Global Business On Edge: Uncertainty Now Bigger Threat Than Red Tape

KUALA LUMPUR, May 28 (Bernama) -- The 2025 Global Business Complexity Index (GBCI) revealed that while regulatory complexity remains a challenge in certain regions, it is growing geopolitical and economic uncertainty that now poses the greatest threat to international business operations.

The report, published by TMF Group, examines over 250 indicators across 79 jurisdictions that represent 94 per cent of global gross domestic product (GDP). It identifies countries in Southern Europe and Latin America as the most complex for business, a consistent finding in recent years. These jurisdictions are described as imposing burdensome requirements on companies, often without delivering tangible societal benefits.

In contrast, Northern European nations and offshore investment hubs remain the easiest places to operate. These regions have streamlined administrative processes and attract investment through business-friendly policies and efficient compliance systems.

TMF Group chief executive officer, Mark Weil emphasised that while regulatory complexity can be managed, today’s biggest challenge is the unpredictability of the global trade landscape.

“Tariffs are just the latest signal of the risks of supply chain concentration. Diversification is a necessity in this context, although it comes with a cost. Businesses can offset those costs by simplifying their internal structures—fewer legal entities and trusted global partners can make a big difference,” he said in a statement.

Yet the report notes that while large multinational corporations can navigate complex regulations, uncertainty is far more destabilising. Factors such as the United States (US)-led sanctions, lockdowns in China, and the Suez Canal blockage have pushed firms to rethink their global strategies.

Many have adopted a “China plus one” approach, diversifying manufacturing and sourcing beyond China by turning to connector economies such as Mexico, the Philippines, and Vietnam.

However, this strategy is now being tested by new US tariffs targeting countries with high trade surpluses, which disproportionately impact these connector nations. The report warns that even if such tariffs are rolled back, their abrupt implementation highlights the broader risk of relying heavily on any one country for trade.

In response, more than half of the jurisdictions surveyed (55 per cent) report a shift toward diversifying trade corridors. The report identifies a new wave of potential connector economies—such as the United Kingdom, the Netherlands, Egypt, Saudi Arabia, Australia, and Hong Kong—which combine low regulatory complexity, moderate trade balances with the US, and a strategic, multipolar position in global trade.

The report concludes with a call to action for governments and businesses alike, in which governments should focus on reducing regulatory burdens and securing diversified trade agreements, while companies should streamline operations to boost resilience and agility amid global uncertainty.

-- BERNAMA