Critical minerals in Southeast Asia and India

Annex A. Downstream critical mineral manufacturing: Southeast Asia as an integrated value chain hub

Why downstream manufacturing matters for the region's critical minerals agenda

As a result of Southeast Asia’s existing manufacturing base, strong trade integration and history of attracting quality FDI - the economic benefits for critical minerals extend beyond upstream extraction as the region positions itself as a hub for downstream industrial activity. This not only plays to the regions strengths but also serves to capitalise the economic benefit of green and digital transitions, as value addition rises steeply as you move down the value chain, going from upstream mining to midstream refining to downstream component manufacturing and final assembly.

Indonesia's downstream push demonstrates both the potential and the limits of processing-led strategies. Export restrictions – while typically not the most effective policy instrument for value addition – have been combined with investment incentives to make Indonesia the world's largest nickel refiner. Yet there is scope to move beyond smelting and refining into component and final goods manufacturing. It is here that Southeast Asia's comparative position differs most markedly from that of other resource-rich regions.

A manufacturing base unmatched among mineral-rich emerging regions

Southeast Asia's principal asset is not only its geological endowments but its strong industrial base. Over five decades of export-oriented industrialisation, the region has built dense manufacturing ecosystems in precisely the sectors that constitute the demand side of critical mineral value chains: automotive, electronics, semiconductors and electrical machinery. This historical base distinguishes Southeast Asia from other mineral-rich regions, where endowments are comparable or larger but the industrial capacity to absorb processed minerals domestically at the same scale.

The regional automotive industry illustrates Southeast Asia’s manufacturing capacity. Thailand has traditionally served as a regional production and export base for Japanese, Chinese, and European manufacturers since the 1980s, and is now repositioning this ecosystem towards electric vehicles through the EV 3.5 scheme, which offer tax holidays and import duty exemptions for domestic manufacturing of EVs, batteries and components (Thailand Board of Investment, 2023[84]). Indonesia is seeking to leverage its nickel processing capacity to create an integrated supply chain that can meet emerging EV demand, with Korean, Chinese, and German automotive companies planning to create manufacturing plants in the country (ASEAN, 2024[85]). Additionally in 2024, Indonesia opened ASEAN’s first EV battery plant (ASEAN, 2024[86]).

Box A.1. VinFast – Viet Nam’s domestic EV manufacturer

Founded in 2017, VinFast initially focused on internal combustion engine vehicles before pivoting decisively towards electric mobility. VinFast soon realised the greater potential in EV manufacturing, introducing Viet Nam's first electric bus and its first consumer EV in 2021. By the end of 2022 VinFast had ceased gas-powered car production entirely, becoming one of the few automakers globally to commit fully to an all-electric lineup.

VinFast's supply chain strategy illustrates both the opportunities to expand across critical minerals value chain, both nationally and across ASEAN. VinFast has enabled Viet Nam’s expansion across the EV supply chain, establishing with Gotion High-Tech the first ever LFP battery cell production facility in Viet Nam. In 2025, VinFast also established its first manufacturing plant in Subang, Indonesia – positioning itself as a regionally integrated EV producer.

Source: (VinFast, 2022[87]) (VinFast, 2021[88]) (VinFast, 2025[89])

Electronics and semiconductors provide a second pillar. Malaysia has hosted semiconductor assembly, testing and packaging operations since the early 1970s and remains one of the world's principal back-end semiconductor locations, while Singapore concentrates wafer fabrication, equipment manufacturing and advanced materials. Viet Nam has emerged over the past fifteen years as a major assembly base for consumer electronics, and Thailand and the Philippines occupy established niches in hard disk drives, automotive electronics and component manufacturing. These industries are intensive users of critical minerals, including silicon, tantalum, REEs and tin, of which the region is itself a significant producer (USGS, 2025[3]).

Solar photovoltaics is a critical mineral manufacturing sector that exemplifies the potential of domestic and regional value chain integration. Viet Nam has been expanding its manufacturing production across the entire PV supply chain, with projects like a polysilicon manufacturing facility being established in 2025, resulting in rapidly falling production prices (see Figure A.1) (IRENA, 2026[90]). Other countries in ASEAN are finding specific niches across the supply chains, with Malaysia specialising in polysilicon and module production and Thailand in wafers and assembly (SinoVoltaics, 2024[41]). The region thus already hosts capacity across most segments of the PV supply chain, from metallurgical-grade silicon through ingots and wafers to cells and modules.

Figure A.1. Viet Nam - Overall PV module production costs (2025-2030)

Note: USD = United States Dollar, Wp = Watt peak. USD/Wp is used to represent the cost (represented in USD) of energy production (represented in Wp) at peak power. Monocrystalline = monocrystalline passivated emitter and rear cell, TOPCon = tunnel oxide passivated contact cell. The reported calculations do not include ESG-related expenses.

