ASEAN’s next phase of economic integration could increasingly focus not only on expanding trade and attracting investment, but also on ensuring that growth creates stronger domestic industries, higher-value jobs, technological capabilities and more broadly shared economic benefits across Southeast Asia.
Speaking at the 2026 China-ASEAN Business Leaders Summit, Malaysian Investment Development Authority (MIDA) Chairman Tengku Datuk Seri Zafrul Abdul Aziz said the principles underpinning Malaysia’s New Industrial Master Plan 2030 (NIMP 2030) could offer useful lessons for ASEAN as the region moves into its next stage of development.
His remarks centred on a broader question facing ASEAN: as investment continues flowing into Southeast Asia, how can the region ensure that capital creates lasting value through stronger local companies, technological know-how, skilled workers and more inclusive economic opportunities?
ASEAN Attracts Growing Global Investment
ASEAN occupies a strategically important position between major global markets and along some of the world’s most important trade routes. The region combines large consumer markets, natural resources, rapidly expanding digital economies and diverse pools of talent.
According to figures cited by Tengku Zafrul, ASEAN attracted approximately US$226 billion in foreign direct investment in 2024, almost twice the level recorded in 2015.
The scale of those inflows demonstrates ASEAN’s growing appeal as companies diversify manufacturing networks and seek exposure to Southeast Asia’s expanding markets.
However, Tengku Zafrul argued that the more important question is increasingly what those investments leave behind.
Investment that creates supplier opportunities, transfers knowledge, develops skilled workers and strengthens local companies can have a significantly wider economic impact than capital that operates largely in isolation from domestic industries.
NIMP 2030 Offers a Mission-Based Industrial Model
Malaysia launched NIMP 2030 in 2023 as a mission-based strategy to transform its industrial sector and strengthen its long-term competitiveness.
The framework is built around four central missions: advancing economic complexity; accelerating technology adoption for a digitally vibrant economy; pushing towards net zero; and safeguarding economic security and inclusivity.
These missions are supported by four enabling areas covering financing, talent development, the investor journey and governance. NIMP 2030 also contains 21 strategies and 62 action plans designed to translate its broader objectives into industrial transformation.
Rather than measuring industrial success primarily through the amount of investment attracted, the framework places greater emphasis on outcomes such as higher-value employment, stronger domestic supply-chain linkages, technological upgrading, sustainability and SME participation.
That outcome-based philosophy was central to Tengku Zafrul’s argument about ASEAN’s future economic integration.
Manufacturing Remains Central to Regional Development
Despite the rapid rise of digital services, artificial intelligence and technology-driven businesses, manufacturing remains a critical part of Southeast Asia’s economic development.
Tengku Zafrul noted that industrial investment creates effects extending well beyond factories themselves, supporting suppliers, logistics companies, professional services, energy providers, technology firms and workforce development.
The long-term value of industrialisation therefore depends partly on whether these wider linkages develop alongside major investments.
Malaysia’s NIMP 2030 follows a similar approach. Its objectives include increasing economic complexity, developing existing and emerging industrial clusters and expanding domestic linkages so that local companies can participate more deeply in higher-value supply chains.
For ASEAN, applying similar principles regionally could mean looking beyond aggregate investment figures and examining how cross-border growth strengthens industrial capabilities throughout the bloc.
Technology Adoption Could Drive the Next Productivity Cycle
Digital transformation is another area where NIMP 2030 principles could have wider regional relevance.
One of the plan’s four missions is to “tech up” for a digitally vibrant economy, including increasing automation, supporting Industry 4.0 adoption and strengthening technological capabilities across industries.
Across ASEAN, technology adoption is becoming increasingly important as Member States compete for investment in semiconductors, artificial intelligence, data centres, electric vehicles and advanced manufacturing.
The region is simultaneously developing broader integration mechanisms intended to make cross-border commerce more efficient.
At the September 2026 ASEAN Economic Ministers meetings, officials discussed preparatory work for the early entry into force of the upgraded ASEAN Trade in Goods Agreement (ATIGA) alongside trade-facilitation initiatives designed to reinforce ASEAN as a single market and production base.
ASEAN officials have also emphasised translating initiatives such as upgraded ATIGA, the Digital Economy Framework Agreement (DEFA) and the ASEAN Single Window into practical benefits for businesses.
Taken together, these efforts indicate that ASEAN’s next integration phase is increasingly about improving the quality and efficiency of regional economic connections rather than simply lowering tariffs.
SMEs Need a Larger Role in Regional Value Chains
Another important principle within NIMP 2030 is expanding opportunities for small and medium-sized enterprises.
