ATIGA TO HASTEN REGION’S EMERGENCE AS UNIFIED GROWTH ENGINE, RAISE ASEAN'S BARGAINING POWER - ECONOMIST

By Danni Haizal Danial Donald

KUALA LUMPUR, Oct 23 (Bernama) -- The upgraded ASEAN Trade in Goods Agreement (ATIGA) will further accelerate Southeast Asia’s emergence as a self-reliant and unified growth engine able to stave off headwinds from economic superpower rivalry, an economist said.

It can also increase ASEAN’s bargaining power with economic superpowers on the global stage, Juwai IQI global chief economist Shan Saeed said today.

He said ATIGA would bolster the grouping’s economy by deepening tariff and non-tariff harmonisation in ASEAN, reducing regulatory fragmentation, aligning standards and tightening rules of origin to protect regional value-chain integrity.

Shan said ATIGA as an expanded free trade agreement also reflects a strategic opportunity for ASEAN members to anchor the region centrally for a high-value future.

“The bloc is entering a defining era of integration not merely as a cluster of economies but as a unified growth engine, as ASEAN prepares to ratify the upgraded ATIGA at the upcoming 47th ASEAN Summit,” he told Bernama in an interview.

ASEAN has already liberalised about 98 per cent of tariff lines under prior ATIGA schedules, leaving fewer than 0.6 per cent of lines with import duties in Malaysia.

“ATIGA also intends to foster seamless customs and digital trade infrastructure via the ASEAN Customs Transit System (ACTS).

“With an upgraded ATIGA, cross-border shipments among member states will be more efficient and transparent,” he said.

Shan said the agreement could broaden small and medium enterprises’ (SMEs) participation and value chain densification, especially in less integrated ASEAN states.

“Over time, intra-ASEAN trade, which has already reached 20–22 per cent of total trade flows, can grow more rapidly.

The new protocols should reduce compliance burdens and open access to supply-chain roles.

“Together, these changes will reshape ASEAN from a collection of fragmented markets into a cohesive single production and consumption network, especially in sectors linked to green growth, electronics, and food systems,” he said.

Shan said the upgraded ATIGA would turn ASEAN into a more self-reliant region, less exposed to external headwinds, amid the United States (US)–China rivalry, which often squeezed the region as a “passage zone”.

Under ATIGA, rather than fragmented voices, member states speak with one trade framework, improving their bargaining power with external powers.

Therefore, ASEAN can engage both China and the US with more balance, reducing the risk of being drawn wholly into one bloc’s orbit, he said.

“As China expands its free trade agreement (FTA) 3.0 (including digital and green chapters), ASEAN’s internal cohesion ensures it sets terms on its own supply-chain integration rather than becoming a passive appendage,” he said.

With global headwinds, tightening monetary policies, supply shocks and trade frictions, this makes the ATIGA upgrade more than symbolic as it strengthens internal buffers, said Shan.

“When demand abroad softens, stronger intra-ASEAN trade provides a stabilising backstop. A harmonised bloc enables coordinated policy response and risk sharing.

“Economic interdependence within ASEAN reduces vulnerabilities tied to overreliance on external markets,” he said.

Shan said that Malaysia stands to reap outsized benefits under the ATIGA upgrade through trade depth and connectivity. 

ASEAN is Malaysia’s largest trading partner, accounting for 30 per cent of its exports and 24 per cent of imports in January–July 2024.

In prior years, exports to ASEAN held a 29.2 per cent share, notably driven by electrical and electronics products, petroleum, machinery, and parts. 

“Malaysia is a global hotspot for semiconductor and electronics manufacturing. Under ATIGA’s improved rules of origin and intra-ASEAN supply flows, Malaysian fabs and component makers can deepen integration with Vietnam, Thailand, the Philippines, and Indonesia,” said Shan.

Under Malaysia’s ASEAN chairmanship, the country is expected to drive deliverables like the ASEAN Digital Economy Framework (DEFA) and the upgraded ATIGA, he said.

“Malaysia has publicly championed the ATIGA upgrade as a ‘key instrument’ to unlock trade, reduce friction and uplift all segments (including SMEs).

“As ASEAN’s trade architecture strengthens, Malaysia’s role as a consensus broker and regional anchor will elevate its geopolitical capital,” he added.

ASEAN member states are expected to ink an upgraded ATIGA at the 47th ASEAN Summit, which will be held from Oct 26-28 here.

Prime Minister Datuk Seri Anwar Ibrahim will chair the upcoming summit, with the theme of Malaysia’s ASEAN chairmanship in 2025 being “Inclusivity and Sustainability.”

Preparatory meetings involving senior officials are set to commence on Oct 23, followed by ministerial-level discussions and culminating in the summit.

-- BERNAMA