Source: (IRENA, 2026[90])

Southeast Asia to this extent, stands well positioned with other regions as both a knowledge and trade partner. Latin America holds world-leading lithium and copper endowments but, outside Mexico and parts of Brazil, its export-oriented manufacturing ecosystems in batteries, electronics or vehicles are still in a nascent stage. Sub-Saharan Africa, with dominant positions in cobalt and manganese, faces challenges in building downstream industrial capacity where Southeast Asian countries can potentially play a role. Factories that consume battery materials, magnets, semiconductors and PV components are already located within Southeast Asia, and creating integrated downstream manufacturing value chains can shorten the distance, both literal and institutional, between mine and market.

The capacity to attract high quality FDI

The second distinguishing attribute is the region's demonstrated ability to attract large-scale, technology-bearing FDI into mineral-linked manufacturing, at a time when global investment conditions for extractives have deteriorated sharply. As noted in Section 2, Global FDI fell by 11% in 2024 yet investment flows into Southeast Asia's downstream segments have actually increased, particularly for the manufacturing sector (See Figure A.2) (UNCTAD, n.d.[23]). Figure A.3 shows that the number of greenfield investment projects across ASEAN in supply chain-intensive manufacturing sectors has more than doubled since 2020.

Figure A.2. Flows of Inward FDI to select sector across ASEAN (in USD Millions)

Note: USD at current prices in millions, FDI= foreign direct investment.

Source: (ASEANStats, n.d.[1])

Figure A.3. Greenfield investment in ASEAN in supply chain-intensive manufacturing sectors

(Number of projects, 2020 - 2024)

Source: (ASEAN-UNCTAD, 2025[91])

Trade integration as the connective tissue of a regional hub

The third attribute, and arguably the one that most clearly differentiates Southeast Asia from other mineral-rich regions, is the depth of its trade integration. Under the ASEAN Trade in Goods Agreement, intra-regional goods trade is nearly tariff free (ASEAN, n.d.[92]). The ASEAN Economic Community is also supplemented by trade facilitation instruments, mutual recognition arrangements and an extensive network of ASEAN+1 free trade agreements. For example, the Regional Comprehensive Economic Partnership provides preferential trade terms for rules of origin across fifteen Asia-Pacific economies (ASEAN, 2024[93]). For multi-stage critical mineral value chains, in which nickel may be mined in one member state, refined in a second, converted into cells in a third and assembled into vehicles in a fourth, this architecture materially lowers the cost of organising production regionally.

Regional policy frameworks are also increasingly aligning with this integration logic. AMCAP IV (2026-2030) places trade and investment in minerals among its four programme areas and seeks coherence with the ASEAN Economic Community Strategic Plan 2026-2030, while the ASEAN Principles for Sustainable Minerals Development positions the region as a destination for sustainable and technologically advanced minerals investment (ASEAN, 2025[27]) (ASEAN, 2025[94]).

Enabling conditions for an integrated manufacturing hub

Southeast Asia's structural advantages do not make an integrated manufacturing hub guaranteed and more work can be done to enhance the level of trade integration and value addition across ASEAN. Three conditions stand out:

• Managing concentration in investment and inputs. Capital flows from select countries have accelerated the region's downstream infrastructure build-out but have also left various ASEAN countries with the supply chain concentrations that global diversification strategies seek to reduce. Broadening the investor base, including through credible ESG frameworks and de-risking instruments such as blended finance, is essential to attract responsible, high quality FDI from a wider set of partners.

• Closing skills and technology gaps. Refining technologies, battery chemistry, ESG auditing and waste management skills remain scarce. Regional training programmes and facilitated mobility of specialised workers and researchers, would accelerate knowledge transfer.

• Aligning industrial and environmental objectives. The environmental footprint and negative social externalities on local communities of manufacturing of energy-intensive processing, must be addressed through alignment of regulatory frameworks to national and regional sustainability frameworks. Regional initiatives such as the ASEAN Framework for the Circular Economy and the ASEAN Principles for Sustainable Minerals Development provide high-level policy momentum but must be fully realised by national and local government counterparts.

Among the world's mineral-rich emerging regions, Southeast Asia provides a unique policy mix due to its existing manufacturing base, with a proven attractiveness to diversified and large-scale FDI, and a regional trade architecture capable of organising multi-country production systems. The region has already been successful in improving its share of midstream value-added, and can potentially become a global hub for downstream critical mineral-related manufacturing. Policymakers across ASEAN should consider the conditions outlined above and move towards deeper trade integration in targeted manufacturing sectors (EVs, semi-conductors, solar PV, etc.). In doing so, Southeast Asia would not only enhance its own economic growth but also strengthen its own economic security and resilience.