Kuala Lumpur: ASEAN needs to double down on streamlining regulations and cutting red tape, including harmonising customs procedures, to unlock the full potential of sub-regional groupings. Besides lowering costs, this would facilitate the operations of food-based small and medium enterprises, reduce transport and logistics barriers, attract investments and help alleviate poverty in these areas.
According to BERNAMA News Agency, UOB Kay Hian Wealth Advisors Sdn Bhd head of investment research Mohd Sedek Jantan flagged non-tariff barriers, which only raise costs and slow down cross-border trade and investment in such areas. This is particularly the case for the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT) and the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) sub-regional groupings. Mohd Sedek described non-tariff barriers as “the sand in the gears of sub-regional development,” during an interview.
International Islamic University Malaysia associate professor of Economics Dr Muhammad Irwan Ariffin echoed this sentiment, noting that despite ASEAN’s efforts to reduce tariffs, the rise in non-tariff barriers is choking the potential of IMT-GT and BIMP-EAGA. He explained that the challenges are not due to a lack of potential in these regions, but rather because the systems surrounding them remain fragmented and inward-looking.
Dr Muhammad Irwan highlighted that these subregions suffer from a “dual-periphery” trap, being both geographically remote and institutionally marginalised due to non-tariff barriers. Mohd Sedek added that despite progress on infrastructure, complex border procedures, misaligned regulations, and high indirect costs continue to slow things down, especially in BIMP-EAGA, where trade costs are 10 to 15 percent higher due to inconsistent customs practices.
Efforts are underway to tackle these challenges, with support from the Manila-based Asian Development Bank in upgrading digital customs platforms, Customs, Immigration, Quarantine and Security (CIQS) systems, and harmonising halal standards. Mohd Sedek noted that IMT-GT’s Single Window system has significantly reduced clearance times by 30 percent, and intra-EAGA trade has increased by 133.6 percent since 2016. He emphasised the need for ASEAN to intensify efforts in streamlining regulations and reducing bureaucratic hurdles to fully realise the benefits of IMT-GT and BIMP-EAGA.
Dr Muhammad Irwan pointed out the lack of standard sanitary and phytosanitary measures among ASEAN members results in exporters facing inconsistent health, safety, and agricultural regulations across borders. He stated this is particularly challenging for agriculture and food-based small and medium enterprises, which are core industries in both subregions. He explained that differences in product standards, labelling, and conformity assessments lead to technical barriers to trade, increasing compliance costs and causing delays for manufacturers and exporters.
Transport and logistics barriers also constrain both subregions, arising from poor infrastructure connectivity in border and maritime areas. Higher transportation costs and unreliable delivery times result from these barriers, with several cross-border roads and ports remaining underutilised due to bureaucratic bottlenecks.
Dr Muhammad Irwan suggested that ASEAN, IMT-GT, and BIMP-EAGA should diversify their trade partners in light of economic volatility, such as tariffs imposed by the United States. He recommended building resilient internal value chains less exposed to major power frictions and strengthening intra-ASEAN trade corridors and value chains, particularly in halal goods and agricultural exports.
He also noted that the ongoing US-China tensions and imposition of new tariffs are prompting global firms to adopt a “China+1” or “China+ASEAN” strategy to diversify their supply chains. IMT-GT and BIMP-EAGA could capitalise on these supply chain shifts by developing low-cost manufacturing zones, green energy hubs, and halal production centres, as well as strategic logistics corridors near maritime chokepoints, thereby attracting investment fleeing tariff-affected zones.