the value chain – beyond agriculture and traditional manufacturing – to stay competitive.”
As US tariffs threaten to further fracture global trade, Humphrey said, Asean’s future will depend less on external forces and more on how quickly it can align internally.
“The region’s outlook is bright – but with stronger unity, it could be transformational,” he said.
Furthermore, he said Southeast Asia loses an estimated US$30 billion (RM141 billion) annually to illicit trade, spanning tobacco, alcohol, pharmaceuticals and even counterfeit car parts.
In Malaysia alone, he said, illicit tobacco remains a persistent issue, with about half of all cigarettes sold in the country coming from illegal sources. “Malaysia’s illicit tobacco market is around 50%. While the trend is slowly declining, it is still alarmingly high.”
Much of the illicit tobacco entering Malaysia and the Philippines is produced legally in licensed factories outside the country, often within Southeast Asia, before being smuggled in, making enforcement efforts more complex, he noted.
“These products are made legally and exported legally, but become illegal once they cross borders through unofficial channels,” Humphrey said, adding that intergovernmental collaboration and tighter export laws are needed to close enforcement gaps.
He said the vaping sector is increasingly exploited through social media and encrypted messaging apps such as Telegram and WhatsApp.
“In markets such as Singapore and Vietnam where alternative tobacco products are banned, online black markets have become rampant. In Europe, regulation and enforcement go hand-in-hand. But in this region, the sheer number of unlicensed players – especially in vaping – makes it hard to control,” Humphrey said.
