Heavy Industry in Southeast Asia

This article is part of the Heavy Industry Program at Global Energy Monitor which includes data on iron and steel, cement and concrete, chemicals and iron ore mines.

Sub-articles:

GEM Wiki Main Page

The Association of Southeast Asian Nations (ASEAN) was established as an intergovernmental organization of 10 Southeast Asian countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. The group aims to promote economic and security cooperation among its ten members. ASEAN’s industrial growth has increased significantly over the last 15 years. This growth mainly comes from multinational corporates’ manufacturing shifting away from China due to rising costs, trade tensions, and geopolitical risks. On the other hand, ASEAN offers cheaper labor, abundant resources, strategic location, government incentives, and its commitment to incorporating sustainability to industrial processes.

The energy demand of the industrial sector in ASEAN increased by over 60% from 2005 to 2020. Heavy industries, mainly cement, petrochemicals, and iron and steel sectors, accounted for 40% of industrial energy demand. A few key industrial policies in ASEAN are shaping the future of heavy industries in the region, including The ASEAN Centre for Energy’s 2025 guidelines for cement industry energy efficiency improvements, Indonesia’s Net-Zero Roadmap (2025) to aim for decarbonizing steel sector, and Thailand’s Chemical Management Master Plan (2019 - 2037) for implementing an overall stricter and safer standards on chemicals manufacturing.

Cement Industry in Southeast Asia

The cement and concrete industry is projected to grow at a 5.2% compound annual growth rate, reaching ~US$178.4 billion by 2025 across the Southeast Asia region. Vietnam is the largest producer (34% of the region’s production), followed by Indonesia (29%), and together with Malaysia, Philippines and Thailand accounting for 94% of the region’s cement production. According to GEM’s data, the capacity for current operating cement production plants in ASEAN is 464 million metric tonnes per annum (mmtpa), and the capacity for cement production plants that are announced and under construction is 27 mmtpa.

Production Technology

The primary cement production process to produce cement is to heat up the limestone to extremely high temperature to produce clinker, a process known as calcination. Clinker is then grinded and mixed with gypsum and other materials to produce cement. Around two thirds of the CO2 emissions come from the calcination process due to the extreme high temperature which requires the burning of fossil fuels.

Decarbonization Policies

The Indonesian Cement Association (ASI) updated its decarbonization roadmap for its cement industry following the Indonesian government’ goal of net zero by 2060. The roadmap indicated a short-to-medium term Scope 1 reduction methods, including increasing the use of alternative fuels, reducing the clinker factor of cement, and optimizing or reducing specific thermal energy consumption of clinker.

ASEAN Centre for Energy published the Guideline for Energy Performance Benchmark in Cement Industry in ASEAN in June 2025, aiming to establish a benchmarking energy performance tool. The guidelines are to identify inefficiencies, establish performance baselines, and guide efficiency improvement in cement production across ASEAN member countries. This is particularly important as ASEAN keeps working towards net zero goals and industrial sustainability.

Chemicals Industry in Southeast Asia

ASEAN has become an attractive destination for petrochemical conglomerate expansion. For example, the LINE project in Indonesia invested by Korean giant Lotte, Chinese Hengyi built the only petrochemical complex in Brunei, and Singapore’s Jurong Island is home to many petrochemical multinational corporations, such as ExxonMobil Chemical, Shell, BASF, etc. Region wise, Thailand has the largest petrochemical capacity in the ASEAN region, with an ethylene output capacity of 5.5 million mt/year in 2024. The total ammonia production capacity in ASEAN was around 7 million tons in 2021, in which Indonesia takes up over 60% of the capacity, followed by Vietnam and Malaysia.

Relevant Chemicals Policies

Thailand released the Chemical Management Master Plan 2019 - 2037, envisioning chemical management that leads to safer population, cleaner environment and higher quality products that are compatible with international standards. The Plan emphasized developing a systematic management of chemicals in compliance with international standards and minimizing risk and impact of chemicals on health and environment.

ESJ Issues

Amid the expanding of petrochemical plants, ASEAN now is facing criticism for being a major contributor to marine plastic while suffering from chemical plants leaks and incidents to the local communities. In Indonesia, repeated chemical leaks from several petrochemical plants affected hundreds of local people. Children who found living around these plants are prone to have multiple disabilities due to chemical pollution. Plant fires and explosions are prevalent issues as well.

Iron & Steel Industry in Southeast Asia

ASEAN currently produces around 80 million tons of crude steel annually, and it’s projected to increase to 147.2 million tons in 2026, and 184.5 million tons by 2029 or 2030. Steel production is concentrated in Vietnam and Indonesia, together producing 73% of the region’s steel. The existing and under construction production capacities in ASEAN are shown in table 1, primary steel is made in Vietnam, Philippines, Indonesia, and Malaysia, mostly through the BF - BOF route. A minor share of DRI capacities exist in Indonesia, Malaysia, and Myanmar. Secondary steel using EAF produced is concentrated in countries such as Thailand, Indonesia, Vietnam, and Malaysia. The only operating steel plant in Singapore is steel produced using EAF.

Table 1. Steel & Iron Capacities (ttpa) in ASEAN by Technologies

	BOF Steel Capacity (ttpa)	EAF Steel Capacity (ttpa)	OHF Steel Capacity(ttpa)	BF Capacity(ttpa)	DRI Capacity(ttpa)
Indonesia	11980	8220	0	10560	1500
Malaysia	11200	6170	0	11400	900
Myanmar	0	400	0	0	500
Phillippines	12000	3300	0	1790	0
Singapore	/	720	/	/	/
Thailand	0	8555	0	0	0
Vietnam	25576	8202	0	22100	0

Data Source: Global Energy Monitor, March 2025

Production Technology

The dominant steel production method in the ASEAN region is the BF-BOF route, which is significantly more energy-intensive than the scrap - EAF route or DRI - EAF route. The BF - BOF route offers cost competitiveness due to cheap and abundant coal supply in ASEAN, and its robust process that does not require high-quality iron ores as feedstock. Therefore, it is projected that BF-BOF will still remain the predominant production method in the region.  However, this will lock in high emissions for the foreseeable future, even with new additions of EAF or DRI plants.

Decarbonization Policies and Collaboration

Indonesia aims for a net-zero emissions target by 2060 or sooner. To achieve this target, the steel sector, a major source of industrial emissions in Indonesia, must peak and begin to decline. The ASEAN Centre for Energy has recently published a Net Zero Roadmap for Indonesia’s Steel Industry to provide a roadmap for deep decarbonization by 2060. The Roadmap emphasizes a technology shift to scrap-based EAF and green hydrogen-based DRI.

Vietnam launched its pilot phase of emissions trading scheme in 2025, aiming to cut three major industrial sector CO2 emissions. Under the scheme, steel, cement, and thermal power will be forced to buy carbon allowances to offset their emissions. The scheme will last until 2029 before expanding to other sectors. This is part of the effort of Vietnam’s net zero target by 2025.