Southeast Asia is growing as a global trade nexus – and its emerging markets have an important role

Malaysia, Indonesia and Singapore have become increasingly significant hubs. In addition to trading with their dominant Asian neighbour, China, they now trade internationally with the European Union (EU) and the United States.

And alongside Southeast Asia’s more advanced markets, a rising band of emerging countries are becoming more active, thanks to a convergence of factors making them more competitive as trading partners.

Fuelled by market-friendly policies, a strategic geographic location and a surging skilled workforce, the region is set to cement its position as a trade and logistics hub.

Unparalleled market access

One of the key drivers behind Southeast Asia's ascendancy is the unparalleled market access granted by multilateral trade agreements like the ASEAN Trade in Goods Agreement (ATIGA). This comprehensive pact, which covers all 10 member states of the Association of Southeast Asian Nations (ASEAN), has significantly reduced tariffs and other barriers, facilitating the seamless flow of goods across the region.

The trade agreement has seen intra-ASEAN trade soar, as well as trade outside the region. EU imports from ASEAN countries grew from €79 billion in 2011 to an all-time high of €136 billion in 2021 – an increase of nearly three-quarters. And Southeast Asia’s merchandise exports grew over 10% annually on average between 2017 and 2021 – faster than the increase seen by the Asia Pacific region more broadly.

This is reflected in the growth we’re seeing as part of our significant presence in major ports like Laem Chabang, Ho Chi Minh City, Manila and Batangas, where we aim to provide integrated logistics solutions to customers across the region.

Growth has been particularly pronounced in sectors such as electronics, automotive and machinery, where Southeast Asian nations have emerged as major exporters.

Indonesia, for example, has seen its automotive industry develop significantly in recent years, emerging as a major production base for global automakers like Toyota, Honda and Suzuki. While much of this trade is with local partners, the country’s reach is expanding.

Electronics, meanwhile, represent Malaysia’s top export, valued at around RM600 billion ($135 billion) in 2022, up more than a fifth from 2021. DP World’s partnership with Sabah Ports in Sapangar will help support the country’s position, with plans to increase container handling capacity from 500,000 TEUs to 1.25 million TEUs by 2025.

ASEAN’s other key trading hub, Singapore, has a diversified export market and strong links with multiple countries thanks to a raft of trade agreements. It has one of the highest trade-to-GDP ratios in the world, showing the importance of trade to the country.

Emerging markets at the fore

ATIGA has also benefited historically less dominant players, such as the Philippines. Well placed at the heart of Southeast Asia, the trading pact and greater investment in infrastructure have enabled greater market access and allowed the country to emerge as an important regional hub.

The new Tanza Barge terminal we’ve launched, offers an innovative solution to ease supply chain gridlock and enable faster, easier movement of goods given the road and port congestion around Manila. The terminal can handle 200,000 containers every year and providing weekly trips to and from the Manila South Harbour can save 150,000 truck journeys annually.

Another key infrastructure upgrade we’ve made has been the modernisation of the Batangas Passenger Terminal, the country’s largest inter-island hub. Batangas Port also hosts a container terminal primarily serving the Calabarzon region which is home to major economic zones and accounts for about 15% of the Philippines’ GDP.

By strategically investing in ports, terminals, economic zones and logistics capabilities across the region, we are catalysing greater regional integration, attracting investment, creating jobs and supporting growth.

Emerging markets like Laos and Brunei are also contributing to the region's growing prominence in global trade.

Laos, for instance, is leveraging its strategic location as a landlocked country to facilitate trade flows between Southeast Asia and China. In 2020, Laos’ share of intra-ASEAN trade in goods was around 60% – the highest in the region. It has also been actively promoting foreign trade and investment opportunities, particularly in sectors like mining, hydropower and agriculture.

In fact, we have recently taken over the operation of the Savannakhet dry port in the Savannakhet Special Economic Zone in Laos. As a crucial link between Laos, Cambodia, Myanmar, Thailand and Vietnam, the port is used by regional cargo owners and logistics companies to connect supply chains along the East-West Economic Corridor.

Brunei is another key intra-ASEAN trading partner and is capitalising on its abundant natural resources and strategic location along major shipping routes to establish itself as a regional trading hub. The country is pursuing economic diversification beyond its traditional reliance on oil and gas, for example, leveraging its strong Islamic culture to become established as a global halal food hub. It has also been investing in its ports and transportation infrastructure to improve logistics.

In total, emerging markets in East Asia account for around 17% of global trade in goods and services.

A burgeoning hub for sustainable trade

Southeast Asia is gaining prominence as a focal point for sustainable trade. Driven by a growing emphasis on environmental protection and responsible business practices, countries like Indonesia and Malaysia are at the forefront of this charge.

Indonesia, for example, is emphasising sustainable palm oil, while Malaysia has emerged as a global leader in the production of sustainable rubber, with initiatives like the Malaysian Rubber Council's Green Rubber plan driving eco-friendly practices across the industry's value chain. Elsewhere, the Philippines is actively developing its renewable energy sector.

Alongside this, governments across the region are implementing policies and incentives to encourage businesses to adopt sustainable practices, such as energy efficiency measures, waste reduction initiatives and responsible sourcing of raw materials.

This commitment to sustainability not only enhances the region's appeal as a responsible trading partner, but also positions it as a leader in the global transition towards a greener economy.

Southeast Asia's rise as a global trade powerhouse is a testament to the region's strategic location, abundant resources and commitment to economic integration and sustainable development. With Indonesia, Malaysia, the Philippines and other countries taking the lead – and emerging nations like Laos and Brunei contributing to the growth – the region is poised to play an increasingly pivotal role in global trade networks.