ASEAN

Regulatory Challenges for MSMEs in ASEAN

This year´s “ASEAN Integration Report 2024” highlights several challenges for MSMEs to participate or navigate in cross-border trade in ASEAN. Firm size is a key factor, as smaller businesses bear a disproportionate compliance burden with non-tariff measures (NTMs), compared to larger firms. Women-led MSMEs face additional barriers, such as societal biases and limited access to finance, further hindering their internationalization.

The report identifies disparities in NTMs across ASEAN Member States, despite ASEAN’s efforts to align them. These variations create regulatory complexities for MSMEs, particularly in sectors like food and agriculture, where differences are significantly evident. The regulatory complexities undermine a key focus of the ASEAN Economic Community (AEC) Blueprint 2025, which emphasizes the need for deeper regional integration to facilitate smoother trade and market access. While the report covers ASEAN as a whole, it particularly emphasizes Malaysia, Thailand, and Indonesia - key regional trading partners - where NTMs still vary significantly.

The findings in the ASEAN Integration Report 2024 will serve as the foundation for next year’s edition, which will offer policy recommendations to address these challenges.

The ASEAN Economic Community (AEC) Blueprint 2025 outlines a strategic direction for regional economic integration, aiming for inclusive and equitable economic prosperity across ASEAN.

Since 2017, the Friedrich Naumann Foundation for Freedom and the Institute for Democracy and Economic Affairs have collaborated under the ASEAN Prosperity Initiative (API) to track progress through the ASEAN Integration Report series, offering insights and policy recommendations to address ongoing challenges.

Southeast Asia has become a key region for resilient global supply chains, especially following disruptions caused by the COVID-19 pandemic. The region’s exports are projected to grow by 90% by 2031. MSMEs, which make up 97% of ASEAN’s businesses, are essential to unlocking this potential. However, only 18% of ASEAN’s MSMEs currently engage in export activities.

Please download and read the new “ASEAN Integration Report 2024 - Inclusive Trade: Perspectives on Regulatory Challenges for MSMEs in ASEAN”:

*Kewalin Sa-ngapet is the Regional Program Officer at the Southeast and East Asia office of the Friedrich Naumann Foundation for Freedom in Bangkok, Thailand.