Green industrial policy in Southeast Asia Developmental states, export-oriented manufacturing, and the paradox of “green” transitions

seminar convened on 21–23 May 2025 at the Science, Technology and Innovation Policy Institute (STIPI) at King Mongkut's University of Technology Thonburi in Bangkok. The workshop, co-organised by STIPI, the Transnational Institute, the GreenPaths project, the ERC-funded GRIP-ARM project, and the University of Sussex, brought together academic researchers, civil society activists, government policymakers, and development practitioners from across the Asia Pacific. Participants included specialists with expertise spanning China, India, Indonesia, the Philippines, Singapore, South Korea, Thailand, and Vietnam. This diverse expert community provided crucial insights into implementation challenges, political obstacles to green transition, labour market dynamics, supply chain vulnerabilities, and divergent national policy priorities.

The workshop format enabled comparative discussion of how different developmental state models approach sectoral promotion, technology transfer, and labour governance within contexts of green industrialisation. Participants examined divergent national pathways: Vietnam's aggressive feed-in tariffs, contrasting with Thailand's hybrid state-private approach; Indonesia's infrastructure-led development, versus the Philippines' fragmented institutional coordination; and Singapore's comprehensive urban planning, versus Malaysia's selective sectoral targeting. These comparative discussions revealed both possibilities for policy learning and structural constraints limiting policy transfer across national contexts. The diversity of institutional arrangements and policy outcomes across Southeast Asia demonstrates that green industrial policy is not a singular approach, but a family of strategies adapted to national circumstances, regional positioning, and governance capacities.

The analysis employs a multidimensional framework that recognises that Southeast Asia's distinctive starting point differs fundamentally from those of other Global South regions. Environmental dimensions encompass both costs (pollution, deforestation, climate impacts from manufacturing) and benefits (renewable energy deployment, improved urban environmental quality). Social dimensions encompass labour precarity, displacement, and inequality alongside poverty reduction and enhanced state capacity for sectoral coordination. This balanced analytical approach avoids both uncritical celebration of green industrialisation and dismissal of genuine material achievements. The framework recognises that green transitions in Southeast Asia occur within inherited structures of inequality, while simultaneously creating opportunities for transformative change through deliberate policy choices.

The resurgence of industrial policy in the twenty-first century represents a decisive departure from decades of neoliberal orthodoxy. This transformation reflects multiple intersecting pressures: intensifying strategic competition between China and Western powers, the imperative of rapid decarbonisation amid the climate crisis, and the recognition that market mechanisms alone are insufficient to drive technological transition. Within this context, green industrial policy has emerged as a central framework through which developing economies attempt to reconcile economic development objectives with environmental sustainability imperatives (Juhász et al., 2024; Nem Singh, 2023).

Southeast Asia occupies a distinctive and consequential position within global green industrial dynamics. The region accounts for approximately 12% of global manufacturing 

manufacturing hub, producing over 2 million vehicles annually (Doner et al., 2021). This transformation was not spontaneous but reflected deliberate policy choices by state institutions, including the Board of Investment, which screened foreign investment proposals, imposed performance requirements, and channelled resources towards priority sectors. Malaysia pursued similar strategies within the electronics sector, advancing from simple assembly operations towards design and testing services. The Malaysian state actively promoted indigenous firm development through targeted policies and strategic support for national champions. Vietnam's more recent integration into global value chains demonstrates the continued relevance of developmental state approaches, particularly through state support for domestic champions such as VinFast in electric vehicle manufacturing and the deliberate cultivation of solar panel production capabilities (Nem Singh et al., 2025).

Substantial material improvements for populations accompanied these successes. Vietnam reduced poverty from 58% in 1993 to under 5% by 2020, among the fastest poverty-reduction trajectories globally, while maintaining world-leading growth rates (World Bank, 2021). Thailand's coordinated development eliminated absolute poverty through sustained manufacturing employment and rural development programmes. Malaysia achieved upper-middle-income status through deliberate sectoral upgrading. Public education and training systems built workforce capabilities, enabling continuous industrial upgrading. State enterprises and sovereign wealth funds maintained strategic control over critical sectors despite liberalisation pressures, preserving national autonomy in determining development trajectories. Coordinated wage growth policies in manufacturing sectors significantly improved living standards. However, these advances remain persistently unequal across regions and sectors, between urban and rural areas, and between core and peripheral workers.

