Get your piece of the pie: ASEAN developments
Spotlight on Asia

Get your piece of the pie: ASEAN developments

Golden opportunities await ASEAN businesses. How to avoid compliance pitfalls, mitigate supply chain risks, and leverage visibility for sustainable success.

Economic integration under ASEAN

I’ve lived in Singapore, at the heart of Southeast Asia, since 2007. I’ve had numerous conversations with business leaders of organizations of all sizes across many industry sectors in that time. And I’ve had the chance to observe the changes the region is going through. One of the major milestones I have witnessed was the formation of the ASEAN Economic Community (AEC) in 2015.

Ever since the formation of ASEAN (Association of Southeast Asian Nations) in 1967, its members have resisted the idea of a regional integration similar to that of the European Union (EU). But with the AEC, the economic community has sent a clear signal to the world: the region is now ready for economic integration.

Multi-lateral trade agreements aim to establish equal status and fair trading grounds for each participating nation. And businesses in the ASEAN community are keen to leverage the potential of regional agreements. But, it’s also a complex matter and businesses that wish to take advantage of latest trade opportunities also need to comply with all applicable global trade regulations.


Driving success in high-risk and fragmented environments

For many companies, managing compliance with comprehensive global trade rules is a major challenge. And with the formation of the AEC, trade compliance has become even more fragmented. Unlike that of the EU, the ASEAN’s trade policy environment is not standardized – and its members are still rather resistant to an overall harmonization.

This contributes to a high-risk and fragmented regulatory trade environment that is much more challenging to comply with. As a result, the adoption of systems and processes to support trade compliance while staying competitive has become crucial.

Maintaining a competitive advantage depends on businesses planning and executing the right measures to minimize supply chain risks – including trade compliance risks. Failure to do so can seriously jeopardize a company’s supply chain and ultimately its business future.

Understanding the impact and complexity of compliance

Southeast Asia’s supply chains are full of opportunities for businesses – but there is also tremendous pressure. Companies cannot afford penalties, delays, criminal sentences, or reputational damages to impact their business. And these are just some of the consequences that violations of trade regulations can bring about.

The reality is that we are still some years away from seamless harmonization of trade regulations in the ASEAN region. Trade regulations and non-compliance penalties will continue to vary by country until all members adopt ASEAN-wide standards.

With ten nations on board – Brunei Darussalam, Cambodia, Indonesia, Lao, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam – this creates a serious volume of national, regional, and international trade regulations for ASEAN members to comply with.

And all these rules are also subject to frequent changes based on developments in today’s dynamic economic and political global trade environment. This confronts regional businesses with a host of uncertainties and challenges in the midst of this favorable, economic trade environment.

End-to-end trade compliance with AEB

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Managing complexity through supply chain visibility

In everyday business, this means that ASEAN companies now trade more openly with a multitude of companies within the trade region. They spread out manufacturing and distribution facilities across a number of countries to take advantage of lower tariffs and better resources.

With this, the number of trade rules and administrative efforts significantly increases – making supply chain visibility more important than ever. Trade compliance is only one aspect of increasing supply chain complexity – there are many areas to keep an eye on, many partners to monitor, and many processes to integrate. As such, IT-supported supply chain visibility is crucial for both trade compliance and overall supply chain performance today.

Every company dreams of achieving supply chain visibility, of course. To date, most companies still struggle to establish complete transparency and control throughout their supply chains. And different companies have different interpretations of what visibility is – with interpretations and expectations continuously evolving. So how can supply chain visibility be achieved to support latest requirements? And how can it be aligned to individual business models and supply chain strategies? 

Many such questions reach us and we are regularly discussing best practice examples in trade compliance and required IT foundations for visualization and monitoring of all process workflows within and beyond the supply chain.

Establishing IT foundations and smart data management

The economic success of ASEAN is highly dependent on cross-border trade. 90% of businesses in this region are small and medium-sized enterprises (SMEs). For them in particular, establishing supply chain visibility while trying to navigate the regulatory environment is a daunting task.

And this challenge is only going to increase over time. As free trade is opening up more opportunities for businesses, the volume of cross-border transactions will further increase and logically, more data will be generated and more information must be processed.

To manage this successfully, SMEs in the region urgently need to modernize and put a solid IT foundation in place – with powerful data management solutions for the different areas such as trade compliance. Supply chain visibility feeds on information from different sources in different formats – the more the better. But many of the current visibility tools are typically designed only for the internal processes of a company.

This makes the processing of third-party data either technically difficult or impossible. As a result, information among all parties within and beyond a supply chain does not flow easily or seamlessly, severely undermining end-to-end visibility.

In this highly dynamic and complex environment, old practices like manual processes or the use of spreadsheets have become inadequate and can no longer support modern supply chain demands. It’s a key requirement today to eliminate the need for manual data entry wherever possible.

Intralogistics and Supply Chain Collaboration

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Are you prepared to get your piece of the ASEAN pie?

Many SMEs in the region are not aware of the scope of compliance requirements and the potential impact on their supply chain performance. And they might not realize that there are cost-effective options for establishing data integration and visibility as basis for efficient compliance programs – through software and business services.

With ongoing global trade developments and various market shift, all eyes are on Asia now. Southeast Asia is home to more than 600 million people with an economic growth average of 6% and a single market of USD2.6 trillion. It is clear that with continued trade liberalization in the region, businesses will seize the opportunities at hand. And so they should.

Are you ready to tap the potential? Is your supply chain set up to manage new global trade requirements and all involved risks? Just contact us to discuss. In the meantime, I’d love to hear about how your company is managing both global trade compliance and supply chain visibility requirements. What are your drivers, pain points, and challenges? Let me know on LinkedIn.