By Ts Dr. Hj Ramli Amir, former President of the Chartered Institute of Logistics and Transport (CILT) Malaysia and Vice-President of CILT International for Southeast Asia
KOTA KINABALU: While the world debates the next chapter of globalisation, ASEAN markets are moving full steam ahead. Investors are flocking to the region, attracted by its robust trade links, rapid digital transformation, and the rising demand for sustainable infrastructure.
What is less visible, yet of crucial importance, is the work ASEAN is doing as an organisation to integrate its ten member states.
The region’s foreign direct investment (FDI) is a testament to its appeal. In 2023, ASEAN attracted $226 billion in FDI, second only to the United States. This represented 17% of global FDI, a significant rise from the 8.2% share between 2015 and 2019.
The International Monetary Fund has highlighted ASEAN’s increasing trade connections not only with major economies like the United States and China but also with the rest of the world. The bloc’s participation in agreements such as the Regional Comprehensive Economic Partnership positions it as a gateway for global trade, particularly South-South trade.
What to Expect
According to Standard Chartered’s Trade report, the fastest-growing trade corridor is expected to be within ASEAN itself. Annual growth in intra-ASEAN trade is projected to average 8.7% until 2030, the fastest rate of any regional trade corridor.
With a combined population exceeding 650 million—200 million more than the European Union—ASEAN has a rapidly expanding middle class. Its gross domestic product reached $3.8 trillion at the end of 2022 and could position the bloc as the world’s fourth-largest economy by 2030.
The region is also undergoing a rapid digital transformation, with tech companies and hyperscalers racing to expand data centre capacity in major cities, aiming to double it by 2028.
Like the EU, ASEAN is actively working to remove barriers to intra-regional trade. This effort has driven greater demand for cross-border financial services such as trade financing and foreign exchange. Banks with strong global networks are well-positioned to facilitate this growth by bringing more business into the ASEAN market.
Efforts such as the ASEAN Economic Community’s Banking Integration Framework are further integrating financial services. Cross-border payment systems, lending, and trade finance initiatives ensure clients and their ecosystems have the liquidity and working capital required when and where they need it.
Beyond Manufacturing
Recent attention on ASEAN has highlighted its attractiveness as a base for global manufacturers looking to diversify and strengthen supply chains amidst geo-economic uncertainty. However, ASEAN’s success story extends well beyond manufacturing.
Singapore serves as a global hub of finance and digital innovation. It was in Singapore that a fully digital platform connecting institutional investors with businesses needing supply-chain financing. ASEAN is further supporting such innovations by finalising a Digital Economy Framework Agreement, which aims to enable faster and more secure cross-border e-commerce and payments.
The framework sets clear rules on data storage and management, reduces regulatory fragmentation, and facilitates seamless digital and fintech solutions across multiple ASEAN markets while ensuring cybersecurity. The bloc’s AI Governance and Ethics Guide provides a balanced, light-touch framework to foster artificial intelligence’s role in driving digital growth.
Outlook
A critical area of opportunity lies in ASEAN’s infrastructure needs. Respondents to the Greater Bay Area survey identified ASEAN’s infrastructure deficit, alongside bureaucratic hurdles and limited local financing, as key challenges.
The ASEAN Power Grid exemplifies efforts to address these issues. By linking national power grids with interconnectors, the grid maximises the potential of intermittent renewable energy sources like wind and solar. Expanding energy infrastructure is particularly vital given the power demands of new data centres. The region aims to grow its transmission capacity from 7.7 gigawatts (GW) to 17.6 GW by 2040.
To support these ambitious goals, ASEAN has established sustainability standards and mechanisms such as the ASEAN Taxonomy for Sustainable Finance, ASEAN Green Bond Standards, and the ASEAN Catalytic Green Finance Facility. These initiatives enable large-scale infrastructure projects to access global funds earmarked for sustainable investment.
When it comes to trusted data, the ASEAN Energy Outlook serves as a vital reference. It charts progress towards delivering the renewable energy required to sustain economic growth while highlighting areas where further investment is needed. The latest report notes that while ASEAN aims for renewables to account for 23% of its total primary energy mix by 2025, the share was only 15.6% in 2022, underscoring the challenge of meeting this target.
A Global Bright Spot
ASEAN is making remarkable strides in integrating its ten member states while recognising that much work remains to be done. Banks are looking forward to continued collaboration with regional partners to help transform ASEAN’s potential into performance. In short, ASEAN is not only a global bright spot but a model for how regional integration, innovation, and sustainability can combine to create a future-ready economic powerhouse. Its journey serves as a beacon of hope and inspiration for other regions seeking to navigate the complexities of the 21st-century global economy.
Sabah’s Way Forward
Sabah, as a developing state in Malaysia, has a unique opportunity to position itself as a key player in ASEAN’s digital transformation, particularly in the context of the growing demand for data availability and data centre capacity.
Uplifting data on logistics and trade is crucial for Sabah to strengthen its economic position and fully capitalise on the opportunities presented by ASEAN’s rapid digital transformation and integration. Improved logistics and trade data management can have transformative impacts across various sectors.
Why Sabah Must Uplift Its Data on Logistics and Trade
Uplifting Sabah’s data on logistics and trade is essential to enhance trade efficiency by streamlining processes like customs clearance, inventory management, and supply chain optimisation, reducing delays and costs while boosting competitiveness in regional and global markets.
Accurate, real-time data is critical for seamless integration with ASEAN trade corridors, aligning Sabah with the region’s fast-growing intra-trade network. Enhanced data capabilities also attract investments by showcasing Sabah as a reliable and efficient logistics hub, fostering growth in key industries like agriculture, palm oil, timber, and tourism through optimised export processes and timely delivery of goods. Furthermore, robust logistics data systems support sustainability by tracking environmental impacts, enabling alignment with green trade standards and global sustainability goals.
Participation in modern digital and smart trade systems, including blockchain and AI-driven frameworks, positions Sabah to capitalise on the global shift towards digital trade, avoiding the risk of falling behind and unlocking significant economic opportunities.
How to Uplift Logistics and Trade Data
Sabah can uplift its logistics and trade data by digitalising systems through IoT, AI, and cloud technologies for real-time supply chain analysis, aligning with ASEAN frameworks like the ASEAN Single Window for cross-border data sharing, and upgrading ports with smart technologies to improve tracking and efficiency.
Establishing a centralised logistics data hub, implementing robust data governance, and upskilling the workforce in digital tools are critical steps. Collaborating with global logistics and tech players through public-private partnerships and integrating with e-commerce platforms will further drive innovation and meet the growing demand for efficient digital trade solutions.
Enhancing Sabah’s logistics and trade data systems can streamline operations, reducing inefficiencies to boost export competitiveness while providing data-driven insights for more effective policymaking. These improvements attract investments, create jobs, and drive economic growth, all while supporting sustainable logistics and resilience against disruptions. By advancing its data capabilities, Sabah can unlock significant economic potential and solidify its role in ASEAN’s thriving digital economy.