Significantly, Southeast Asian manufacturing wages are substantially higher than those in South Asia or sub-Saharan Africa, despite persistent labour exploitation (Natsuda and Thoburn, 2021). These institutional legacies—distinctive amongst Global South regions— fundamentally shape possibilities for green industrial transitions. While labour conditions in export sectors warrant sustained criticism, Southeast Asian developmental states have demonstrated capacities for coordinated sectoral development that most other developing economies lack. Understanding contemporary green industrial policy requires recognising both the institutional capabilities these achievements represent and the persistent injustices they contain. The question confronting contemporary policymakers is whether these developmental state capacities can be redirected towards genuinely sustainable and equitable green transitions, or whether the contradictions embedded in previous industrialisation patterns will reproduce themselves in green sectors.

The Philippines presents a contrasting case, revealing how developmental-state institutional weakness constrains the possibilities for green industrial policy. Unlike Thailand and Vietnam, which have coherent, long-term sectoral strategies, Philippine policymaking has remained fragmented across competing bureaucratic agencies, resulting in inconsistent policy direction. The shift away from industrial policy following the 1986 democratisation, undertaken as part of neoliberal structural adjustment 

Vietnam's feed-in tariff mechanism enabled grid-connected capacity expansion within 2 to 3 years, whereas comparable countries required significantly longer periods. Thailand's integrated renewable planning, spanning energy, water, and agricultural sectors, enabled coordinated infrastructure development. These achievements reflect deliberate state institutions directing capital, setting priorities, and implementing consistent policies. A comparative analysis of renewable energy expansion across developing countries reveals a consistent pattern: countries with strong state capacity and deliberate industrial policy achieved faster transitions than those relying on market- driven alternatives. This finding carries profound implications for global climate policy: achieving the requisite carbon reductions within the remaining timeframe likely requires strengthening state capacities for coordinated industrial policy, contradicting dominant neoliberal frameworks that emphasise privatisation and market liberalisation. Climate justice requires not merely transitions but equitable transitions that protect and advance working people's interests.

'Green' sector designation offers absolutely no assurance of social justice, labour dignity, or environmental integrity. Electronics manufacturing and solar panel production display exploitative working conditions structurally identical to those in traditional sectors, which have been condemned for decades. Without robust independent labour organisations, democratic participation in policy formulation, and mechanisms ensuring fair distribution of gains, green industrialisation risks perpetuating exploitation beneath environmental legitimacy. This finding challenges mainstream narratives equating green transitions with social progress. The relationship between sectoral 'greenness' and labour standards is contingent, dependent on deliberate policies that prioritise worker rights and democratic governance rather than being automatic. Environmental credentials carry no inherent labour or social benefits; these outcomes require deliberate political struggle.

Electronics manufacturing sectors designated as 'green' due to producing renewable energy components display identical labour exploitation patterns to traditional sectors. Worker wages typically range from three to five US dollars per day, insufficient to meet basic needs in most Southeast Asian contexts. Working hours regularly exceed fifty per week with minimal compensation for overtime. Occupational health hazards, including chemical exposure and repetitive strain injuries, remain inadequately addressed. Women workers are concentrated in the lowest-wage positions with limited advancement pathways. Migrant workers face particular vulnerability with minimal legal protections and employer restrictions on freedom of movement. These conditions persist despite international scrutiny of supply chains and certification systems that claim to verify ethical labour practices. The gap between certified compliance and actual labour conditions reveals fundamental limitations of market-based accountability mechanisms. Genuine labour justice requires independent worker organisations capable of monitoring conditions and negotiating improvements directly with employers, supported by government enforcement of labour standards. This demands strengthening rather than weakening labour regulations, contrary to competitive liberalisation pressures.

obstruct transformative change. The analysis reveals persistent contradictions: state coordination enables rapid transition but without democratic governance risks authoritarian imposition; manufacturing growth creates employment but often involves exploitative working conditions; renewable energy expands while fossil fuels simultaneously increase; green sectors emerge while extractive logic persists. These contradictions cannot be resolved through technical policy adjustments alone but demand a fundamental reorientation of power relations and development priorities. The stakes involve distributional justice and genuine ecological transformation, not merely technological substitution that maintains existing power hierarchies.

European Union policies shape these dynamics substantially through climate standards, trade regimes, and strategic competition, yet often in ways that reproduce North-South inequalities and constrain Southeast Asian policy autonomy. Progressive green industrial policy requires both advancing environmental and labour standards while resisting Global North domination of standard-setting and supply chain governance. Southeast Asian governments must simultaneously embrace state capacity for sectoral development while democratising these capacities; maintain openness to foreign investment while protecting technology and establishing development conditions; and integrate into global value chains while building regional cooperation, reducing Global North dependence. These tensions cannot be perfectly reconciled but require sustained political negotiation.

