The European Union’s Strategy for Cooperation in the Indo-Pacific, launched in October 2021, marked a significant shift in the EU’s foreign policy. It represented a comprehensive approach to engaging with the region of the Indo-Pacific, which is increasingly recognized as a global economic and strategic hub. Together, the Indo-Pacific and Europe hold over 70% of global trade in goods and services, as well as 60% of foreign direct investment (FDI) flows.
Assessment of Present-Day Position
Almost four years later the EU Strategy for Cooperation in the Indo-Pacific’s focus on sustainable development, economic and digital connectivity, and security continues to open a wealth of opportunities for businesses in Europe. The document proved that it is not outdated. It continues to evolve to meet emerging challenges and opportunities in both regions, including the inauguration of the new U.S. administration. While the strategy, introduced in October 2021, provides a broad framework, its implementation throughout the years has been dynamic, with ongoing updates to address new geopolitical and economic developments. Currently, the spirit and different aspects of this strategy are also applicable on bilateral basis.
After the Russian invasion of Ukraine in February 2022, the EU has faced the challenge of continuing its realistic commitments to the Indo-Pacific region despite the difficulties created by efforts to allocate resources and capacities under the new circumstances. Security issues started to play a more significant role, but there is even greater potential for renewing the agenda in areas such as economy, trade, investment, and sustainable development, as well as implementing infrastructure projects in the Indo-Pacific. In 2024 an increase in the focus on security and defense could be noted (Japan). At the same time, the preferences on the side of some countries from Southeast Asia go to deepening the relations with the EU member states mostly in the economic field in an attempt to prevent EU’s excessive engagement with security issues.
In December 2022 EU pledged to mobilize 10 billion EUR for green transition and sustainable connectivity projects in ASEAN (Association for Southeast Asian Nations) member states under Global Gateway Initiative. Six months later, Dr.Frederick Kliem, a research fellow at Nanyang Technological University in Singapore most effectively drew attention to his forecast that “the war in Ukraine will inevitably put the brakes on European funding capacities elsewhere. It would be highly unrealistic to expect that the financing of the EU Indo-Pacific Agenda could be fully implemented. Nonetheless, the imperative for the EU to engage in the Indo-Pacific, especially in economic and sustainable development matters, has not faded”. The reality proved such a prediction. The EU Strategy for Cooperation in the Indo-Pacific became more specific and focused on measurable outcomes that would enhance accountability.
This article is focused mainly on the new opportunities for trade & investment for Bulgarian companies in some countries from the region of Indo-Pacific, mainly in East Asia.
The EU aims to maintain a free and open Indo-Pacific, in line with the principles of democracy, rule of law, human rights and international law. The EU’s approach is designed to foster a rules-based international order, a level playing field, as well as an open and fair environment for trade and investment, tackling climate change and supporting connectivity with the EU. The Indo-Pacific Strategy thus commits the EU to further support the ASEAN (Association of South East Asian Nations)-led regional architecture and ASEAN’s centrality within it.
The EU Strategy for Cooperation in the Indo-Pacific focuses on seven priority areas:
Sustainable and Inclusive Prosperity: Promoting economic growth and development that benefits all segments of the society through building more resilient and sustainable supply and value chains by diversifying trade and economic relations. EU has an intention to pursue the extension of its network of FTAs (free trade agreements) with Indo-Pacific partners through the ongoing negotiations with Australia, Indonesia, India and Thailand and possible relaunch of negotiations with other ASEAN partners such as Malaysia and the Philippines. Bilateral trade agreements still remain a priority in the relations between EU and ASEAN, provided that the conditions to ensure a shared level of ambition like the cases with Singapore and Vietnam FTAs are met, especially in the field of public procurement and sustainable development. An EU-ASEAN FTA is still a matter of a very distant future.
EU-ASEAN Dialogue on Sustainable Development and EU-ASEAN Dialogue on Trade and Business are going to play even more important role in the next several years. Regarding Southeast Asia, the biggest challenge here is related to some very visible signs of rising protectionism and economic nationalism on commodities and strategic industries (for example ban on the nickel ore exports from Indonesia in order to boost downstream industrialization of the country). It is largely expected the new administration of Indonesia to focus more on critical minerals sector. At the same time, Indonesia and Malaysia have welcomed last autumn the European Commission’s proposal to delay the implementation of its deforestation regulation. It was seen as a gesture on the side of the EU to the important palm oil sector in both countries. Such a directive was aimed at production of unsustainable biofuels based on palm oil.
Green Transition: Addressing climate change and promoting environmental sustainability are among the key tasks for advancing green transition through conclusion of green alliances & partnerships such as the ASEAN/Southeast Asia Team Europe Green Initiative, Just Energy Transition Partnerships for Indonesia and Vietnam and EU-ASEAN Dialogue on Circular Economy.
Ocean Governance: Ensuring the sustainable use and management of ocean resources, including an increase of the EU support for Indo-Pacific countries fisheries’ management and control systems.
Digital Governance and Partnerships: The EU has successfully set up Digital Partnerships with Japan, Republic of Korea and Singapore as well as Trade & Technology Council with India. EU-ASEAN Dialogue on Digital Economy and Society, included under the EU-ASEAN Team Europe Initiative on Sustainable Connectivity could be underlined. EU has concluded Digital Trade Agreement with Singapore and EU-Japan Agreement on Cross-Border Data Flows. For example, through the EU-Singapore Digital Partnership, both sides explore common approaches to semiconductors, in e-identification and in AI governance as well as working on projects such as interoperable e-invoicing standards to facilitate digital trade and small and medium enterprises digital transformation.
