Overview

The Association of Southeast Asian Nations (ASEAN) has long aspired to become a deeply integrated economic community capable of competing with other global blocs. With a population exceeding 650 million people and a combined GDP ranking it as the world’s fifth-largest economy, ASEAN holds vast potential (Khmer Times, 2025). However, despite significant progress through Free Trade Agreements (FTAs) and policy reforms, businesses continue to encounter fragmented regulations, barriers to labor mobility, and challenges in scaling across borders.

The ASEAN Business Entity (ABE) initiative emerges as a response to these issues. By creating a harmonized operational framework, ABE aims to allow companies to move goods, capital, and talent across ASEAN more seamlessly. It is not a one-size-fits-all model, but a flexible status that each member state can adapt to its own context while supporting the collective vision of an integrated ASEAN economy (ASEAN-BAC Malaysia, 2025).

ASEAN’s Growing Economic Importance

ASEAN’s economic trajectory has been marked by resilience and growth. Cambodian Prime Minister Hun Manet emphasized this momentum when he noted that ASEAN currently stands as the fifth-largest economy globally, supported by FTAs that have driven regional integration. He further highlighted ASEAN’s “strong economic trajectory with an annual growth rate of 4.8 percent” and stressed that an inclusive ASEAN offers “significant investment opportunities for the global markets.” For Cambodia specifically, growth is projected at 6.3 percent in 2025, with medium-term expansion between 6–7 percent, supported by an open policy toward trade and investment (Khmer Times, 2025).

These figures reflect the collective strength of ASEAN as an attractive investment destination. However, translating this potential into operational efficiency for businesses remains a pressing challenge.

The Case for ABE

Tan Sri Nazir Razak, Chairman of ASEAN-BAC Malaysia, articulated the difficulty of building businesses across ASEAN without the free movement of people and operations. He noted that politically, such integration is challenging, but underscored that investors cannot be convinced ASEAN is a single market unless cross-border business activities become more fluid. According to him, ABE could provide the most meaningful pathway forward, granting select companies access to ASEAN’s economies of scale. He emphasized that implementation would rest in the hands of ASEAN leaders, while the ASEAN-BAC provides private sector feedback. Razak clarified that the initiative does not impose uniform benefits across all member states but instead allows each country to define what ABE would mean domestically (The Edge Malaysia, 2025).

The ASEAN-BAC (2025) further positions ABE as a strategic instrument to accelerate intra-ASEAN investment, deepen regional integration, and make ASEAN identity tangible for businesses.

Concept, Criteria, and Benefits

Under the ABE framework, eligible companies are those with investment or operational presence in at least four ASEAN countries, with a minimum of 30 percent ASEAN shareholder participation. They must operate in priority sectors such as finance, energy, transport, and tourism, and contribute meaningfully to regional investment flows. In addition, companies must demonstrate commitment to the Sustainable Development Goals (SDGs), in line with ASEAN Vision 2045 (ASEAN-BAC Malaysia, 2025).

The benefits envisioned for ABE entities include streamlined regulatory processes, more effortless movement of skilled professionals, flexible capital flows, and reduced barriers for cross-border operations. Malaysia, as ASEAN Chair in 2025, has been proposed to pioneer this initiative, potentially by offering measures such as “auto-approval work permits” and ASEAN-wide internship programs to facilitate labor mobility (ASEAN-BAC & PwC, 2025).

Voices from Business Leaders

Business leaders across different sectors have expressed optimism about ABE’s potential. Tony Fernandes, CEO of Capital A, observed that although ASEAN is home to more than 650 million people, businesses still face the burden of fragmented regulations. He argued that ABE could transform this reality by creating a single, more dynamic economic landscape where goods and people can move faster and more efficiently.

From the financial services sector, Novan Amirudin, CEO of CIMB Group, highlighted that ASEAN’s financial sector thrives on expertise and talent. He suggested that with ABE facilitating the free movement of skilled professionals, the region could build a more connected banking ecosystem capable of serving communities across borders.

Mak Joon Nien, CEO of Standard Chartered Bank, described ABE as an innovative mechanism that allows companies to capture ASEAN-wide synergies that are otherwise difficult to achieve at the national level. Similarly, Eric Cheng, CEO of Carsome, emphasized that the initiative could empower firms to scale regionally by reducing the inefficiencies typically associated with cross-border mergers and acquisitions. These perspectives demonstrate a strong alignment between ABE’s objectives and the operational needs of businesses in the region.

Conclusion

The ASEAN Business Entity is more than a regulatory innovation; it is a strategic step toward turning ASEAN’s economic promise into reality. By reducing cross-border inefficiencies, empowering companies with flexibility, and fostering greater integration, ABE can catalyze regional growth. If effectively implemented, it will not only make ASEAN a practical reality for businesses but also solidify the region’s position as a globally competitive and resilient economic bloc.

References

ASEAN-BAC Malaysia. (2025). ASEAN Business Entity (ABE). Retrieved from: https://aseanbac.com.my/asean-business-entity  

ASEAN-BAC. (2025). ASEAN Business Entity (ABE): Making ASEAN scale a reality for business operations. ASEAN Business Advisory Council.

Khmer Times. (2025, March). Cambodia Prime Minister Hun Manet said that Cambodia’s economic and business landscapes. Retrieved from: https://www.khmertimeskh.com/

The Edge Malaysia. (2025, January). ASEAN-BAC Malaysia chairman Tan Sri Nazir Raza. Retrieved from:  https://theedgemalaysia.com/