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Thailand Urged to Move into Smart Production to Boost Economy

Thailand is being urged to embrace smart production technologies to stay competitive in the global economy. Industry leaders and experts are calling for the country to accelerate its shift toward advanced manufacturing and digitalization in order to meet the demands of the modern economy. As the world continues to evolve with technological advancements, Thailand's manufacturing sector—one of the key pillars of its economy—faces increasing pressure to adopt innovations such as robotics, artificial intelligence (AI), and the Internet of Things (IoT). These technologies are critical to improving efficiency, product quality, and overall productivity.

The call for smart manufacturing comes at a time when Thailand’s traditional industries are struggling to keep up with rapid technological shifts globally. The global pandemic and the supply chain disruptions that followed have exposed vulnerabilities in the current system, making it clear that Thailand must modernize to remain globally competitive.

Experts argue that Thailand has the potential to lead in smart manufacturing if it invests in the right infrastructure, workforce training, and technology adoption. The government has already introduced several initiatives, including the Thailand 4.0 policy, aimed at transforming the country into a more innovative, digital economy. However, experts stress that faster implementation is essential to keep pace with regional and global competitors. The move towards smart production not only promises to enhance Thailand’s industrial capabilities but also offers opportunities for job creation in high-tech sectors, boosting economic growth and improving the country's global standing.

To successfully transition, Thailand must address several challenges, including digital literacy, a skilled workforce, and investment in cutting-edge technologies. This shift will require collaboration between the public and private sectors to create the necessary environment for innovation and growth. In conclusion, experts are urging Thailand to act swiftly to adopt smart manufacturing and ensure that it does not fall behind in the increasingly competitive global market. Embracing digital transformation will be key to securing the nation’s economic future and improving its position on the global stage.

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Thai business group cuts 2025 GDP forecast as US tariffs threaten exports

Thailand’s economic growth forecast for 2025 has been downgraded, with the Joint Standing Committee on Commerce, Industry, and Banking now predicting growth of just 1.5% to 2.0%, down from an earlier estimate of 2.0% to 2.2%. The revision comes amid concerns over the impact of US tariffs on Thai exports.
The export sector, a critical driver of the Thai economy, is expected to see minimal growth, with the latest forecast showing a potential decline of up to 0.5% or, at best, a rise of 0.3%. This marks a significant cut from the previous prediction of 0.3% to 0.9% growth. The second half of the year is expected to be particularly weak, with growth potentially falling below 1%, compared to 3% in the first half.

US Tariffs and Regional Competition
Thailand faces a potential 36% tariff on goods exported to the US if no deal is reached by July, a prospect causing growing concern among businesses. In contrast, neighboring Vietnam, which is engaged in active tariff negotiations with the US, could secure a more favorable deal, further complicating Thailand's competitiveness.
Kriangkrai Thianuku, chair of the Federation of Thai Industries, warned that if Vietnam receives a lower tariff rate, the impact on Thailand’s economy could be severe.

Rising Currency and Structural Pressures
In addition to the tariff threat, the appreciating Thai baht is raising concerns about Thailand’s price competitiveness in global markets. The country is also facing longer-term challenges, including an ageing population and high household debt, which are expected to slow economic growth.
With these combined pressures, the outlook for Thailand in the second half of 2025 remains uncertain.

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AI and design will see wider adoption only if tools and systems are designed well

[SINGAPORE] More companies in Singapore view artificial intelligence (AI) as a “practical tool” for growth and innovation today, with many already moving past the experimentation stage and actively deploying AI in their daily operations.

Senior Minister of State for Digital Development and Information Tan Kiat How said this at the inaugural Design AI and Tech Awards ceremony on Monday (May 19), an event that recognised enterprises that harness design, AI and technology to tackle real business challenges.

Tan noted that, according to latest available figures, enterprise adoption of AI has grown steadily from 34 per cent in 2022 to 46 per cent last year.

In 2024, close to 3,000 small and medium-sized enterprises (SMEs) here adopted AI-enabled solutions from local retailers – making use of the technology to help them forecast demand, optimise venues and reduce wastage.

Tan added that with this greater adoption of AI, SMEs should take advantage of various government initiatives and make use of the platforms and tools on offer.

He cited examples such as the Chief Technology Officer-as-a-Service, which offers over 300 pre-approved digital solutions, nearly a third of which were AI-enabled last year alone. 

It supported more than 330,000 users and helped some 3,000 SMEs adopt AI to enhance operations, improve customer efficiency and make informed decisions.

Another tool is the SME Go Digital programme, which has benefited close to 100,000 SMEs since 2017 by helping them digitalise at their own pace to suit their needs.

“Innovators and startups in Singapore who find solutions to common issues should make use of these platforms to reach out to SMEs and firms,” he said.

These platforms are not just for end-users but also for innovators to scale up and implement their solutions in Singapore and overseas.

Beyond SMEs, Tan also highlighted the importance of helping workers outside of traditional tech sectors, by providing clear and practical guidance on how roles are evolving and to keep pace with them.

In his speech at the Singapore University of Technology and Design (SUTD), Tan also spoke of the focus on enrolling more students in information and digital technology (IDT) courses. Last year, around 8,000 students were enrolled in such courses across universities, polytechnics and the Institute of Technical Education.

