A view of DEEP C Industrial Zone 2, a typical port-oriented industrial zone jointly developed by EU firms and the northern city of Hải Phòng. — Photo courtesy of the firm

HÀ NỘI — Việt Nam has emerged as the most attractive destination in ASEAN for European businesses planning expansion, with nearly two thirds of surveyed firms intending to expand operations in the country over the next five years, according to the EU-ASEAN Business Council’s 12th Business Sentiment Survey released on Tuesday.

Some 64 per cent of respondents said they planned to expand in Việt Nam, ahead of Indonesia at 57 per cent, Malaysia and Thailand at 49 per cent each, Singapore at 44 per cent and the Philippines at 43 per cent.

The finding marks the second consecutive year that Việt Nam has ranked as the top ASEAN destination for European business expansion.

Among European businesses not currently operating in Việt Nam, 34 per cent are considering entering the market, slightly ahead of Indonesia at 32 per cent, the survey found.

The survey, which gathered responses from around 150 European business leaders, also pointed to stronger expectations for trade and investment across ASEAN.

Nearly four in five respondents, or 78 per cent, expect their companies’ trade and investment in ASEAN to increase over the next five years, up from 71 per cent in 2025.

ASEAN was also ranked as offering the strongest economic opportunities by 61 per cent of respondents, maintaining its position ahead of China and South Asia for the fourth consecutive year. The figure was up from 56 per cent last year.

Meanwhile, 78 per cent of respondents said they planned to expand operations in at least one ASEAN market, while 54 per cent intended to scale up in three or more markets.

Economic recovery and growth opportunities were the strongest drivers of expansion, cited by 66 per cent of respondents as one of their top three reasons. Investment-friendly laws and regulations, a more diversified customer base and reasonable production costs were also significant factors.

The survey highlighted ASEAN’s growing role in global supply chain diversification. Among companies recalibrating supply chains amid uncertainty over US tariff policy, 67 per cent were considering ASEAN, compared with 29 per cent for South Asia and 24 per cent for China.

However, regulatory and trade barriers remain concerns. Some 73 per cent of respondents said there were too many barriers to efficient supply chain use, while 67 per cent pointed to a lack of harmonised regulations. Around 32 per cent considered customs procedures overly burdensome, with only 12 per cent describing them as speedy and efficient.

“European businesses have shown a firm commitment to ASEAN. Investment appetite has increased, with most companies planning to expand within the region,” said Executive Director of the EU-ASEAN Business Council Chris Humphrey.

The survey also found strong support for deeper EU-ASEAN economic integration. Nearly 90 per cent of respondents believed European businesses faced disadvantages compared with competitors from countries covered by regional agreements with ASEAN, while 74 per cent favoured a region-to-region free trade agreement over separate bilateral deals.

With the EU and ASEAN approaching the 50th anniversary of diplomatic relations in 2027, 49 per cent of respondents said they would like region-to-region FTA negotiations to be launched to mark the milestone.

Despite continuing global trade uncertainty, the survey suggests European businesses remain confident in ASEAN’s long-term growth prospects, with Việt Nam continuing to stand out as the region’s leading destination for expansion. — VNS