How Southeast Asia’s solar industry can shine in face of US tariff threat
The progress so far is impressive. Southeast Asia has emerged as the world’s second-largest solar module producer, trailing only China. By the end of 2022, the region boasted a total module production capacity of 70 gigawatts, a significant leap from an almost negligible level just a few years ago. This capacity represents roughly 6.4 per cent of the world total of about 1,100GW expected by the end of this year.
Moreover, Southeast Asia has shown remarkable progress in increasing its share in supply chains, particularly in solar cell manufacturing, led by Malaysia, Thailand and Vietnam. Malaysia has also made significant strides in polysilicon production, reaching a capacity of 32 gigatonnes in 2022.
Between 2017 and 2021, Southeast Asia supplied one-third of the world’s solar PV modules, with a large portion destined for the United States and Europe. Four Southeast Asian countries – Cambodia, Malaysia, Thailand and Vietnam – supplied more than 75 per cent of the solar modules imported by the US in 2022.
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However, Southeast Asia now faces shifting winds. Geopolitical challenges, growing protectionism and trade tensions are casting shadows over the future of globalisation, introducing significant uncertainties for trade-dependent economies.
With post-pandemic economic recovery starting to take hold, the region’s GDP is expected to grow by 4.6 per cent in 2024. In tandem with its strong sustained economic growth, the region is expected to experience the world’s second-fastest energy demand growth until 2050, behind only India.
Solar PV installed in the region needs to surpass 240GW by 2030 and further increase to more than 2,100GW by