2025 has started out rough for many agencies and businesses with a shrinking economy and a seemingly more unstable global economy. The economic landscape in Southeast Asia is facing significant pressure due to global geopolitical tensions. The ongoing Palestinian-Israeli conflict, the Russia-Ukraine war, and the U.S. tariff policies under Donald Trump have all contributed to inflationary pressures, supply chain disruptions, and volatile investment sentiment. Businesses, particularly in marketing and advertising, are seeing shifts in budget allocations, pricing strategies, and expansion plans.
In this interview, we speak with Terng Shing Chen, CEO and Founder of SYNC PR, to discuss how companies in the region are adapting to these challenges and what the future holds for business growth. The Singapore PR agency has teams across Southeast Asia and has been providing marketing solutions for businesses for the last eight years.
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We spoke to Terng about a few things, especially about the need for sustainable growth and what exactly businesses are witnessing right now. The issues around tariffs raise prices through the entire supply chain, which can impact entire industries that then spill over into Southeast Asia. The geopolitical instability also impacts global businesses looking to expand into new markets – likely to be Southeast Asia, which is still seen as a potential growth market.
How are geopolitical tensions affecting Southeast Asian businesses, particularly in terms of marketing budgets?
Geopolitical conflicts have created a ripple effect on global supply chains, trade agreements, and inflation. Rising costs for raw materials, energy, and transportation have led companies to reassess their budgets. Marketing, often seen as a discretionary expense, is among the first areas to be cut when businesses face financial uncertainty. A recent report from GroupM and WARC showed that global ad spend is still growing but at a slower pace, particularly in regions heavily affected by economic volatility.
For Southeast Asia, where many businesses rely on exports and foreign investment, the instability has forced brands to prioritize short-term ROI over long-term brand-building efforts. We see more brands shifting to performance marketing and reducing above-the-line spending.
How has inflation impacted pricing strategies for businesses in the region?
Inflation has significantly impacted pricing, especially for consumer-facing industries. With costs rising across supply chains, businesses are being forced to pass those expenses to consumers. However, Southeast Asia is a price-sensitive market, making this a delicate balancing act.
We’ve observed companies exploring alternative strategies such as shrinkflation (reducing product sizes rather than increasing prices), bundling products, or offering promotions to retain customers. In sectors like e-commerce, many are also using dynamic pricing models to adjust to market conditions in real-time.
Are businesses becoming more hesitant to expand given these uncertainties?
Absolutely. Expansion requires capital investment, and with rising borrowing costs and uncertain returns, many businesses are taking a wait-and-see approach. According to the latest survey by the Asian Development Bank (ADB), investment confidence in Southeast Asia remains cautious, with businesses delaying expansion plans until there is more clarity on trade policies and interest rate movements.
Many companies are opting for regional consolidation rather than aggressive expansion. Instead of entering new markets, they are focusing on optimizing existing operations and strengthening customer retention strategies.
What role do U.S. trade policies play in Southeast Asia’s business environment?
I want to be clear that I’m not a political pundit nor do I have any diplomatic knowledge, however I can share what we are seeing on the ground in the region. The potential return of Trump-era tariffs is a major concern for Southeast Asian economies, especially those reliant on exports to the U.S. During his presidency, tariffs on Chinese goods led to some manufacturing shifts to Southeast Asia, but they also created broader uncertainty around trade stability.
If similar policies are reinstated, businesses may have to deal with higher operational costs and potential retaliatory tariffs, which could further disrupt supply chains. Some companies are already diversifying their manufacturing bases, with Vietnam, Indonesia, and Malaysia emerging as alternatives to China.
Are there any industries in Southeast Asia that are still experiencing growth despite these challenges?
Yes, despite the overall slowdown, certain industries remain resilient. Digital services, fintech, and logistics continue to see strong demand. The rise of AI-driven automation and e-commerce infrastructure has allowed businesses in these sectors to adapt more quickly.
Additionally, green energy and sustainability initiatives are gaining momentum, with increasing investments in renewable energy projects across the region. This is partly due to government policies and international funding that support climate-related business transitions.
How are marketing strategies evolving in response to constrained budgets?
Businesses are shifting towards more data-driven and cost-efficient marketing strategies. Performance marketing, influencer collaborations, and organic social media engagement are becoming more prominent, as they provide measurable returns with lower upfront costs.
Companies are also reallocating budgets towards owned media, such as blogs, newsletters, and community-building efforts. This allows brands to maintain visibility without heavy reliance on expensive paid campaigns.
Do you see businesses investing more in automation and AI to counter these financial pressures?
Yes, automation and AI are being used to optimize operations and reduce costs. In marketing, AI-driven content creation, predictive analytics, and chatbots are becoming standard tools for maximizing efficiency. According to a study by McKinsey, companies that integrate AI into their workflows can reduce operational costs by up to 30%.
While AI adoption is growing, some businesses remain cautious due to the initial investment costs and concerns around data security. However, in the long run, automation is likely to be a key strategy for businesses looking to maintain growth in a challenging economic climate.
What should businesses in Southeast Asia prioritize in the coming year?
The key focus should be on resilience and adaptability. Companies need to maintain financial discipline while being flexible enough to seize emerging opportunities. Strengthening customer relationships, diversifying supply chains, and investing in digital transformation will be crucial. Selfishly, a lot of these issues could be resolved or at least, mitigated through smarter marketing and public relations – as they say, sales solves all issues.
While global uncertainties persist, Southeast Asia remains a dynamic region with significant long-term potential. Businesses that can navigate these challenges effectively will be in a strong position when conditions stabilize. The goal should be around sustainable growth rather than fast growth, but businesses need to continue to grow despite the challenges.