Strategic considerations for industrial strategy in Southeast Asia

Successful industrial strategies tend to share several common principles: clear objectives, stable and predictable policy frameworks, support for innovation, openness to investment and competition, investment in infrastructure and skills, and mechanisms for monitoring and adjusting policies over time. Yet no industrial strategy can maximise all objectives simultaneously. Trade-offs are an inherent feature of policy making in this area, requiring governments to balance competing goals such as affordability, speed of deployment, domestic value creation, fiscal costs and long-term industrial competitiveness.

Experience with electric vehicle (EV) policies illustrates these trade-offs. Southeast Asian countries have pursued different pathways: some prioritised rapid market growth through access to affordable imported cars, while others focused on building domestic manufacturing capabilities. In many cases, measures supporting local production reduced the short-term availability of affordable electric cars and slowed progress towards energy security, affordability and emission reduction objectives, while more open approaches accelerated deployment but generated fewer domestic industrial benefits.

There is no single model for success, but a number of low-regret policy options emerge across countries. Co-operation with best-in-class companies can help countries capture greater benefits from the clean energy transition. Many of Southeast Asia’s manufacturing industries – including solar PV, batteries and EVs – have expanded through partnerships with foreign firms, supporting investment, technology transfer and skills development. International co‑operation in trade and investment can further strengthen supply chains, improve market opportunities and allow countries to specialise in different stages of clean energy technology production.

Better data and greater transparency can improve policy outcomes. Reliable information on technology costs, trade flows, manufacturing activity and deployment trends helps governments design more effective industrial strategies, evaluate trade-offs and adjust policies as markets evolve.