Government Incentives Fuel Growth of EMS Industry in Southeast Asia
- By Lipika Agarwal
- 30 May 2025
- Business
Southeast Asia is quickly emerging as a hub for Electronic Manufacturing Services (EMS), driven by robust government incentives and strategic industrial policies. Countries like India, Vietnam, Malaysia, Thailand and Indonesia are actively creating environments conducive to high-tech manufacturing that have drawn significant foreign investments into these countries.
India: Offering Capax Support, Flexible Policies, and Optimistic Initiatives
India’s Production-Linked Incentive (PLI) schemes (first round from 2020, second from 2021 for components) offer 3–6% cashback on incremental electronics production, aiming to generate ~$78 billion in exports and trigger ₹110 billion in investments. Further, incentives like MEIS and RoDTEP help lower export costs, making EMS exports more competitive in Southeast Asian markets.
Vietnam Offers High-Tech Manufacturing and Export Incentives
Vietnam has emerged as an ideal location for electronics manufacturing thanks to policies like Decision No. 16/CT-TTg which promote the digitization of manufacturing. Vietnam offers tax reductions and land lease waivers as incentives for companies investing in high-tech and export industries; such initiatives aim to generate over three million employment opportunities by 2030.
Malaysia: Promoting Semiconductor and AI Manufacturing
Malaysia is taking advantage of its strategic location and infrastructure to attract investments in semiconductor and AI manufacturing, offering Pioneer Status tax incentives for high-value manufacturing and R&D companies. Notably, Malaysia invested $250 million to acquire chip design blueprints from Arm Holdings with plans of producing its own chips within 10 years; training 10,000 engineers is also part of this initiative along with building Southeast Asia's largest integrated-circuit design park.
Thailand: Promoting Innovation and Smart Manufacturing
“Thailand 4.0” policy seeks to transform Thailand into a high-tech, innovation-driven economy by offering tax breaks of up to 13 years for companies investing in R&D and advanced manufacturing technologies, semiconductor production technologies, smart packaging systems, smart packaging technologies as well as tax exemptions based on investment amounts and technology adoption.
Indonesia: Implementing Industry 4.0 for Economic Growth
Indonesia's “Making Indonesia 4.0” initiative seeks to modernize its manufacturing sector through automation and digitalization, offering incentives to foreign companies in fields like automotive, electronics and food processing. Their policies aim to increase manufacturing's contribution to GDP to 25% by 2025 and create skilled workers trained in advanced manufacturing techniques.
Conclusion
Southeast Asian governments' concerted efforts in providing targeted incentives have significantly aided EMS industry growth. By investing in infrastructure, technology, and human capital development projects they are well positioned to become major players on the global electronics manufacturing scene.
