Asean Enterprises Urged to Shift Up Value Chain
Singapore's leadership is pushing firms to adopt digital tools to maintain competitiveness against automation.
Updated on Sept. 28, 2026 in International Trade
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Singapore Deputy Prime Minister Gan Kim Yong has called for Asean enterprises to move up the value chain to remain competitive as traditional low-cost labor advantages fade. The directive comes as Asean and China continue to deepen their trade relationship, which exceeded US$1 trillion in 2025.
Why it matters
Automation is eroding the historical reliance on lower labor costs for regional firms, making digital integration essential for market survival. Adapting to this shift is a strategic necessity for operators to compete effectively as digital platforms expand market access.
Trade between Asean and China reached US$744.4 billion in the first seven months of 2026, with Asean accounting for 22% of China's total foreign trade. This follows the 2025 signing of the Asean-China Free Trade Area upgrade.
The players
Gan Kim Yong
The Deputy Prime Minister of Singapore who provides strategic direction on economic policy and regional trade integration.
Asean
An intergovernmental organization comprising 10 Southeast Asian nations that serves as a collective economic bloc.
China
The world's second-largest economy and the dominant trading partner for the Asean region.
The details
Enterprises are being encouraged to prioritize the adoption of digital tools and specialized training to increase operational efficiency. Enhanced regional logistics and transport connectivity are further facilitating this transition by linking firms to larger markets. These changes aim to offset the competitive pressure introduced by regional automation and global digital platforms.
Timeline
2009: China became Asean's largest trading partner.
2019: Asean became China's largest trading partner.
2025: Trade between Asean and China exceeded US$1 trillion.
October 2025: The Asean-China Free Trade Area upgrade was signed.
September 25, 2026: Gan Kim Yong spoke at the FutureChina Global Forum in Singapore.
Market Landscape
The call to move up the value chain follows the implementation of the Asean-China Free Trade Area upgrade. This strategy aligns with a regional trend of shifting from basic manufacturing to high-value service and digital integration.
Operators should evaluate their reliance on low-labor-cost models and assess the feasibility of adopting digital tools to improve margin efficiency. Managers should specifically audit current logistics workflows to identify opportunities for leveraging improved regional transport infrastructure.
The takeaway
The move toward high-value operations is a required response to the automation and digital competition currently reshaping regional trade. Review your firm's digital integration roadmap to ensure your production cycle is not overly reliant on labor cost advantages that are diminishing against global benchmarks.
Further reading
For broader analysis on regional market dynamics, visit our International Trade section.
Source note: This article includes information reported by The Star.
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