Strengthening Supply Chain Resilience in ASEAN: Firm Responses to Trade Shocks, Sustainability, and Digital Transformation

Recent years have exposed global supply chains to unprecedented uncertainty arising from the COVID-19 pandemic, geopolitical tensions, rising protectionism, sustainability pressures, and rapid digital transformation. Most recently, tariff measures introduced under the second Trump administration
have further intensified uncertainty for firms operating across international production networks. Drawing on firm interviews and surveys of Japanese, other multinational, and ASEAN local firms, this policy brief examines how businesses are responding to four interconnected challenges: (1) evolving US
trade policy, including reciprocal tariffs; (2) broader supply chain uncertainty; (3) decarbonisation requirements; and (4) digital transformation. It finds that firms are increasingly diversifying procurement, production, and markets, investing in digital technologies, and integrating sustainability into business strategies, while continuing to face significant policy, regulatory, and investment constraints. The brief argues that geographical diversification alone is insufficient to ensure resilient supply chains. Instead, ASEAN’s long-term competitiveness will depend on coordinated policies that strengthen regional integration, industrial upgrading, decarbonisation, and digital transformation. It concludes with policy recommendations for reinforcing ASEAN’s position as a resilient, competitive, and sustainable global production hub.