IDT places at universities have increased from 3,000 in 2020 to 4,000 this year, accounting for more than one in four degree places, he said.

Universities are also making AI more accessible, practical and relevant across fields beyond tech, such as architecture, sustainable design and engineering product development.

“It’s not about our technology, it’s our people and talent. AI and design will only be widely adopted if the tools are designed well with the user interface and experience fitting into existing workflows. Designers not only need skills but (they) also need to understand users and their needs,” said Tan.

The Design AI and Tech Awards, jointly organised by The Business Times and the SUTD, saw three finalists named as this year’s winners – LionsBot, MetaOptics Technologies and Sengkang General Hospital. 

The awards were open to all companies, international and locally, including SMEs, startups and large corporations. 

Applicants were assessed across six criteria: design thinking process and strategies; originality; utilisation of AI and advanced technologies; ethical consideration and sustainability; aesthetic and functional qualities; and whether the design has made quantitative and qualitative impact.

 

Source: The Business Times (published 19/5/2025)

AI and design will see wider adoption only if tools and systems are designed well: Tan Kiat How - The Business Times

Time for ASEAN to court new partners in its web of free trade agreements

SINGAPORE: On a research trip in the middle of April, we found ourselves in Washington, bathed in springtime sunshine, with smiling tourists taking photos outside the White House. Speaking to US government officials and think tank analysts provided us quite a different picture: The raft of “Liberation Day” tariffs announced just days earlier, they said, was “an exercise in unbridled chaos”. 

Now that the US and China are finally starting trade talks this weekend, there is some hope that weeks of brinksmanship between the world’s two largest economies might finally give way to something constructive.

Both sides need a deal. For Southeast Asia, it must be a deal that does not create more collateral damage, better still a deal that does not force countries to walk a tightrope between the two strategic rivals.

Southeast Asia worries about becoming the dumping ground for excess Chinese goods, about being forced to cough up exorbitant tariff fees to continue exporting to America, and the expectation to impose trade or investment restrictions on China.

It’s really all about China. American officials are brutally frank when it comes to Southeast Asia. They don’t hide their disinterest in the region.

The Trump 2.0 administration is focused on righting the “wrongs” of trade imbalances between the US and its trading partners. For now, it is less concerned about Washington’s strategic approach to Southeast Asia and the Indo-Pacific. Any ounce of interest comes in the form of lamenting the region’s sanguine approach to China, when Washington is keen to line up a defensive perimeter around China.

A COHERENT CHINA STRATEGY, OR LACK THEREOF

Yet it does not appear that Mr Trump has formed a coherent China strategy, apart from what is effectively a trade embargo on China and using tariffs to exert pressure on everyone else to limit their relationship with Beijing.

In the interim, it appears that the US’ lazy default on Taiwan and the South China Sea will be implicit deterrence. One think tank analyst reminded us of his favourite Trump quote about his relationship with Chinese President Xi Jinping: “I wouldn't have to (use military force), because he respects me and he knows I'm f****** crazy,”.

But Washington cannot have a coherent China strategy if it does not have at least some Southeast Asian cooperation or acquiescence.

The Indo-Pacific is the world’s new centre of gravity, and Southeast Asia lies at its core. The region’s economy will eventually reach US$4.5 trillion to become the world’s fourth biggest economy come 2030, overtaking economic powerhouses like Japan and Germany. With ASEAN and its related entities such as the East Asia Summit in its diplomatic toolkit, the grouping exercises some form of convening power among the major powers.

Southeast Asia also sees the US as a way to balance China, as suggested in the ISEAS-Yusof Ishak Institute’s 2025 State of Southeast Asia Survey. A significant portion of respondents welcomed Mr Trump’s strongman persona and his ability to stand up to China’s aggression, particularly in the South China Sea, though it should be noted the survey was conducted before “Liberation Day”.

The centre cannot hold, however. Speaking at this year's edition of the S Rajaratnam lecture in April, Singapore Prime Minister Lawrence Wong underscored how the post-World War II rules-based international order was fraying, given that the US is retreating from its traditional role as the guarantor of global order and no country is able to fill the void.

COURTING PARTNERS INTO EXISTING TRADE PACTS

A changed global order does not mean that Southeast Asian countries have no agency. The region is not without ammunition in the ongoing trade war between China and the US.

Courting trading partners who are looking for alternatives in the face of US tariffs is one. ASEAN may be a distinctive group of 10 economies but it has spun a complex web of bilateral and regional free trade agreements (FTAs) together as a collective grouping.

These include the Regional Comprehensive Economic Partnership (RCEP), the world’s largest FTA comprising 30 per cent of the world’s total GDP and population. Four ASEAN countries are also part of the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP), the precursor of which was abandoned by the first Trump Administration.

ASEAN’s proposed Digital Economic Framework Agreement, the world’s first regional digital economic trade agreement, could be another game changer in the burgeoning digital services trade. 

Despite on-off talks of an FTA with ASEAN, the EU has held back due to reservations about ASEAN’s ability to harmonise and meet up to stringent EU trade, environment and human rights rules. The perfect cannot be the enemy of good. It would be timely for the two blocs to revive and accelerate these talks. 

