The call from Malaysia's Foreign Minister, Mohamad Hasan, for ASEAN to deepen its internal trade collaboration and strive to increase the share of intra-regional trade to over 30% by 2030 has drawn widespread attention both within and outside the region. This goal is not only a key priority during Malaysia's tenure as ASEAN Chair but also a pragmatic choice for the bloc to fortify its economic foundations in the face of a complex external environment.
For a long time, ASEAN economies have exhibited a high degree of external dependence, making them vulnerable to fluctuations in global markets. Coordinating political security and economic development while encouraging member states to move beyond unilateral approaches and embrace deeper cooperation has become crucial for ASEAN's long-term growth. The urgency to rapidly expand intra-regional trade is increasingly evident from trade data.
Despite decades of development and continuous progress in trade liberalization, which has significantly lowered overall tariff levels and steadily increased trade openness, the share of intra-ASEAN trade as a proportion of its total trade has long stagnated between 20% and 25%, failing to achieve a breakthrough. A comparative perspective highlights the gap: the European Union's intra-regional trade share has long surpassed 60%, and the share within the "ASEAN+3" framework has reached 43%. Despite a population exceeding 670 million and immense consumption potential, ASEAN's internal economic circulation capacity remains underutilized.
The varying development stages and distinct industrial structures of member states present a dual reality. While this creates a unique division of labor within global supply chains, it also constrains the potential for complementary intra-regional trade. High-end products from high-income members struggle to find effective consumer markets in less developed members, while primary goods and production capacity from lower-income members often fail to meet the industrial demands of more developed economies, creating significant barriers to trade flow within the bloc.
To overcome this developmental impasse, relying solely on traditional tariff reductions is no longer sufficient. ASEAN must deepen reforms and dismantle barriers at the institutional level. Mohamad Hasan emphasized the need to strengthen the practical effectiveness of free trade agreements. While the number of such agreements has grown, their implementation has been uneven, with non-tariff barriers becoming a major obstacle to the free movement of goods. Complex customs procedures, disparate technical standards, and varying market regulations across countries significantly increase the costs of cross-border operations for businesses.
In response, ASEAN is accelerating the upgrade negotiations for the ASEAN Trade in Goods Agreement, aiming to create a more standardized, transparent, fair, and orderly regional market by simplifying customs procedures and harmonizing technical regulations and industry standards. Concurrently, the implementation of high-level agreements like the China-ASEAN Free Trade Area 3.0, which incorporates cooperation in the digital economy, green development, and supply chain connectivity, is set to deepen collaboration in frontier areas such as cloud infrastructure, artificial intelligence, fintech, and green equipment, fostering deeper integration of industrial and supply chains.
Beyond institutional coordination, the interconnection of cross-border infrastructure and the deep integration of industrial chains are equally vital for expanding and strengthening intra-regional trade. In recent years, the completion and operation of cross-border transport infrastructure, exemplified by the China-Laos Railway, has enhanced the logistics network connecting ASEAN with neighboring countries, making the movement of people and goods within the region more efficient and continuously revitalizing economic activity along these corridors.
As infrastructure improves, the internal industrial division of labor within ASEAN is also being reshaped. Emerging economies like Vietnam are shifting their trade relations with other regional countries from merely pursuing scale expansion to forging deeper supply chain linkages. Vietnam not only views ASEAN nations as key export markets but also relies on regional supply chains for imports of raw materials, components, and production equipment, leading to a pattern of mutual industrial embedding and interdependence, gradually forming an "each other's market, each other's factory" industrial landscape.
Industry analysis suggests that to achieve the 30% intra-regional trade target by 2030, ASEAN must accelerate its role transformation—from a traditional recipient of foreign investment to an active player in outward investment. Cross-border direct investment is a core pillar for deep regional economic integration, capable of linking upstream and downstream industries, promoting technology sharing, and building stable, long-term supply-demand partnerships. Currently, intra-ASEAN direct investment accounts for only about 10% of the region's total outward investment, significantly lower than the EU's approximately 50%, indicating a substantial gap and reflecting the need for greater initiative from ASEAN-based enterprises in cross-border investment and operations.
To address this, ASEAN countries need to improve cross-border investment facilitation mechanisms, harmonize standards for enterprise qualification certification within the region, and continuously enhance supporting systems for cross-border payments and local currency settlement. Enabling small and medium-sized enterprises to participate smoothly in transnational operations and unclogging bottlenecks in the regional industrial cycle are essential for building a regional economic system with stronger resilience and greater capacity for self-sustaining development.
Looking ahead, ASEAN's goal of increasing intra-regional trade is both a proactive defense against global uncertainties and external risks and a strategic move to elevate regional economic integration to a higher level. Malaysia, as the Chair, is fostering synergy between political and economic development, creating a solid platform for ASEAN members to build consensus on cooperation. As various cooperation plans are implemented, rules in digital and green sectors continue to align, and the cross-border infrastructure network expands, a more integrated and dynamic ASEAN Community is taking shape at an accelerated pace.