Malaysia’s industrial plan identifies SMEs as important suppliers of local content and contributors to industrial ecosystems. It aims to strengthen their ability to participate in higher-value activities, adopt technology and meet environmental, social and governance requirements demanded by multinational supply chains.
This has wider relevance for ASEAN because smaller businesses account for a substantial share of enterprises and employment throughout Southeast Asia.
If regional economic integration primarily benefits large multinational corporations, its impact on income growth and domestic capability could remain limited.
Greater SME participation in cross-border production, digital commerce and industrial supply chains could help distribute the benefits of integration more broadly while also creating stronger domestic business ecosystems.
Sustainability and Economic Security Move Up the Agenda
NIMP 2030 also connects industrial competitiveness with decarbonisation and economic resilience.
Its third mission focuses on moving towards net zero, while its fourth addresses economic security and inclusivity, including strengthening supply-chain resilience and industrial clusters.
These objectives have become increasingly relevant as Southeast Asia faces external risks ranging from geopolitical tensions and trade restrictions to energy disruptions and climate-related pressures.
For ASEAN, deeper integration may therefore require balancing efficiency with resilience.
Regional supply chains that are highly interconnected can reduce costs and improve market access, but economies also need sufficient diversification, domestic capacity and energy security to respond when international disruptions occur.
A stronger regional industrial framework could help Member States use their different capabilities more effectively while reducing vulnerabilities across critical supply chains.
ASEAN–China Cooperation Could Support Complementary Strengths
Tengku Zafrul delivered his remarks in the context of ASEAN–China economic cooperation, arguing that both sides possess different strengths, levels of development and talent pools that can complement one another through deeper regional integration.
Rather than focusing solely on expanding transaction volumes, he emphasised shared prosperity and the ability of regional development to create greater opportunities for businesses and individuals to build wealth.
China remains deeply connected to ASEAN’s manufacturing and supply-chain networks, while Southeast Asia has become an increasingly important production base and consumer market.
The challenge is ensuring that deeper integration also strengthens local capabilities and produces sustainable economic gains across participating economies.
Moving From Investment Volume to Investment Quality
Malaysia has increasingly incorporated this principle into its own investment policy.
Under the country’s New Incentive Framework, investment incentives are linked to six intended outcomes: greater economic complexity, high-value employment, stronger domestic supply chains, development of industrial clusters, improved inclusivity and enhanced sustainability practices.
This represents a shift from focusing principally on how much investment enters the country towards evaluating what economic benefits that investment produces.
A similar philosophy applied more broadly across ASEAN could encourage investment strategies that prioritise technology transfer, workforce development, local sourcing and long-term industrial capability alongside capital inflows.
Such an approach would not require Member States to adopt identical industrial policies. ASEAN economies differ significantly in size, income levels, industrial structures and development priorities.
Instead, regional integration could create mechanisms that allow those different strengths to complement one another.
Closing Development Gaps Could Strengthen ASEAN Competitiveness
Tengku Zafrul also linked economic competitiveness with the question of inequality and wealth distribution.
His keynote address, titled “Beyond Profit: Closing the Wealth Gap as ASEAN and China’s Greatest Competitive Advantage,” argued that stronger regional growth needs to translate into opportunities for people and businesses rather than being measured only through headline investment and trade figures.
This issue could become increasingly important as ASEAN integrates further.
Member States enter the next phase of integration from very different economic starting points. Greater connectivity can create significant opportunities, but the distribution of investment, skills and industrial capabilities will influence whether regional development gaps narrow or widen.
Policies that support workforce development, SMEs, technology adoption and domestic industrial linkages could therefore become important components of ASEAN’s long-term competitiveness.
Looking Ahead
ASEAN is already advancing several major economic integration initiatives, from the upgraded ATIGA and ASEAN Single Window to DEFA and wider supply-chain cooperation. The next challenge will be turning these frameworks into measurable improvements in productivity, business competitiveness and living standards.
Malaysia’s NIMP 2030 provides one possible reference point for that discussion.
Its emphasis on economic complexity, technology adoption, sustainability, resilience and inclusivity reflects a broader evolution in industrial policy — from simply attracting investment towards building lasting capabilities around that investment.
For ASEAN, the opportunity is to use deeper integration not only to create a larger market, but to build stronger regional industries, more competitive local enterprises and a workforce equipped for increasingly technology-intensive economic activity.
As Tengku Zafrul’s remarks suggest, the success of ASEAN’s next development phase may ultimately be judged less by the amount of capital entering the region and more by the knowledge, businesses, skills and opportunities that remain after the investment is made.