Connectivity: The main focus here is on improving transport, energy, and digital links between the EU and the Indo-Pacific. EU Global Gateway aims to reduce the Indo-Pacific’s infrastructure gaps by providing capital for investment into hard and soft infrastructure, with the support of development banks and the private sector. In this regard, the EU-ASEAN Sustainable Connectivity Team Europe Initiative plays a very significant role.
Security and Defense: This key area is related mainly to strengthening regional security through partnerships and joint operations and deepening the EU’s role in the ASEAN Regional Forum. Main activities of cooperation are focused on maritime security, cybersecurity, counter-terrorism and crisis management. It should be noted that free and secure maritime supply routes are a vital strategic interest of the EU. Freedom of navigation in the Indo-Pacific is the most important issue from business companies’ viewpoint.
Human Security: Providing humanitarian aid and addressing human-induced disasters and natural hazards, with particular attention to the most vulnerable.
From the viewpoint of the Bulgarian economy and Bulgarian business companies four of these seven areas are very important: sustainable and inclusive prosperity, including trade issues; digital governance and partnerships, including research and innovation; connectivity and security (especially cybersecurity).
For Bulgarian business companies, the EU Strategy for Cooperation in the Indo-Pacific offers a gateway to new opportunities for trade & investment, enabling them to access some of the world’s fastest-growing economies and build new partnerships. Deepening the EU economic ties with the Indo-Pacific could lead to new markets for Bulgarian products and services. Such an expansion could lead to diversification of the Bulgarian export markets and reduction of dependency on the Bulgarian traditional trading partners. It would also result in the resilience of the supply chains for both Bulgaria and their reliable Indo-Pacific partners. However, the most important challenge is related to attracting the attention of companies from East Asia to invest in Bulgaria. In this regard, special efforts are needed.
The EU’s focus on green and digital cooperation opens avenues for Bulgarian companies specializing in renewable energy and IT services. Connectivity initiatives under the EU Strategy for Cooperation in the Indo-Pacific create opportunities for Bulgarian construction, engineering and logistics companies to participate in large-scale infrastructure projects. Such projects are not limited to physical infrastructure, but also include opportunities for Bulgarian software companies to build digital infrastructure and digital networks.
Examples: There are two emerging main areas for cooperation between Bulgaria and Singapore: resilience of the supply chains and IT, digital economy and cybersecurity. Bulgaria could contribute to the efforts of the Government of Singapore, business associations and trading companies for achieving a supply chains’ resilience through increase of the exports of Bulgarian high-quality food products to the Singaporean market and other markets in East Asia. Bulgarian companies are also interested in export of food and cosmetic products certified by halal standards to Indonesia, Malaysia and Brunei. As a regional ICT hub and № 1 business process outsourcing in Southeastern Europe, Bulgarian IT, software and start-up companies are interested in collaborating with companies from Singapore, including on EU-funded projects based on the widely recognized talent of the Bulgarian software engineers. Other key sectors for economic cooperation and business partnerships between Bulgaria and some countries in Southeast Asia are: semiconductors (Singapore and Malaysia); clean energy (development and commercialization of green hydrogen with Malaysia and geothermal energy with Indonesia); robotics and automation (Singapore), creative economy (Indonesia).
In the light of many opportunities for serious consideration, in their dealings with companies from Southeast Asia, the Bulgarian companies must navigate certain challenges. Among them understanding local regulations and cultural differences is essential for successful market entry. The high diversity of the region of Southeast Asia means that each country operates within a unique legal framework. Successful collaborations rely on building relationships first and meeting with people face-to-face, either virtually or in person. Identifying the right local partner could be a key for Bulgarian firms to facilitating business operations and expanding to multiple markets within the region of Southeast Asia. The Indo-Pacific is a highly competitive region, requiring companies to innovate and adapt to stand out.
Regarding the geopolitical risks, it should be noted that the regional tensions in East Asia, particularly in areas like South China Sea and Taiwan may pose risks to operations and investment. Expanding business operations from Bulgaria to East Asia involves careful planning and strategic execution involving the following steps: preparation of market entry report; understanding the legal frameworks in the countries from the region; adapting business strategies of the Bulgarian firms to the specific country; leverage the digital economy and online presence; building relationships; identifying the right local partner; exploring government incentives in different countries from East Asia; budget and funding; risk assessment; making choice of the right entry mode; participation in trade shows, business missions, conferences and networking events as well as connections with local industry associations and chambers of commerce.
Conclusion
The EU’s Indo-Pacific Strategy represents more than just a geopolitical shift. It is an economic blueprint with tangible benefits for businesses across Europe, including Bulgaria.
The EU’s Strategy for Cooperation in the Indo-Pacific could play a role of transformative opportunity for Bulgarian business companies. Still this opportunity seems to be largely unnoticed or neglected. By aligning their marketing and investment plans with the strategy’s focus areas—trade, sustainability, digitalization, and security— Bulgarian firms can expand their reach into one of the world’s most dynamic regions. While challenges such as regulatory complexity and competition remain, proactive strategies and regional collaborations can enable Bulgarian companies to position themselves as key players in the evolving global business landscape.
By Petar Andonov, Business Development Director, Boyanov & Co
