3 March 2026
Southeast Asia is proving its resilience in the face of global trade upheaval. Firms that can access flexible financing may well end up defining the next decade of growth.
Despite the introduction of sweeping US trade tariffs, ASEAN economies continued to deepen their presence in global supply chains in 2025. Vietnamese exports rose 17% to $475 billion last year, with FDI inflows up 9% to $27.6 billion.[1] Malaysia now accounts for around 13% of global semiconductor testing and packaging.[2]
Further upstream, Indonesia now hosts 106 active nickel smelter projects, providing critical materials to the electric vehicle and battery supply chain.[3]
Sustaining this momentum will require financing solutions that can move as quickly as supply chains themselves, particularly in markets where traditional bank credit remains selective. Banks across Southeast Asia are being cautious when lending to exporters and trading-linked companies, even when underlying demand is robust. Trade finance and working-capital loans are typically short-dated, cyclical and sensitive to external shocks, and lenders often prefer collateral tied to real estate or hard assets rather than receivables, inventories or contracts that depend on volatile trade flows.
The rapid expansion of equity ownership across Southeast Asia, which has deepened capital markets and broadened the base of long-term shareholders, could help.
Indonesia offers the clearest illustration: its retail investor base exploded between 2020 and 2025, rising from 3.8 million to more than 20 million investors — a shift that is also evident, to varying degrees, across much of the rest of the region.[4]
Equity-linked financing could become an increasingly important source of credit for entrepreneurs keen to capitalize on emerging growth opportunities in an evolving landscape.
Regional resilience
ASEAN's resilience in the face of US trade tariffs underlines the investment case for the region. The US government has raised effective tariff rates on a broad range of Asian exports to 19-25% range over the past year, while Chinese-origin goods face substantially higher levies — including reciprocal rates of more than 35% in some categories.[5]
Yet the impact on Southeast Asia’s trade volumes has so far been muted. In October 2025, the region’s total goods exports were around 15% higher than a year earlier, according to regional trade data — a pace that, if sustained, would translate into a substantial increase in annual export value.[6]
Fears of a tariff-related slump have not materialized. Even with higher tariffs, exports out of Asia remain competitive. US tariffs have also been broadly applied rather than selectively targeted, leaving manufacturers with little to gain from shifting production elsewhere.
Higher tariffs on Chinese exports to the US, meanwhile, are deepening Southeast Asia’s role in global supply chains. Goods originating in China are increasingly processed, assembled or routed through neighboring economies. Indirect exports from China to the US last year were approximately equal to direct trade flows alone.[7]
The resilience of Southeast Asian trade is also visible in broader regional flows. Even back in 2024, intra-Asian flows represented nearly 60% of the region’s total exports.[8]
The region’s integration into the global technology supply chain has also provided a powerful tailwind. Demand tied to the AI build-out — including chips, chipmaking equipment, servers and data infrastructure — has underpinned export momentum. Thailand, for example, is now actively courting semiconductor and electronics investment, as electrical and electronic products account for around a quarter of total exports.[9]
Many of these products have remained exempt from US tariffs, and shipments of electronic goods have been growing at rates well above historical norms, reinforcing the region’s position as a critical supplier into the technology super cycle sustaining global economic growth.
Yet while factory activity and exports have held up, financing conditions have tightened. Bank lending across parts of Southeast Asia slowed in 2025 as lenders grew more cautious amid trade uncertainty, higher funding costs and regulatory constraints. In the Philippines, loan growth in October slowed to the weakest pace in 16 months, while Malaysian banks are on track to end the year with approximately a 5% increase in loans, reflecting softer credit demand.[10],[11]
Regulatory uncertainty is a major factor behind this restraint. As trade policy shifts — from tariffs and export controls to sanctions and rules-of-origin requirements — banks are wary of taking on additional credit risks.
Monetary policy has also offered limited relief. While inflation has eased across much of Southeast Asia, central banks have been cautious about cutting interest rates aggressively, mindful that any currency depreciation that may come about could raise import costs — particularly for food, fuel and consumer goods — and stoke social pressure in economies with young, urbanizing populations.
With trade uncertainty likely to remain elevated in the near term, the region’s entrepreneurs could have to contend with a financing environment in which borrowing costs remain elevated — even as investment needs rise.
For firms investing for the long run, access to flexible forms of capital may prove decisive.
As bank credit turns more selective, alternative credit – including equity-linked financing structures – will need to play a larger role, allowing entrepreneurs to unlock capital from existing shareholdings while preserving balance-sheet flexibility during a prolonged investment cycle.
[1] https://www.reuters.com/world/asia-pacific/vietnams-annual-growth-reaches-8-trade-surplus-with-us-hits-record-despite-2026-01-05/
[2] https://www.reuters.com/world/asia-pacific/malaysia-offer-incentives-its-chipmaking-industry-state-media-reports-2025-05-21/
[3] https://cgs.umd.edu/sites/default/files/2025-12/UMD_NickelIndonesia_Brief2025.pdf
[4] https://jakartaglobe.id/business/indonesias-capital-market-investors-surge-40-to-17-million-the-largest-in-asean
[5] https://www.sidley.com/en/insights/newsupdates/2025/08/implications-of-us-tariffs-on-southeast-asia-navigating-the-trade-tumult
[6] https://www.lowyinstitute.org/publications/navigating-storm-southeast-asia-global-trade-shocks
[7] https://www.ft.com/content/accd73b8-c352-4a64-a879-3f374450ecf9
[8] https://www.fedex.com/en-cn/business-insights/sme/vietnam-unlocking-potential-intra-asia-trade.html
[9] https://www.reuters.com/world/asia-pacific/thailand-targets-investments-worth-79-billion-in-semiconductors-electronics-2026-01-08
[10] https://mb.com.ph/2025/12/05/bank-loan-growth-weakest-in-16-months-despite-liquidity-surge
[11] https://asianbankingandfinance.net/lending-credit/in-focus/malaysian-banks-see-lending-growth-soften-ahead-year-end
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