The EU also needs to consider if joining the RCEP and CPTPP could help to bolster its own trade resilience and strengthen its equally precarious trade position vis-a-vis the US. Similarly, an expansion of the CPTPP – which Indonesia, China, Taiwan, Costa Rica, Uruguay and Ecuador have applied to join –  would serve to extend and strengthen trade linkages between Asia, Latin America and Europe.

The real cherry on the cake will be getting India to join the club. It is the fifth-largest economy by gross domestic product and soon-to-be the world’s third-largest consumer economy, and its young demographic dividend is alluring.

Getting India to enter more trade pacts has been difficult. But on May 6, it struck a mega deal with the United Kingdom which may be indicative that India is open to trade agreements in this volatile geoeconomic environment.

A DEFENCE SHAKEDOWN

On the security front, regional countries are not holding their breath either. If Mr Trump can settle tariff negotiations with Southeast Asian countries, a proper approach would be to use the “Free and Open Indo-Pacific” strategy to get US allies and partners to uphold principles, such as freedom and navigation and no recourse to the use of force, as an implicit deterrent on China.

For now, Trump 2.0 appears to be heading in the right direction. In his first meeting with Quad leaders in January, Secretary of State Marco Rubio upheld this strategy. In his inaugural tour of Japan and the Philippines in March, Secretary of Defense Pete Hegseth stressed that America First does not mean America Alone.

But such a traditional US approach to regional security cannot be assured. The fear is that the US will shake down its allies and partners to carry more of the defence burden as the US cuts back on its forward-deployed posture. 

No wonder, there is talk about Southeast Asian countries deepening security cooperation with Quad countries sans the US, and revived debates about South Korea and Japan breaking the taboo on nuclear weapons.

As the US-led world order frays in a multipolar one, Southeast Asian countries still retain agency to chart their own paths.

 

Source: Channel News Asia (published 10/5/2025)

Link: Commentary: Time for ASEAN to court new partners in its web of free trade agreements

ASEAN power grid could unlock 25 GW of renewable capacity, lowering electricity costs

[SINGAPORE] A regional power grid that allows for electricity trade between Asean nations, if fully realised, could unlock projects that can deliver up to 25 gigawatts (GW) of renewable power and energy storage, based on research by Rystad Energy.

The projects, spanning hydropower, solar and offshore wind, would be worth more than US$40 billion in investment across the region, and benefit Singapore the most, said the energy research firm on Tuesday (Jun 3).

However, realising the regional power grid blueprint, which was first brought up in the late 1990s, will not be smooth sailing.

“Singapore stands to benefit the most from South-east Asia’s emerging regional grid, but realising these gains will require coordinated, win-win cooperation with supplier countries, many of which may see limited direct advantage in linking up with another market,” said Raksit Pattanapitoon, lead renewables and power analyst of Asia-Pacific at Rystad Energy.

 

The city-state can help neighbouring countries, where land is more abundant and power demand is less concentrated, by leveraging its financial strength and partnerships to unlock the infrastructure capital needed, noted Raksit.

He added that grid resilience, with strong interconnections and sufficient grid-connected storage, must be a key priority, as highlighted by the recent blackouts in the Iberian Peninsula.

“Cost-effective alternative”

Singapore relies heavily on natural gas for power generation, with gas currently accounting for 96 per cent of its power mix, according to Rystad Energy’s report.

The Republic has been using combined-cycle gas turbine (CCGT) plants that burn natural gas to generate electricity, and use the resulting hot exhaust to produce steam that drives a secondary turbine.

Rystad Energy’s analysis shows that electricity imports via the power grid would offer a “more cost-effective alternative to building new domestic CCGT capacity”.

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While these projects to import power are already more affordable than building a new CCGT, they also lower the cost of electricity with higher efficiency of energy usage, as proxied by the load factor, said Raksit.

The Energy Market Authority (EMA) requires projects to achieve an annual load factor of at least 60 per cent within five years of commercial operation, ensuring a steady and dependable power supply for the nation, noted Rystad Energy. It highlighted that the projects’ developers have a “strong economic incentive” to exceed the 60 per cent benchmark for the load factor.

“Developers of these import projects are sizing the installed capacity to exceed EMA’s minimum 60 per cent load factor and seem to be aiming for near 100 per cent load factor,” Raksit shared with The Business Times.

The analysis shows that raising the load factor target from 60 per cent to 100 per cent can substantially lower the average cost of electricity generation over the lifetime of a power plant, or the overall levelised cost of electricity (LCOE), by spreading transmission costs more effectively and unlocking capital expenditure efficiencies through economies of scale.

“This impact is particularly significant (for renewable energy imports) in countries such as Malaysia (Sarawak), Cambodia and Vietnam, where long transmission distances amplify cost-optimisation benefits. Hydropower projects, in particular, benefit from these scaling effects, resulting in even-greater cost reductions,” stated the report.

Solar-plus-storage hybrid systems can already achieve load factors above 90 per cent, both technically and economically. Rystad Energy noted that such systems, with both a battery energy storage system (Bess) and necessary backups, can reach the level of reliability required by Singapore’s EMA and could be comparable to other dispatchable energy sources.

