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

emitter.21 Industry contributes around 34% of ASEAN’s GDP , with manufacturing (as the largest sub-sector) making up around 20% of the region’s GDP .22 It is the fourth-largest manufacturing base in the world, and manufacturing gross output value could reach $1.2 trillion by 2030.23 Concentrated within manufacturing hubs, industrial estates and port zones, this footprint offers a unique platform for coordinated, high-impact decarbonization. Industrial clusters create the structures where national policy, private investment and regional collaboration converge. For countries, industrial clusters can: –Accelerate clean technology deployment in hard-to-abate sectors such as cement, steel and chemicals –Provide scale by concentrating industrial activity, enabling efficient deployment of renewables, hydrogen and carbon capture across shared infrastructure –Lower costs and de-risk investments through shared infrastructure and utilities and pooled investments –Drive green job creation and workforce transformation by reskilling workers –Showcase that energy transition and development can advance together For the region, industrial clusters can: –Serve as anchor nodes for cross-border power trade and low-carbon hydrogen corridors, aligning supply and demand across markets –Build investor confidence through standardized frameworks, aggregated demand and scalable models –Strengthen regional and national competitiveness by enabling coordinated industrial development that enhances ASEAN’s position in global value chains and attracts sustainable trade and investment Clean, efficient clusters will be pivotal in determining whether the region protects and grows its position as an attractive, competitive manufacturing base and an investment destination in a world increasingly shaped by carbon intensity and supply chain resilience. ASEAN’s industrial future depends on aligning sustainable energy ambitions with manufacturing competitiveness. This white paper illustrates how industrial clusters offer a practical route to deliver low-carbon growth and industrial competitiveness, a key focus of the International Energy Agency (IEA) Regional Cooperation Centre’s work on energy manufacturing. By deepening collaboration across borders and sectors, ASEAN can move beyond the traditional trilemma mindset and demonstrate that energy security, emissions reduction and competitiveness can advance together. Sue-Ern Tan, Head, IEA Regional Cooperation Centre Industrial Transformation in ASEAN: A Cluster-Driven Model for Regional and Global Collaboration 6