Summary:

The Solar Power Industry in ASEAN – A Competitiveness Analysis offers a comprehensive evaluation of the region’s developmental trajectory through rigorous quantitative assessments and an examination of key policies proposed and implemented by ASEAN and individual member states. By critically analysing the strengths and weaknesses identified in the Competitiveness Indicators, the analysis provides valuable insights on how ASEAN and member states could ride on the trending opportunities in supply chain reconfiguration, the green economy and the digital economy. 

Chapter 1 features the green economy, assessing ASEAN’s role in the global solar photovoltaic (PV) supply chain, from its research and development (R&D) capacity to the exports of finished solar PVs. We find that ASEAN’s contribution to global solar PV R&D remains marginal, with Malaysia and Singapore emerging as the primary regional contributors. In terms of trade, ASEAN has solidified its position as the world’s second-largest exporter of solar PV cells or modules, led by Vietnam, Malaysia and Singapore in 2022. Meanwhile, ASEAN was also the world’s leading importer of wafers and polysilicon, with strong reliance on external sources for key inputs. As for trade partners, ASEAN’s heavy reliance on the US as its largest export market for finished goods, and on China for key inputs exposes it to risks from potential US tariffs on products linked to Chinese supply chains. This highlights the importance for ASEAN member states (AMS) to diversify its export markets and import sources by further regional integration.

Chapter 2 presents the 2024 edition of the ACI’s Annual ASEAN Competitiveness Index.  Among the ten AMS, Singapore remained the most competitive country and excelled in all environments: Macroeconomic Stability; Government and Institutional Setting; Financial, Business and Manpower Conditions; and Quality of Life and Infrastructure Development. Indonesia and Vietnam demonstrated significant progress, highlighting their resilience amid global uncertainties and disruptions. Compared to the 2023 edition, Indonesia’s ranking in Macroeconomic Stability jumped from the sixth position to the third. Vietnam showed a more comprehensive improvement, scoring above the regional average across three environments: Macroeconomic Stability; Financial, Business and Manpower Conditions; and Quality of Life and Infrastructure Development, for the first time.

Comparing across environments, except for the Financial, Business and Manpower Conditions environment, the other three environments saw a widening gap between the regional leader, Singapore, and those that rank at the bottom. This underscores the importance of strengthening efforts to enhance competitiveness in order to seize opportunities from the green and the digital economy, and from supply chain reconfiguration.

Chapter 3 examines the latest developments in digital transformation across the ASEAN+ economies, presenting findings from the 2024 edition of the ASEAN+ Digital Competitiveness Analysis. Compared to the 2023 edition, Singapore remained the leader in Overall Digital Competitiveness. The Republic of Korea climbed up from fourth to second place, while China and Hong Kong SAR lost ground.

There is a persistent digital divide across the ASEAN+ economies. A widening gap was seen in Institutional Capacity, Digital Infrastructure and Core Inputs, from 2023 to 2024. Frontrunners like Singapore and China pulled further ahead while countries such as the Philippines, Indonesia and Vietnam lagged further behind.

As ASEAN progresses towards a more integrated digital economy through initiatives like the Digital Economy Framework Agreement, bridging digital divide is essential to fully unlock the region’s digital potential. Encouragingly, the AMS are actively implementing strategies to achieve this goal. These efforts include investments in technological infrastructure, research and development of frontier technologies, encouraging private sector participation in the digital economy, cultivating digital talents, and enhancing the efficiency of digital governance.

By HUANG, Yijia