Pacific Money | Economy | Southeast Asia

Southeast Asia’s Solar Panel Boom

It’s not just about China. The world is now benefiting from historically cheap solar panels made in Vietnam, Thailand, and Indonesia.

Solar power is booming these days, with 511 GW of new capacity added in 2025 alone. A big reason is because the cost of solar panels has been dropping fast in recent years, making it genuinely competitive with fossil fuels. Solar is making big gains not just in Europe and North America but in Africa, South Asia, and beyond. So why is solar such an attractive option right now?

There is obviously a demand side component. Renewable energy like solar power is critical for energy security, something that has become painfully obvious to energy importers in recent weeks. But we also need to look at the supply side of the ledger, where solar is becoming increasingly affordable because of large production increases. China is the world’s biggest producer, but solar cells and panels have become a major industrial force throughout Southeast Asia.

Thailand and Malaysia have long been reliable makers and exporters of solar cells and panels, while Vietnam has risen rapidly in recent years to become the second largest producer in the world after China. Even Indonesia has lately joined the party.

According to the Atlas of Economic Complexity, Malaysia accounted for approximately 4 percent of the world’s solar panel exports in 2024. Thailand accounted for 5 percent, with 15 solar cell and module manufacturers and a production capacity of roughly 10 GW per year. Both Malaysia and Thailand have consistently been producing solar cells for export at around these levels for many years.

The real growth story in solar is Vietnam. In 2017, Vietnam exported $2.1 billion in photosensitive semiconductors, including solar cells and panels, equal to around 4 percent of global supply. By 2023, exports of solar panels had surged to nearly $8 billion or 13 percent of global supply. The industry employs around 50,000 workers, with a production capacity of 18.4 GW per year. This rapid expansion has been attributed to favorable policies, the judicious use of special economic zones, and rising inflows of Chinese investment.

Vietnam is rapidly becoming Southeast Asia’s newest export-led manufacturing powerhouse, so it’s not really surprising that they are scaling up production of clean energy like solar panels. Perhaps somewhat less expected is that in nearby Indonesia, we are also finally starting to see the emergence of a nascent solar panel industry.

Indonesia has been much slower than some of its neighbors to build a solar manufacturing industry. But the government has lately made a concerted effort to attract investment into the sector, and it is starting to bear fruit. According to a report published by the Just Energy Transition Partnership, 10 GW of solar cell and panel production capacity have been built or are under construction in Batam, Central and West Java, backed mainly by Chinese and American firms that have invested hundreds of millions of dollars.

As a result, Indonesian solar panel exports rose from $185 million in 2022 to over $500 million in 2024. This is still small compared to the scale of production in Vietnam, Thailand, and Malaysia, but indicates the extent to which solar manufacturing is spreading across the region.

This is not happening in a vacuum. The United States is the largest market for solar panels, importing $11 billion in 2024. China is the largest producer of solar panels. In 2018, the United States increased tariffs on Chinese solar panels. The boom in Southeast Asian solar manufacturing, largely driven by Chinese investment, could be interpreted as an attempt to evade tariffs on Chinese goods by moving production to Southeast Asia. In response, the U.S. has threatened or enacted anti-dumping measures on solar panels made in Southeast Asia.

It’s likely that Chinese firms have indeed increased their investment in Southeast Asian solar manufacturing to get around U.S. tariffs. But even if that is the case, this kind of investment has real benefits for the recipient countries. It draws major Southeast Asian economies into global clean energy supply chains and provides things they want like jobs, productivity spillovers, exports, and the possibility of skill, knowledge, and technology transfer.  At the same time, the world at large is benefiting from historically cheap solar panels being made in Vietnam, Thailand, and Indonesia.

Meanwhile, the United States has hit Southeast Asian economies with punitive tariffs (including the ones specifically targeting solar panels) and waged a war that pushed up energy prices and forced governments in the region to ration fuel. The contrast between how China and the United States are engaging the region on trade and industrial development could not be starker, and solar panels are just one of the many instances where this is becoming unmistakably clear.

