Singapore, Indonesia, Vietnam, and others all boast stronger policies for chip-related manufacturing, photo Le Toan

During the ASEAN Future Forum 2025 held in Hanoi late last month, Malaysian Prime Minister Anwar bin Ibrahim stated that member states need to cement cooperation in manufacturing semiconductors to turn Southeast Asia into a major hub for such products.

“Malaysia is leading the region in semiconductor manufacturing and the country’s leaders fully support the development of this industry,” PM Ibrahim told Vietnamese counterpart Pham Minh Chinh.

Malaysia began to develop semiconductor products about 20 years ago, with the participation of high-tech investors from the US, China, South Korea, and Japan. This success needs to be shared among other ASEAN nations, according to PM Ibrahim.

Malaysia is the world’s sixth-largest exporter of semiconductors, accounting for 13 per cent of the global assembly, testing and packaging market. It aims to lure in $115 billion worth of investments by 2030.

Last week, British chip company Arm Holdings inked a deal with Malaysia to bolster its efforts to produce high-end semiconductors. The deal will see Softbank-owned Arm provide chip designs and other technology, helping Malaysia to move into more value-added production such as wafer fabrication and integrated circuit design. Malaysia reported to be paying $250 million over a decade to receive support from Arm Holdings.

Malaysia’s national semiconductor strategy aims to invest over $100 billion in advanced technologies. In May 2024, the Malaysian government committed to invest at least $5.6 billion in the semiconductor industry, with the goal of being self-sufficient in chip manufacturing within the next 5–10 years.

“Indonesia, Vietnam, and Thailand also want to develop semiconductors, so all of us need to stay united and boost cooperation in this industry. Malaysia stands ready to support Vietnam in this endeavour,” PM Ibrahim said.

The global semiconductor industry is undergoing a significant transformation, with ASEAN emerging as a prominent player. Geopolitical tensions have opened opportunities for the region, with key contributors like Singapore and Malaysia leading the way.

ASEAN, in its effort to diversify the global supply chain, has recorded impressive growth. Total semiconductor exports from the region reached $268.8 billion in 2023, accounting for almost one-quarter of the global market. A 41.6 per cent increase in exports from 2018 to 2023 underscores the industry’s growth in this area.

Vietnam’s semiconductor industry is led by strategic government policies, raising foreign investment, and a growing demand for chips in various industries. With a projected market value of $31.28 billion by 2027 and a compound annual growth rate of 11.6 per cent from 2023 to 2027, Vietnam is steadily positioning itself as a key player in the global semiconductor supply chain, according to Dezan Shira & Associates.

After Vietnam and the US forged a comprehensive strategic partnership in 2023, the former’s semiconductor industry has been beefed up, with larger participation from global semiconductor giants such as Intel, OnSemi, Hana Micron, and Amkor. They are particularly found in outsourced semiconductor assembly and test (OSAT) facilities in the northern region, and research and development centres in the south.

Under Vietnam’s semiconductor strategy towards 2030, with a vision extending to 2050, the country will centre on talent development, manufacturing capacity, and global integration. According to the strategy, the country will establish at least 100 design companies, one small-scale manufacturing facility, and 10 packaging and testing plants, with annual revenue in the semiconductor industry of $25 billion, all by the end of this decade.

Those revenues will aimed to be doubled by 2024 and, from there to mid-century doubled again to $100 billion, with Vietnam seeking to boast 300 design companies, three fabrication plants, and 20 OSAT plants.

However, experts said a lack of high-quality personnel, underdeveloped infrastructure, and administrative hurdles need to be addressed.

Other ASEAN countries, such as Indonesia and Singapore, are also ramping up efforts.

Singapore is expanding its wafer fabrication zones and enhancing business support services. According to Singapore’s Economic Development Board, over the past decades, Singapore has become a semiconductor powerhouse, holding 10 per cent of the global chip production and about a fifth of the world’s chip-making gear.

Singaporean Prime Minister Lawrence Wong in his budget speech late last month said that Singapore has attracted global AI and quantum computing firms. He pledged to spend around SGD1 billion ($747 million) on a new chip research facility.

Singapore already houses plants for blue-chip US manufacturers including memory chip specialist Micron, outsource manufacturer GlobalFoundries and fabrication-equipment supplier Applied Materials.

Meanwhile, Indonesia, with its abundant raw materials, is developing a supply chain from raw material extraction to production. This regional competition not only elevates ASEAN’s position in the global semiconductor market but also fosters collaboration to create an integrated value chain.

“To strongly develop the semiconductor industry successfully, we need to pay special attention to training high-quality personnel,” Malaysian PM Ibrahim said.

Vietnam is aiming to train 50,000 skilled engineers for the industry by 2030 and about 100,000 by 2040.

For 2026, the bank anticipates the expansion pace to step up to 7.4 per cent, benefitting from the government’s efficiency drive.

With surprisingly strong performances in three straight quarters, Vietnam’s economy expanded 7.09 per cent in 2024 from 5.1 per cent in 2023, beating the consensus call of 6.7 per cent and official target of 6.5 per cent. This was the best showing since the post-COVID rebound in 2022 (8.1 per cent).

The manufacturing and services sectors were the main drivers of activities in the last quarter of 2024, while external trade maintained a strong pace through most of 2024. The upswing in semiconductor sales since mid-2023 also boosted exports.

