When I was working with an EV brand in Indonesia last year, I was impressed to see that over 70 per cent of the vehicle components were locally sourced. It was a rare glimpse into what a more self-reliant Southeast Asian manufacturing ecosystem could look like.
But behind that milestone lurked a deeper question: can our region scale up as a global alternative without repeating the environmental and social missteps of past industrial booms?
The region’s industrial rise
Southeast Asia is increasingly emerging as a viable alternative to China for manufacturing Electric Vehicles (EVs) and semiconductors.
In the Southeast Asia semiconductor market, revenue is projected to reach US$95.89 billion in 2024, with integrated circuits dominating the market, accounting for US$86.54 billion of the total revenue. The market is expected to grow at an annual rate of 11.25 per cent (CAGR 2024-2029), reaching a market volume of US$163.40 billion by 2029.
The hidden costs of rapid growth
However, while Southeast Asia’s manufacturing potential is undeniable, it comes with a critical caveat: many of the region’s industrial gains have historically come at a high cost—to both the environment and local communities.
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In Indonesia, for example, the rapid expansion of nickel mining—driven by soaring global demand for electric vehicle batteries—has resulted in widespread deforestation and ecosystem degradation.
The Indonesia Weda Bay Industrial Park (IWIP) in Halmahera has been linked to the clearing of thousands of hectares of forest and the pollution of rivers and coastal waters, with severe consequences for local livelihoods and biodiversity.
Across the region, industrial growth has consistently outpaced environmental safeguards. Studies show that unsustainable resource extraction and pollution not only harm ecosystems and public health, but also undermine long-term economic growth.
According to the World Health Organisation (WHO), air pollution alone causes over 500,000 premature deaths in Asia annually—representing both a human tragedy and a significant economic burden on healthcare systems and productivity.
Aligning strengths across borders
But the challenges facing Southeast Asia’s industrial future are not inevitable—they are solvable. With the right policies, partnerships, and priorities, the region can build a manufacturing ecosystem that is not only competitive, but also clean, inclusive, and resilient. Despite the missteps of past industrial booms, each country in the region brings unique strengths to the table.
Indonesia, for instance, is home to vast nickel reserves, estimated at 17.7 billion tons of ore and 177.8 million tons of metal, with accessible reserves reaching 5.2 billion tons of ore and 57 million tons of metal. Meanwhile, Vietnam’s manufacturing and processing sectors continue to attract significant investment, with 106 new projects and US$3.13 billion in newly registered capital recorded in November 2024.
Singapore is reinforcing its global semiconductor supply chain position with a SG$500 million investment in the upcoming National Semiconductor Translation and Innovation Centre (NSTIC).
These examples highlight the immense potential of Southeast Asian nations to lead in next-generation manufacturing. But in my view, the region’s future success won’t depend on which country takes the lead—it will depend on how well we integrate and collaborate as a unified ecosystem.
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Without a coordinated, ethical industrial strategy, Southeast Asia risks becoming a low-cost manufacturing zone at the expense of its people and environment. The opportunity to lead the EV and semiconductor future must not be built on the mistakes of the past—but on a shared ASEAN framework that enforces sustainability, inclusivity, and cross-border innovation.
Despite encouraging bilateral moves, such as Indonesia-Vietnam digital cooperation and ASEAN clean energy commitments, these remain fragmented and often lack regulatory teeth.
Without a unified ASEAN mechanism to enforce ethical sourcing, transparent technology transfer, and just industrial transition, the region risks exporting its future while importing its problems.
A shared path for a stronger tomorrow
Southeast Asia doesn’t need to wait for global frameworks—it can lead. An ASEAN Green Manufacturing Charter could set enforceable ESG standards across borders, while a shared tech-sharing protocol would turn isolated innovation into collective leverage.
Most importantly, the region must treat its mineral wealth not as a quick win, but as a shared trust that demands ethical stewardship.
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