Nevi Cahya Winofa, analyst of renewables and power research at Rystad Energy, said: “Current cost analyses indicate these hybrid systems could deliver lower LCOEs than many in the industry currently anticipate.”

She added that Singapore must proactively identify and secure unique advantages to maximise shared value in the emerging regional power grid.

EMA, on Friday, granted the sixth conditional licence to a low-carbon electricity import project, after raising the import target to around 6 GW by 2035, up from the initial target of 4 GW announced in 2021.

The Singapore government would be open to more electricity imports beyond the current 6 GW target as the country’s energy needs grow, EMA’s director of energy connections office Faith Gan told BT.

 

Source: The Business Times (published 3/6/2025)

Link: Asean power grid could unlock 25 GW of renewable capacity, lowering Singapore’s electricity costs: Rystad Energy - The Business Times

E-commerce sales in South-east Asia to more than double to US$410 billion by 2030

Consolidation will benefit the region’s major players such as Shopee and Grab.

[SINGAPORE] E-commerce in South-east Asia has reached profitability in 2024, with regional sales expected to more than double from US$184 billion last year to US$410 billion by 2030 – a 14 per cent compound annual growth rate over the period.

This was one of the key findings of the DBS Nextwave Southeast Asia 2025 report that was released on Wednesday (May 14). This report is the first edition in a series exploring Asia’s digital economy and was developed in partnership with market data and insights firm Cube.

The report noted that e-commerce sales in the region today has increased from US$4 billion to more than US$180 billion between 2012 and 2024, as more consumers embrace e-commerce as their preferred mode to purchase goods.

It added that the likes of Shopee, Lazada and Grab were among the key winners of this growth as they achieved profitability, as increased consolidation among the top platforms in recent years have seen them gain market share from the smaller competitors.

These larger platforms currently command more than 70 per cent of total online sales in South-east Asia, with many smaller firms shutting down due to competition and market dominance.

The report said the factors contributing to the e-commerce giants’ profitability include greater consolidation, commission fee increases and a greater prioritisation of core business offerings.

“Several also invested in vertical ‘e-commerce-adjacent’ business models – such as warehousing and last-mile delivery – to drive operational efficiency and improve customer service,” the report said.

“There is now a class of profitable and entrenched winners who guarantee greater stability while simultaneously making it harder for new entrants to compete.”

Over in China, major players such as Alibaba experienced declining market shares from 2015 to 2024 due to stiff competition from newer entrants such as ByteDance and Pinduoduo.

And in the US, which is seen as a more mature e-commerce market, top platforms such as Amazon and MercadoLibre largely maintained their market shares, while smaller entrants provide specialised e-commerce experiences to cater to a more diverse set of preferences from consumers.

According to the DBS report, the US is where advanced digital infrastructure and consumer preferences have shaped a more diverse online landscape.

“Convenience-focused platforms Amazon and Walmart share the market with a long tail of omni-channel players and specialised e-tailers. The US market offers a clue that South-east Asia’s consumers may seek a more diverse set of e-commerce experiences over time,” the report said.

What future entrants should be aware of

Investors prefer more sustainable business models and realistic projects to provide their funding to. This is even as they conduct more rigorous due diligence, suggesting a greater difficulty in attracting funding for new entrants.

The report said that investors prefer companies with proven business models, such as personalised shopping experiences, to grow customer loyalty, which shows future growth potential in their market shares. 

Chua Shih Guan, head of Digital Economy Group, Institutional Banking at DBS, said: “As the region’s e-commerce sector matures, we are seeing a shift from simply offering promotions and discounts to more innovative and differentiated customer experiences.”

“We believe these platforms will grow profitably and play a crucial role as conduits for the next wave of South-east Asian innovation,” says DBS’ Chua Shih Guan. PHOTO: DBS

Entrants should also focus sustainable growth such as seeking balanced capital structures with a focus on credit-backed growth to lower the cost of capital. 

For example, utilising credit reduces costs compared to equity due to more tax-deductibles and the use of credit not diluting existing shareholders’ equity.

Other tools that can be capitalised are new lines of financing such as term loans to finance specific projects and revolving credit which provides companies to a line of credit that can be drawn as needed. 

“We believe these platforms will grow profitably and play a crucial role as conduits for the next wave of South-east Asian innovation. This evolution may also require founders to pair fundraising with credit solutions earlier on in their journey,” said Chua.

Source: The Business Times (published 14/5/2025)

Link: E-commerce sales in South-east Asia to more than double to US$410 billion by 2030: DBS report - The Business Times

Private green investments in South-east Asia rise 43% to US$8 billion in 2024

Singapore and Malaysia take lion’s share of the amount, notes study by Bain & Co and Temasek.

[SINGAPORE] South-east Asia managed to attract US$8 billion in green investments from the private sector in 2024, up 43 per cent from the previous year, according to a joint report by Bain & Company and Temasek released on Tuesday (May 6).

About 70 per cent of these investments came from foreign investors. This was a stark contrast from the previous year, when only 30 per cent were from foreign sources.

Out of the six South-east Asian markets studied in the report – which was also authored by Google, Standard Chartered, as well as Temasek-backed decarbonisation investment platform GenZero – it found that Malaysia and Singapore took the lion’s share of the US$8 billion.

