Regulatory Uncertainty Hinders US Investment into ASEAN

Regulatory uncertainty remains a major issue for US investors in Indonesia and much of ASEAN, stemming from both domestic regulations and US tariff policies.

Regulatory uncertainty is one of the primary obstacles for investment from United States companies in Southeast Asian nations. This uncertainty arises when rule changes are difficult to predict, advance notice is inadequate, consultation windows are limited, or companies are not given sufficient time to adjust. Pressure is further compounded by US tariff policies.

Brian McFeeters, President and CEO of the US-ASEAN Business Council (USABC), stated that the issue of regulatory certainty is not unique to Indonesia, but is also prevalent in the Philippines and other ASEAN nations.

“The main thing companies want is predictable regulation. This is not specifically an issue only in Indonesia; it is a major issue across almost all of ASEAN,” McFeeters said in Jakarta on Thursday (27/8/2026).

Before arriving in Indonesia, McFeeters led a business mission to the Philippines. According to him, US companies there also prioritise regulatory certainty as a fundamental necessity. If new regulations significantly impact operations or cost structures, companies hope for transition periods and consultation sessions regarding the policies.

The Head of USABC Indonesia, Nugrahendi Widia Utami, noted that regulatory certainty also determines the competition between ASEAN countries in attracting US investment. “When companies choose a country to invest in, they compare Indonesia with others to see which is easier to understand or provides more certainty,” said Utami.

The USABC team in Indonesia has held approximately 45 meetings with the government throughout this year, discussing various issues ranging from digital trade and manufacturing to agriculture. These meetings are part of the consultation mechanism between the government and the business world.

Utami stated that the number of meetings reflects the intensity of communication between the USABC and the government. “We understand that close communication and relationships with the government are vital for our members, as uncertainty often arises when communication and discussions between the government and companies are lacking,” said Utami.

The USABC represents over 175 companies across various sectors, including mining, oil and gas, information and communications technology, agriculture, and healthcare.

This assessment aligns with the ‘US-Indonesia Investment Report 2025: A Year of Transition’, published by AmCham Indonesia, the US business association in Indonesia, alongside the US Chamber of Commerce on 17 November 2025. The report identified regulatory uncertainty and inconsistent policy implementation as the primary barriers to US investment in Indonesia.

While the Indonesian market is still considered attractive with significant growth potential, uncertainty makes it difficult for investors to make long-term investment decisions. In an anonymous survey of AmCham Indonesia member companies, 80 per cent of respondents cited regulatory uncertainty as a major structural barrier, 73.3 per cent cited a lack of transparency, and 66.7 per cent pointed to bureaucratic complexity.

The report also highlighted weak inter-agency coordination, overlapping import licensing, non-transparent quota systems, and administrative tax uncertainty. Furthermore, regulations regarding local content, data, and digital trade were deemed to be hindering investment in several sectors.

US tariff policies are adding to the uncertainty. Several US tariff regulations for ASEAN countries remain subject to change and are not yet finalised. According to McFeeters, the main issue is not the magnitude of the tariffs, but rather the lack of certainty regarding future US tariff policies.

As a result, companies are unable to engage in long-term planning. McFeeters revealed that companies could adapt to high tariffs if the rates were clear and not constantly changing. “If two years ago you had said a tariff of 19 per cent and that was it, companies might not have been happy, but they would have adjusted. Now they are asking, what is next, and will it change?” he said.

Utami mentioned that tariff differences also affect the competitiveness of ASEAN nations in capturing the US market. “If Indonesia receives slightly lower tariffs compared to Vietnam or Thailand, it will benefit Indonesian producers exporting to the US because their products will be more competitive in the American market,” she said.

Since 24 July 2026, the US has imposed an additional 10 per cent tariff on many goods from Indonesia. Malaysia and Cambodia have also been hit with a 10 per cent tariff, while Vietnam, Thailand, the Philippines, and Singapore face a 12.5 per cent tariff.

These tariffs are part of US trade policy under Section 301 of the Trade Act of 1974, concerning the prohibition of imports produced using forced labour. However, tariff uncertainty is far from over. The US government is still conducting other Section 301 investigations regarding excess capacity and manufacturing production, covering Indonesia, Malaysia, Cambodia, Thailand, Vietnam, and Singapore. As of 27 August 2026, no final decision has been reached regarding the trade actions to be taken based on these investigations.

Consequently, even though Indonesia’s current tariffs are lower than those of Vietnam and Thailand, companies cannot yet be certain if the tariff structure will remain stable. Amidst these various uncertainties, US-ASEAN trade continues to rise. McFeeters noted that Indonesian exports to the US have risen, US exports to Indonesia have increased, and so have ASEAN exports to the US.