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Solar power is booming these days, with 511 GW of new capacity added in 2025 alone. A big reason is because the cost of solar panels has been dropping fast in recent years, making it genuinely competitive with fossil fuels. Solar is making big gains not just in Europe and North America but in Africa, South Asia, and beyond. So why is solar such an attractive option right now?

There is obviously a demand side component. Renewable energy like solar power is critical for energy security, something that has become painfully obvious to energy importers in recent weeks. But we also need to look at the supply side of the ledger, where solar is becoming increasingly affordable because of large production increases. China is the world’s biggest producer, but solar cells and panels have become a major industrial force throughout Southeast Asia.

Thailand and Malaysia have long been reliable makers and exporters of solar cells and panels, while Vietnam has risen rapidly in recent years to become the second largest producer in the world after China. Even Indonesia has lately joined the party.

According to the Atlas of Economic Complexity, Malaysia accounted for approximately 4 percent of the world’s solar panel exports in 2024. Thailand accounted for 5 percent, with 15 solar cell and module manufacturers and a production capacity of roughly 10 GW per year. Both Malaysia and Thailand have consistently been producing solar cells for export at around these levels for many years.

The real growth story in solar is Vietnam. In 2017, Vietnam exported $2.1 billion in photosensitive semiconductors, including solar cells and panels, equal to around 4 percent of global supply. By 2023, exports of solar panels had surged to nearly $8 billion or 13 percent of global supply. The industry employs around 50,000 workers, with a production capacity of 18.4 GW per year. This rapid expansion has been attributed to favorable policies, the judicious use of special economic zones, and rising inflows of Chinese investment.

Vietnam is rapidly becoming Southeast Asia’s newest export-led manufacturing powerhouse, so it’s not really surprising that they are scaling up production of clean energy like solar panels. Perhaps somewhat less expected is that in nearby Indonesia, we are also finally starting to see the emergence of a nascent solar panel industry.

Indonesia has been much slower than some of its neighbors to build a solar manufacturing industry. But the government has lately made a concerted effort to attract investment into the sector, and it is starting to bear fruit. According to a report published by the Just Energy Transition Partnership, 10 GW of solar cell and panel production capacity have been built or are under construction in Batam, Central and West Java, backed mainly by Chinese and American firms that have invested hundreds of millions of dollars.

As a result, Indonesian solar panel exports rose from $185 million in 2022 to over $500 million in 2024. This is still small compared to the scale of production in Vietnam, Thailand, and Malaysia, but indicates the extent to which solar manufacturing is spreading across the region.

This is not happening in a vacuum. The United States is the largest market for solar panels, importing $11 billion in 2024. China is the largest producer of solar panels. In 2018, the United States increased tariffs on Chinese solar panels. The boom in Southeast Asian solar manufacturing, largely driven by Chinese investment, could be interpreted as an attempt to evade tariffs on Chinese goods by moving production to Southeast Asia. In response, the U.S. has threatened or enacted anti-dumping measures on solar panels made in Southeast Asia.

It’s likely that Chinese firms have indeed increased their investment in Southeast Asian solar manufacturing to get around U.S. tariffs. But even if that is the case, this kind of investment has real benefits for the recipient countries. It draws major Southeast Asian economies into global clean energy supply chains and provides things they want like jobs, productivity spillovers, exports, and the possibility of skill, knowledge, and technology transfer.  At the same time, the world at large is benefiting from historically cheap solar panels being made in Vietnam, Thailand, and Indonesia.

Meanwhile, the United States has hit Southeast Asian economies with punitive tariffs (including the ones specifically targeting solar panels) and waged a war that pushed up energy prices and forced governments in the region to ration fuel. The contrast between how China and the United States are engaging the region on trade and industrial development could not be starker, and solar panels are just one of the many instances where this is becoming unmistakably clear.

James Guild is an expert in trade, finance, and economic development in Southeast Asia.

Southeast Asia energy

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