Green investment into Malaysia increased by 124 per cent to US$2.3 billion, making up about 29 per cent of the total sum of investments. Green fund flows into Singapore accounted for 33 per cent, as they jumped 194 per cent from the previous year to US$2.7 billion.

The other four markets – the Philippines, Thailand, Indonesia and Vietnam – saw a reduction in green investments.

Indonesia suffered the worst decline, dropping 22 per cent to US$1.2 billion. This was followed by Vietnam, which had a 19 per cent reduction to US$161 million.

Green investments into the Philippines went down by 12 per cent to US$1.3 billion, while Thailand experienced a drop of 10 per cent to US$355 million.

When analysing the allocation of green investments across different project types, about two-thirds went into clean power projects, particularly solar which saw capital flows doubling from the previous year and accounted for 21 per cent of the total green investments in 2024.

Investments into industrial waste management, which made up 9 per cent of the total fund flows, also increased, primarily driven by water treatment and recycling projects.

In contrast, electric vehicles (EVs) and agricultural productivity experienced a decline in investments.

Despite the jump in green investments, the report noted that there is still a funding gap of about US$50 billion for these six Asean markets to meet their stated climate pledges by 2030.

To make good on these promises by 2030, South-east Asia has to reduce its emissions by another 600 million tonnes of carbon dioxide equivalent (tCO2e).

Solutions to accelerate the green transition

To accelerate the clean energy transition, the report advocates for a systems-based approach that involves identifying systemic barriers, finding high-impact solutions and prioritising those with the highest ability to drive lasting change. 

This is because the region’s green economy is a set of linked systems, where changes in one area can affect others.

The report identified three systems-level solutions that are important for South-east Asia to decarbonise: a sustainable bio-economy, an EV ecosystem, as well as growing its renewable energy along with developing the Asean Power Grid.

A sustainable bio-economy would involve leveraging South-east Asia’s natural capital for economic benefit and carbon reduction through sustainable agriculture, expanding nature-based solutions, and scaling bio-waste utilisation.

EV adoption could be accelerated by implementing buyer incentives, developing the necessary infrastructure as well as its regional supply chains.

Investing in grid infrastructure can help eliminate a critical bottleneck in scaling up renewable power generation, with long-term positive impacts on regional energy security and affordability.

The report estimates that such an approach could help these Asean economies grow by US$120 billion by 2030, potentially bring about 900,000 green economy jobs, and close the emissions gap of 600 million tCO2e by half to 300 million tCO2e.

It also noted that these three systems-based solutions may also attract up to US$55 billion in annual investments by 2030, which could potentially serve to shore up foreign direct investments during an economic slowdown.

Climate and transition finance, carbon markets, as well as green artificial intelligence (AI) have also been identified in the report as key enabling solutions.

Growing the sum of sustainable and transition financing requires expanding access to capital through innovative financing models, regional financing frameworks and enhanced risk-sharing mechanisms.

To grow the region’s carbon markets, the report said there was a need to establish domestic and regionally connected carbon markets, put in place stronger carbon policies to drive demand, as well as increase the supply of large-scale verifiable credit projects.

As for green AI, it involves advancing AI-driven sustainability solutions while ensuring viable data-centre growth.

 

Source: The Business Times (Published 6/5/2025)

Link: Private green investments in South-east Asia rise 43% to US$8 billion in 2024: report - The Business Times

US solar tariffs could drive Asia transition boom

[BANGKOK] Massive planned US duties on solar panels made in South-east Asia could be a chance for the region to ramp up its own long-stalled energy transition, experts say.

Earlier this month, Washington announced plans for hefty duties on solar panels made in Cambodia, Vietnam, Thailand and Malaysia.

The levies follow an investigation, launched before US President Donald Trump took office, into “unfair practices” in the countries, particularly by Chinese-headquartered firms.

If approved next month, they will pile upon tariffs already imposed by the Trump administration, including blanket 10per cent levies for most countries, and 145 per cent on Chinese-made goods.

For the US market, the consequences are likely to be severe. China makes eight out of every 10 solar panels globally, and controls 80 per cent of every stage of the manufacturing process.

The new tariffs “will practically make solar exports to US impossible commercially”, said Putra Adhiguna, managing director at the Energy Shift Institute think tank.

South-east Asia accounted for nearly 80 per cent of US solar panel imports in 2024.

And while investment in solar production has ramped up in the United States in recent years, the market still relies heavily on imported components.

For Chinese manufacturers, already dealing with a saturated domestic market, the raft of tariffs is potentially very bad news.

Many shifted operations to South-east Asia hoping to avoid punitive measures imposed by Washington and the European Union as they try to protect and nurture domestic solar industries.

The proposed new duties range from around 40 per cent for some Malaysian exports to an eye-watering 3,521 per cent for some Cambodia-based manufacturers.

Tariffs ‘accelerate’ transition

But there may be a silver lining for the region, explained Ben McCarron, managing director at Asia Research & Engagement.

“The tariffs and trade war are likely to accelerate the energy transition in South-east Asia,” he said.

China will “supercharge efforts” in regional markets and push for policy and implementation plans to “enable fast adoption of green energy across the region”, driven by its exporters.

