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ASEAN’s Next Leap Forward: Deepening Intra-Regional Integration

This article⁣ was first published in the Edge ‌Singapore on October 20, 2025.

ASEAN’s economy is now almost as⁤ large as Japan’s. Its 10 member states‌ sit at the heart of global supply chains, attracting more ⁢foreign investment in recent years‌ than any other developing region. Yet for all this dynamism, ASEAN remains less connected within itself.

Intra-regional trade has hovered around ​20 to​ 25 percent⁤ of total⁢ trade⁣ for two decades-roughly⁣ half⁣ the level seen between ⁢ASEAN and its closest partners: China, Japan, and South Korea, collectively known as the Plus-3. As ‍leaders convene in Kuala lumpur for the ASEAN+3 ⁣Summit later this⁣ month, the question is‌ not whether ‌ASEAN can‍ afford to deepen integration, but whether Asia can afford for⁣ it⁤ not to.

The Structural Challenges to Intra-ASEAN Integration

The reasons for ASEAN’s shallow internal⁤ integration are‍ structural. Wide disparities in income and production sophistication limit complementarities, while‌ intra-ASEAN investment-at onyl around ⁢a⁣ tenth⁤ of total FDI stock-remains too shallow to⁢ anchor durable supply ⁢and demand networks.

Consider the⁣ economic landscape: Singapore‌ and ⁤Brunei ‍boast considerably higher GDP per capita than Cambodia, Laos, and​ Myanmar. This disparity ⁤impacts ⁢the ⁣types of ‌goods and services ⁤traded, creating imbalances. Furthermore, differing​ regulatory environments and infrastructure ‍quality across member states add complexity to cross-border investment and trade.