European businesses continue to view ASEAN as the region offering the strongest economic opportunities, with 61 percent of respondents ranking the bloc ahead of China and South Asia, according to the latest EU-ASEAN Business Council (EU-ABC) Business Sentiment Survey.

The survey, which gathered responses from around 150 European business leaders, showed that expectations for trade and investment in ASEAN have improved despite continuing global trade uncertainty.

“The global situation has certainly proved challenging, but European businesses have shown a firm commitment to ASEAN. Investment appetite has increased, with most companies planning to expand within the region. That tells us ASEAN remains central to business growth, even as companies rethink their investment and operational strategies,” said Chris Humphrey, EU-ABC Executive Director.

About 78 percent of respondents expect their companies’ trade and investment in ASEAN to increase over the next five years, up from 71 percent in 2025. ASEAN has ranked as the leading region for economic opportunities in the survey for four consecutive years.

The Philippines remained among the six main ASEAN markets attracting European expansion plans. Forty-three percent of respondents said they plan to expand in the country, up from 40 percent last year and just below Singapore’s 44 percent.

Vietnam was the most preferred expansion market, cited by 64 percent of respondents, followed by Indonesia at 57 percent. Malaysia and Thailand each recorded 49 percent, while Singapore and the Philippines followed at 44 percent and 43 percent, respectively.

Across the region, 78 percent of respondents said they planned to expand in at least one ASEAN market, although this was down from 87 percent in 2025. At the same time, the share planning to contract operations declined to 29 percent from 39 percent.

More than half, or 54 percent, plan to expand in three or more ASEAN markets.

“With both expansion and contraction plans declining, the findings point more towards a stabilising European presence, rather than withdrawal from the region. This is further supported by stronger investment expectations and an improved perception of economic opportunities,” said Humphrey.

Economic recovery and growth opportunities were the main factors behind expansion plans, with 66 percent of respondents listing them among their top three reasons. Investment-friendly laws and regulations, a more diversified customer base and reasonable production costs were also cited by more than 40 percent of respondents.

Trade uncertainty, however, remains a concern. Eighty-one percent of respondents said uncertainty over US tariff policy had weakened business confidence in ASEAN.

Among companies adjusting their supply chains because of trade uncertainty, 67 percent were considering ASEAN, compared with 29 percent for South Asia and 24 percent for China.

The survey also found strong support for a broader EU-ASEAN trade agreement. Eighty-eight percent of respondents said European businesses face a disadvantage against competitors from countries with regional agreements with ASEAN, while 74 percent favored a region-to-region free trade agreement over separate bilateral deals.

Only 18 percent considered the current level of EU engagement in ASEAN sufficient to support European businesses, while 43 percent called for greater engagement from EU institutions.

The EU and ASEAN are set to mark the 50th anniversary of their diplomatic relations in 2027. Nearly half, or 49 percent, of respondents said they would like the milestone to be used to announce the launch of region-to-region FTA negotiations.