Analysts have long warned that countries in the region are moving too slowly to transition from planet-warming fossil fuels such as coal.

“At the current pace, it (South-east Asia) risks missing out on the opportunities provided by the declining costs of wind and solar, now cheaper than fossil fuels,” said energy think tank Ember in a report last year.

For example, Malaysia relied on fossil fuels for over 80 per cent of its electricity generation last year.

It aims to generate 24 per cent from renewables by 2030, a target that has been criticised as out of step with global climate goals.

The tariff regime represents a double opportunity for the region, explained Muyi Yang, senior energy analyst at Ember.

So far, the local solar industry has been “largely opportunistic, focused on leveraging domestic resources or labour advantages for export gains”, he told AFP.

Cut off from the US market, it could instead focus on local energy transitions, speeding green energy uptake locally and driving a new market that “could serve as a natural hedge against external volatility”.

Still, replacing the US market will not be easy, given its size and the relatively nascent state of renewables in the region.

“Success hinges on turning this export-led momentum into a homegrown cleantech revolution,” said Yang.

“Clearance prices” may be attractive to some, but countries in the region and beyond may also be cautious about a flood of solar, said Adhiguna.

Major markets such as Indonesia and India already have measures in place intended to favour domestic solar production.

“Many will hesitate to import massively, prioritising trade balance and aims to create local green jobs,” he said. AFP

Source: The Business Times (Published 4/5/2025)

Link: US solar tariffs could drive Asia transition boom - The Business Times

AI to transform 3 key sectors in ASEAN: report

Artificial intelligence (AI) is providing transformative opportunities in the Association of Southeast Asian Nations (ASEAN), with the AI market projected to reach US$8.92 billion by 2025 and $30.30 billion by 2030 to present vast opportunities for the region’s digitally engaged population and offer benefits to key sectors, says a new report.

The policy brief released by the Economic Research Institute for ASEAN and East Asia (ERIA) said AI is estimated to contribute 10% to 18% of ASEAN’s gross domestic product (GDP) by 2030, translating to nearly $1 trillion.

Key sectors poised to benefit from AI adoption include manufacturing, where AI enhances efficiency through automation and predictive maintenance; retail and health care, where it enables personalized recommendations and diagnostics; and agriculture, where it optimizes crop yields and reduces food waste.

Beyond economic benefits, AI is transforming public services. With ASEAN’s urban population set to grow from 280 million to 370 million individuals by 2030, AI-driven smart cities can improve traffic and urban planning. AI can also facilitate personalized learning in education and enhance health care accessibility and diagnostics.

In addition, AI is crucial in energy management and sustainability. As ASEAN’s energy demand rises, AI-powered smart grids help balance supply and demand and integrate renewable energy sources. These innovations enhance energy efficiency and support sustainability goals.

However, the report found that AI integration also highlights challenges, including governance gaps, disparities in AI readiness among member states, data governance issues, and sustainability concerns.

To leverage AI opportunities, the ERIA report highlighted the importance of having explicit AI strategies, noting that currently only six AMS have them, while others rely on broader digital policies with limited AI focus.

“AMS with dedicated AI strategies score higher in the governance and ethics dimension of the Government AI Readiness Index (GAIRI) and are projected to experience greater economic benefits from AI,” said the paper. “While governance and ethics are not the only factors, they highlight how national AI policies enhance governance capacity and ensure that AI systems are deployed responsibly to support economic potential.”

Research also shows that while ASEAN’s potential for AI adoption is vast, the region also faces gaps in AI readiness, with Singapore leading with strong governmental support and infrastructure, while less-developed AMS face gaps in infrastructure, skills, and AI ecosystems.

Member states should respond to these challenges by including flexible, forward-looking AI and emerging technology frameworks grounded in ethical principles, ensuring alignment with global standards while fostering responsible AI use and adaptability, said the document.

Talent shortages and workforce mismatches are also further slowing AI adoption in many AMS, raising concerns about job displacement.

To address this, ASEAN should strengthen cooperation with dialogue partners to launch regional AI-focused capacity-building initiatives for public and private sector employees as well as partnerships with academia to integrate AI into curricula.

AI adoption also remains low among micro, small, and medium-sized enterprises (MSMEs) and startups. The primary barriers are high costs, technical complexities, and a lack of expertise. These constraints prevent these smaller businesses from fully leveraging AI’s potential.

AMS should establish AI adoption programs for MSMEs, including AI upskilling initiatives in collaboration with universities and industry. AMS should likewise provide financial incentives and support, such as tax benefits and grants, and regulatory sandboxes that allow MSMEs to experiment with AI applications in a controlled environment, advises the policy brief.

Finally, the report recommends offering fiscal incentives and strengthening public-private partnerships to advance green technologies, such as smart grids and green data centers, while building the technical capacity for responsible AI deployment.

PHILEXPORT News and Features
Published: June 20, 2025

ASEAN MSMEs need more tech support to adopt circular economy: study

Micro, small and medium enterprises (MSMEs) in the ASEAN region are encountering significant barriers in implementing circular economy (CE) practices mainly due to limited technical assistance and inadequate training, according to a new study.