The stakes for Southeast Asia are profound: the region's development trajectory, its position within shifting global orders, and crucially, whether green transitions deliver genuine improvements in wellbeing and ecosystem integrity for the hundreds of millions of people the region encompasses. Meeting these challenges demands sustained political commitment to democratic governance, labour rights, and environmental justice as non-negotiable components of green industrial strategies. The technical capacity exists; the political will to democratise power relations fundamentally constrains transformation. Building that political will requires sustained organising by labour movements, environmental activists, and social movements capable of maintaining pressure on state institutions and transnational corporations. Without this counter-power from below, developmental state capacities risk being mobilised for transitions that reproduce existing inequalities and ecological destruction beneath green branding.

The final analysis returns to fundamental questions of power and legitimacy. Southeast Asian governments face pressures from multiple directions: international financial institutions demanding liberalisation, multinational corporations seeking favourable investment conditions, the climate crisis demanding urgent transitions, and working populations requiring decent livelihoods. Reconciling these competing demands requires political leadership willing to prioritise genuine development and sustainability over narrow elite interests. This proves especially challenging given transnational corporate integration into Southeast Asian state institutions through corruption, revolving-door arrangements between government and business, and ideological commitment to neoliberal frameworks. However, historical precedents demonstrate that transformative change becomes possible when organised movements create sufficient 

formal-sector manufacturers to supply chains and informal-sector producers, addressing currently unregulated environmental externalities. Developing context- specific development indicators beyond GDP growth reflecting wellbeing, ecological health, and distributional outcomes would reorient policy evaluation away from conventional growth metrics (Noman and Stiglitz, 2017). Environmental impact assessments should be mandatory before industrial expansion, with meaningful community consultation and compensation for affected populations.

Finally, creating ASEAN-wide frameworks for joint technology development, coordinated labour standards, and environmental protection remains crucial to preventing a race to the bottom. Regional cooperation should enhance collective bargaining power against transnational corporations and Global North trade partners, enabling Southeast Asian countries to negotiate from a collective rather than an individual position within global value chains. South-South technology collaboration, particularly with India and China, provides alternatives to Global North-led intellectual property regimes. Harmonised labour standards across ASEAN would prevent capital flight to the lowest-wage jurisdictions and protect workers' collective rights.

Just transition frameworks, increasingly prominent in international climate discourse, deserve critical examination within Southeast Asian contexts. Global discussions of just transitions typically focus on coal miners and fossil fuel industry workers requiring retraining and income support during energy transitions. Nevertheless, Southeast Asian energy transitions co-occur with manufacturing expansion, creating complex labour dynamics in which declining fossil fuel sectors coexist with expanding green manufacturing. Workers displaced from coal mining lack guaranteed pathways into green manufacturing jobs; retraining programmes often teach skills that do not align with local job availability. Gender dimensions remain largely absent from just transition discussions, despite women constituting the majority of workforces in light manufacturing and green sectors. The family and community consequences of industrial transitions receive minimal attention despite their profound impacts on household survival strategies. Just transition frameworks must extend beyond income support for affected workers towards comprehensive restructuring of development pathways, ensuring transitions benefit working people and marginalised communities rather than merely substituting one form of exploitation for another. This demands substantial public investment in education, retraining, infrastructure, and social protection systems alongside coordinated industrial policy.

ASEAN institutions, despite a formal commitment to regional cooperation, have historically prioritised national sovereignty over coordinated action, thereby limiting their effectiveness in addressing problems that require collective responses. The ASEAN Comprehensive Investment Agreement and various trade frameworks have predominantly liberalised markets rather than coordinated development strategies. Green industrial policy, however, creates incentives for deeper coordination: harmonised standards reduce compliance costs for producers serving multiple markets; joint technology development platforms multiply individual-country research capacity; coordinated labour standards prevent capital flight to the lowest-wage jurisdictions. Indonesia, as the largest economy in Southeast Asia and the ASEAN chair, could lead the establishment of regional green industrial frameworks. Vietnam's technological sophistication in renewables could anchor regional knowledge platforms. Thailand's manufacturing expertise could support sectoral development elsewhere. Such cooperation would require moving ASEAN beyond rhetoric towards genuine institutional capacity for coordinated policymaking, a fundamental shift from historically fragmented approaches.