Export activities expanded for the 10th month in 2024, registering a full-year gain of 14 per cent, and reversing the 4.6 per cent contraction in 2023. Imports rose 16.1 per cent in 2024 to deliver Vietnam’s second-largest trade surplus of about $23.9 billion, following the record high of $28.4 billion in 2023. This is the ninth consecutive year that Vietnam has registered an annual trade surplus, which will be helpful in anchoring the VND exchange rate, UOB affirmed in the report released on March 12.

Vietnam’s heavy dependence on international trade is reflected in the roller coaster ride of economic growth over the 2023-2024 period, when falling exports in 2023 caused a significant slowdown to the headline GDP. The boom in exports in 2024 resulted in its strongest economic performance since 2022. Vietnam’s export value was about 90 per cent of GDP in 2024, the second highest in ASEAN after Singapore’s 174 per cent and ahead of third-placed Malaysia’s 69 per cent.

This high degree of openness means that Vietnam is vulnerable to disruptions and frictions in international trade, especially with US President Trump’s focus on trade imbalances. Overall, the US trade deficit with ASEAN nearly tripled to $228 billion in the same period as global trade flows and supply chain shifts accelerated in response to trade restrictions implemented in the Trump 1.0 era.

Vietnam’s National Assembly has raised the country’s 2025 growth target to at least 8 per cent and is targeting double-digit growth from 2026-2030, but most forecasts remain at 6.5-7 per cent. “While 8 per cent or higher growth rate is possible, exports and manufacturing will not be sufficient to drive this outperformance,” the UOB asserted.

Additional capital expenditure, particularly from public investment, will be needed to stretch further as well as to buffer against any potential downturns in trade. Vietnam’s capital investment ratio has stayed around 30 per cent of GDP at least over the past decade. In contrast, China’s gross capital formation has stayed consistently above 40 per cent in the same period. This suggests that Vietnam has been underinvesting relative to its large neighbour and there is certainly a case for higher public investment, particularly with the government aiming for double-digit growth.

“Taking into account the above factors, we remain cautiously positive about Vietnam’s outlook,” UOB reported.

With economic growth staying robust in 2024 and into 2025 and the US Fed poised to hold steady, there is less urgency for the central bank to hurry into any policy easing. At the same time, inflation ticked higher to 3.6 per cent in 2024 from 3.26 per cent in 2023, though still below the 4.5 per cent threshold.

However, with the prospects of further trade tensions globally under Trump 2.0 and the accompanying US dollar strength an emerging concern, the SBV is expected to stay alert to downside pressures on the VND. As such, the best course of action currently is for the key refinancing rate to stay at 4.5 per cent, according to the UOB.

The VND weakened to a record low of about 25,600/USD in early Mar after the SBV raised its USD sale prices to banks to 25,698/USD from 25,450/USD, the first increase since last October. From here, the path of resistance is still biased towards further VND weakness due to China’s growth and tariff uncertainties, UOB said.

There is a risk of the US imposing tariffs on Vietnam, owning to the latter’s sizeable and growing trade surplus with the US. Potential tailwinds to offset VND depreciation pressures include a strong domestic growth outlook and the SBV’s pledge to ensure a stable exchange rate.

Overall, the UOB’s updated USD/VND forecasts are 25,800 in 2Q25, 26,000 in 3Q25, 25,800 in 4Q25, and 25,600 in 1Q26.

Chairwoman of the State Securities Commission (SSC) Vu Thi Chan Phuong and deputy general director of the Monetary Authority of Singapore (MAS) Tuang Lee Lim signed the Letter of Intent.

The signing ceremony was witnessed by Party General Secretary To Lam and Singaporean Prime Minister Lawrence Wong, while Vietnamese Minister of Finance Nguyen Van Thang and other leaders of the two countries also attended the ceremony.

Vietnam’s SSC chairwoman Vu Thi Chan Phuong and Singapore’s MAS deputy general director Tuang Lee Lim

Recognising the importance of developing and regulating the digital asset market, the two countries have partnered to combat money laundering and terrorist financing through digital asset transactions, protecting the integrity and stability of the two financial markets.

Specifically, the MAS will help the SSC to build a legal framework for the development and management of the digital asset market in Vietnam. It will also exchange information and experience in anti-money laundering and counter-terrorism financing in the financial markets of the two countries, thereby enhancing Vietnam’s capacity to monitor the development and trading of digital assets.

Lim said, “Singapore and Vietnam have a long-standing, multidimensional partnership in the capital markets, reinforced through bilateral commitments and cooperation at regional and international forums. The exchange of this Letter of Intent reflects our commitment to help each other protect the integrity and stability of our capital markets, as well as promote cross-border connectivity. The MAS and SSC will learn from each other and build a deeper relationship.”

In response, Phuong said that the Vietnam – Singapore relationship has been upgraded to a Comprehensive Strategic Partnership, and that economic, financial, and investment cooperation have become deep and effective. The signing of the letter is a new step forward, an important foundation for the two capital market management agencies to strengthen cooperation and contribute to the integrity of the financial markets of the two countries and the region.

“We believe and expect that this agreement will contribute to the stable, fair, transparent, and sustainable development of the capital and digital asset markets in both countries,” Phuong added.