The report, published by the ASEAN Secretariat, found that most capacity-building efforts in the region have focused on basic knowledge of CE principles, with insufficient emphasis on detailed technical assistance and practical implementation strategies.

“We need technical advice and technical know-how. Currently, the government offers capacity building in broad terms and general practices relating to CE concepts. But to grow, we need specific programs tailored to specific CE industries,” said one survey respondent.

Asked about the awareness or knowledge gaps that prevent transitioning to CE practices, MSMEs said they require specific and advanced knowledge in the areas of reducing waste and optimizing resources, addressing cost and investment gaps, developing circular business models, and managing sustainable supply chains.

There is clearly a need for more focused policies to support MSMEs adopting CE practices across the region, said the study entitled “Study on MSME Participation in the Circular Economy.”

It continued: “While MSMEs have benefited from government-led capacity-building efforts, particularly in raising awareness, they require more technical support, including mentorship, consultancy, training on transition plans, legal assistance and certification of products and services to accelerate their transition to CE models.”

Due to this lack of knowledge, MSMEs, the backbone of the region’s economy, are facing adjustment difficulties with the global shift from a traditional linear business to a more CE approach, the paper explained.

It further revealed that only 57% of ASEAN MSMEs are familiar with the CE concept as a powerful tool for sustainable development through practices such as environmental protection and responsible consumption and production.

“CE business models not only provide solutions to overcome environmental challenges but also opportunities for MSMEs, such as cutting operating costs through resource efficiency improvements, adopting low-emission energy alternatives and introducing new low-emission products and services, thereby enhancing their competitive edge in the market,” said the study.

Aside from lack of knowledge and awareness, surveyed MSMEs said other significant constraints to embracing sustainable principles include low consumer preference, high cost of transition, regulation barriers, and supply chain complexity.

On consumer behavior, it appeared that consumers still prefer to use disposable and single-use products, are price conscious, and lack awareness of the benefits of green and recycled products.

The research authors noted that in the Philippines, for example, the tingi culture provides accessibility and convenience, but it also generates more waste due to the packaging of small portions.

“Addressing this challenge requires strategic marketing and comprehensive consumer education campaigns to foster a more receptive market for CE-based products,” they said.

The cost of transitioning to CE practices also presents a significant challenge since greening business operations always come with high technology and upfront expenditure costs.

Financial support mechanisms, such as subsidies, tax reliefs and access to low-interest loans and soft financing, could facilitate the adoption of CE practices among MSMEs, said the report.

Meanwhile, regulation barriers are also seen to hinder MSMEs. These include policy roadblocks preventing them from gaining access to land, to virgin and secondary materials, and to financial options, such as rules requiring collateral for loans.

Supply chain complexity, with the emphasis on environmental values throughout the value chain, was likewise cited as a major hindrance to MSMEs’ business processes. The CE approach requires consideration of factors such as traceability and the use of local or recycled materials, which can significantly complicate operations.

“MSMEs aim to source materials and produce products as efficiently as possible, but the additional requirements to ensure sustainability can add complexity to their operations,” said the report.

The study stressed that the transition to CE has become unavoidable with the recognition of the devastating impact of climate change on development and economic growth. It called on the ASEAN community to commit to adopt more CE practices by transforming its production and consumption patterns to achieve a low-carbon economy.

The report said what will help the region to move toward a CE are government incentives that will encourage businesses to redesign their business models more circularly, and crucial infrastructure to improve material efficiency through reuse and recycling at waste facilities.

“Similarly, digitalisation, such as big data management and artificial intelligence, will play a role in helping optimise resource use and waste management and enable material traceability through digital platforms and apps,” the paper added.

PHILEXPORT News and Features
Published: June 20, 2025
Photo Source: Google

ASEAN targets becoming fourth largest economy by 2030

The Association of Southeast Asian Nations (ASEAN) has unveiled the “ASEAN Economic Community (AEC) Strategic Plan 2026–2030,” aiming to position the region as the world’s fourth largest economic bloc by 2030 and targeting to double ASEAN’s digital economy to an estimated US$2 trillion.

Formally introduced on June 12 in Malaysia, the AEC strategic plan is a "blueprint for regional economic transformation" that will drive sustainable growth and deeper integration, according to Malaysian Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz during the launching.

It serves as a five-year strategic roadmap to realize a seamless ASEAN single market driven by innovation, sustainability, and productivity, while reinforcing the region’s role in global value chains and supporting its aspiration to become the world’s fourth largest economy, he said.

Tengku Zafrul added that ASEAN can become the world’s fourth largest economy if the region can maintain a steady gross domestic product growth rate of 4% to 5%.

The digital economy stands out as a key focus of the strategic plan, with its doubling to $2 trillion projected to bring transformative benefits to businesses across the region.

The minister highlighted how this initiative will also empower small and medium enterprises.

The AEC Strategic Plan 2026–2030 succeeds the AEC Blueprint 2025 and will implement the economic aspects of the ASEAN Community Vision 2045, which aims to create a "resilient, innovative, dynamic, and people-centered ASEAN" by 2045.

