South Asia, ASEAN Lead Trade Realignment
South Asia and ASEAN are at the forefront of a global trade realignment as companies diversify supply chains away from China, according to analysts at Citi. The trend is creating new intra-Asia demand and shifting trade flows. Thailand is seen as well-positioned to benefit from this shift due to its regional connectivity and infrastructure.
- India, the world's largest rice exporter, lifted its ban on non-basmati white rice exports in September 2024 and subsequently removed the minimum export price and export duties on parboiled rice in October 2024, moves expected to lower global prices. For the marketing year 2025-26, India's rice exports are projected to rise to between 22 and 30 million metric tons. - Vietnam is targeting rice exports of over 7.5 million tons in 2025, with a strategic focus on leveraging free trade agreements like the EVFTA, RCEP, and CPTPP to gain preferential tariffs in key markets. The country is also developing one million hectares of high-quality, low-carbon rice in the Mekong Delta to access premium export markets. - The Thai baht is forecasted to remain strong against regional currencies through the first quarter of 2026 before potentially depreciating mid-year. Against the euro, forecasts suggest a softer exchange rate for the baht in 2026, with projections around 0.026000 in early 2026 and 0.025300 by late 2026. - To enter the European market, rice exporters must comply with Regulation (EU) 2018/848 for organic products, which requires certification and ensures no chemical traces. All organic imports into the EU require an electronic Certificate of Inspection (e-COI) administered through the TRACEs system to ensure traceability. - The Asia-Pacific rice market is projected to grow from USD 376 billion in 2025 to USD 476.34 billion by 2031, with rising middle-class incomes driving demand for premium, organic, and specialty rice varieties. Urban consumers are increasingly prioritizing grain uniformity, aroma, and branded packaging. - The Regional Comprehensive Economic Partnership (RCEP) is expected to increase Thailand's trade with member countries, which already accounted for nearly 58.5% of its total external trade in 2022-23. The agreement aims to eliminate tariffs on over 65% of goods traded within the bloc over 20 years. - For premium positioning, certifications like Global G.A.P., Fair Trade, and those from the Sustainable Rice Platform (SRP) are gaining importance for market access, especially in Europe. Food safety certifications such as FSSC 22000, which is based on ISO methodology, are also preferred by European importers. - Economic growth in the ASEAN region is forecast to be 4.1% in 2025 and moderate to 4.0% in 2026. Southeast Asia's GDP growth forecasts for 2025 and 2026 have been raised to 4.5% and 4.4% respectively, reflecting strong performance in several key economies.
