Industrial Transformation in ASEAN A Cluster-Driven Model for Regional and Global Collaboration 2026

2Align cross-border policies and technical standards: ASEAN could boost investor confidence by accelerating the harmonization of cross-border policies, targets and standards. Ongoing initiatives like the APG92 and the Harmonisation of Minimum Energy Performance Standards (MEPS)93 show early progress, while the EU Energy Efficiency Directive offers a useful reference. Widespread adoption of ASEAN taxonomy and sustainability disclosures, gradual rebalancing of fossil-fuel incentives, and market reform to reward renewable energies and batteries are all needed to attract investments. 3Develop an ASEAN-wide carbon pricing and market framework: Emerging voluntary carbon markets offer ASEAN a chance to become a regional carbon trading hub. A shared architecture, with aligned protocols, interoperable registries and transparent credit tracking, would incentivize industries to adopt low- carbon technologies, and enable cross-border trade and investment. 4Promote cluster-level low- carbon infrastructure: Industrial clusters require clear directives for the development of shared low-carbon infrastructure such as renewable systems, energy efficiencies, circularity, digital monitoring, reporting and verification (MRV) systems and eco-buildings. Examples like Indonesia’s Jababeka Industrial Estate94 show progress, while directives for such standards (e.g. China’s National Development and Reform Commission95) can cut costs and boost efficiency. 5Accelerate grid expansion and corporate renewable access: Upgrading, expanding and interconnecting ASEAN’s power grids is a critical enabler for clusters, allowing them to access clean power. Complementing these efforts, market-based mechanisms such as renewable energy certificates, Viet Nam’s Direct Power Purchase Agreement pilot and the Corporate Renewable Electricity Supply Scheme can empower clusters to directly procure renewable energy. Cross-border electron trading via the APG will also require market model innovation.96 6Advance human capital development and workforce transformation: ASEAN would require strengthened education and training systems, which would help to build energy and sustainability skills for green jobs.97 Government and industry support workforce transitions in carbon- intensive sectors through reskilling and inclusive programmes will also be required.98 Brightlands Circular Space cultivates a knowledge ecosystem advancing a sustainable chemical industry.99 7Unlock scalable finance Mobilizing public and private investment through green bonds, green sukuk, and blended and transition finance is essential. Existing mechanisms like the ASEAN Catalytic Green Finance Facility (ACGF) and FAST-P provide an initial foundation, while the European Investment Bank’s (EIB) EU Green Bond Standard-aligned Green Bond exemplifies large-scale green finance.100 8Deploy robust de-risking instruments De-risking investments requires access to grants, concessional finance and government-backed capital – such as low-interest loans or loan guarantees.101 Contracts for difference (CfDs), targeted tax credits and blended finance platforms provide facilitation mechanisms to better connect available capital with clusters’ needs.102 Targeted tools like viability gap funding, feed-in tariffs, auctions and standardized contracts can be used to unlock investment.103 Additionally, tokenization and digitalization of physical assets can create new derivative forms for public market participation. Industrial clusters thrive only when supported by strong policies, clean energy investment, robust infrastructure and cross-border alignment. Industrial Transformation in ASEAN: A Cluster-Driven Model for Regional and Global Collaboration 14