The AEC Strategic Plan is organized into five-year cycles. In the first five-year cycle, the plan outlines six strategic goals, 44 objectives and 192 strategic measures. The six goals are as follows:

•    An action-oriented community: Realizing an integrated single market and production base with new sources of competitiveness
•    A sustainable community: Engendering and mainstreaming climate-responsive elements and policies in all dimension
•    An enterprising, bold, and innovative community: Enhancing sectoral cooperation, attuned to emerging trends and developments
•    An adaptable and pro-active community: Strengthening Global ASEAN agenda
•    A nimble and resilient community: Empowering the AEC and ASEAN peoples, withstanding shocks, stresses, crises, and volatility
•    An inclusive, participatory, and collaborative community: Leaving no one behind, charting people-centered ASEAN

"This plan represents a new chapter in ASEAN’s economic journey, structured to respond to evolving business needs and emerging challenges while ensuring policies remain dynamic and relevant," Tengku Zafrul further said.

“Through the AEC Strategic Plan, ASEAN aspires to significantly enhance intra-ASEAN trade by boosting the interconnectedness of the single market for goods, services, and investments,” he added.

“By further reducing persistent non-trade barriers, we can realize the fuller potential of intra-ASEAN trade. This will strengthen ASEAN’s competitiveness and build greater resilience against external shocks.”

The AEC is a regional economic bloc comprising the 10 ASEAN member states and was officially established on December 31, 2015. The AEC is one of the three key pillars of the ASEAN Vision 2045, besides the ASEAN Political-Security Community and the ASEAN Socio-Cultural Community.

PHILEXPORT News and Features
Published: June 13, 2025

Enabling access to finance, incentives keys to ASEAN MSMEs’ CE adoption

Collective initiatives, including an enabling access to finance and focusing on incentives, are crucial to accelerate micro, small and medium enterprises’ (MSMEs) adoption of the circular economy (CE) in Southeast Asia given opportunities related to their transitioning, according to a study.

The publication, Study on MSME Participation in the Circular Economy, said access to finance and suitable funding avenues could be essential for MSMEs seeking to improve their sustainability performance and/or introduce innovations within a CE. 

It underscored the need to offer MSMEs a variety of finance instruments, including grants, low-interest loans and tax incentives for businesses willing to exceed regulatory requirements and invest in more sustainable technologies. 

“Sustainable finance instruments that integrate economic growth, environmental protection and social inclusion dimensions (impact investment fund, green microfinance, sustainability-linked loans) can provide MSMEs with additional capital access,” it added.

In designing interventions and instruments for MSMEs transitioning to the CE, the study  proposed to ASEAN policymakers to focus on incentives, raising awareness on the impact of the CE on ASEAN trade, capacity building, collaboration through matchmaking and regulatory sandboxes.

It said fiscal incentives, such as subsidies and tax holidays, demonstrate government support for CE practices and encourage MSMEs to invest in CE strategies. 

For non-fiscal incentives, governments can create market demand for circular products from MSMEs through the facilitation of green public procurement, it added. 

Citing an earlier report published by the Organization for Economic Co-operation and Development, the study said encouraging larger companies to apply pressure on their supply chains can also support the development of domestic demand for circular products.

“While MSMEs have benefited from government-led capacity-building efforts, particularly in raising awareness, they require more technical support, including mentorship, consultancy, training on transition plans, legal assistance and certification of products and services to accelerate their transition to CE models,” it said.

The survey findings documented that only 57 percent of ASEAN MSMEs were familiar with CE concepts, and 43 percent had a limited understanding of the CE. 

The study also shows that geographical constraints cluster knowledge gaps. The demand for knowledge in circular business models is exceptionally high in the Philippines, Vietnam, Singapore, and Lao PDR.

The sectors most knowledgeable about the CE include food and beverages, craft and creative industry, consultation services, agriculture, trade and retail, and fashion and textiles. 

Common CE practices among ASEAN MSMEs are digitalization (62 percent), material optimization (59 percent) and energy efficiency (59 percent).

“Despite their familiarity with the term ‘circular economy’, MSMEs still lack an understanding of the benefits of CE business practices. MSMES must recognise that adopting these practices can yield significant advantages beyond environmental impact, including internal benefits such as cost savings, enhanced resource and material security and customer retention. Being aware of these benefits can simplify the transition process for MSMEs,” it said, citing an earlier paper.

To encourage this shift, the study underscored the importance of sharing the experiences and success stories of fellow businesses that can motivate other MSMEs to start their journey in the CE. 

“On the other hand, it is crucial to communicate CE regulations and policy frameworks to MSMEs regularly,” it said. “Best practices should be shared with specific sectors to ensure relevance and immediate applicability.” 

The study also highlighted substantial opportunities for global market demand for green and circular products, which are increasingly in demand. 

“This trend presents a chance for MSMEs that utilize eco-friendly and traceable materials to expand their market reach, especially MSMEs that are supplying to the export market. Governments have the opportunity to support MSMEs throughout the value chain to meet international standards,” it added. 

It also cited support from platforms such as ASEAN Access and the ASEAN Circular Economy Stakeholder Platform (ACESP).

Meanwhile, the study was prepared with the support of the SME Promotion in ASEAN II project, which is implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and funded by the German Federal Ministry for Economic Cooperation and Development.

PHILEXPORT News and Features
Published: June 13, 2025
Photo Source: Canva