How policy is powering Southeast Asia’s digital industry

Policy matters. An effective tool, smart policy incentivises individuals and businesses to make choices favourable to society, whether financial, social, environmental, or any combination therein.

Let’s take Norway, for example. Norway’s electric vehicle market accounts for over 80 percent of new car sales – the largest percentage worldwide by an enormous margin (Iceland comes in second at just over 40 percent). And it is making a difference: electrification of road transportation in Norway is expected to cut the nation’s transportation-related emissions by a third in just over a decade.

This is no’t an accident. Norway’s success in the electrification of its transportation sector is a direct result of enabling policy that nudges behaviour – in this case, influencing consumer choice toward electric cars to substantially reduce the nation’s carbon footprint. These policy incentives date back to the early 1990’s and include the elimination of purchase tax (or VAT) on electric vehicles, no road traffic insurance tax and half-price tolls and parking. Such savings compel consumers to buy electric because, with these policies, it makes financial sense for them to do so. 

The southeast asian digital economy

Emerging economies throughout Southeast Asia are in the early stages of implementing similar enabling policy mechanisms to digitalise businesses, including the industrial sector. With increased awareness and visibility of available digital solutions, the industrial sector throughout Southeast Asia is primed to onboard new intelligent software solutions that radically increase productivity levels by minimising time and other resource waste, reduce the carbon footprint of industrial assets, and improve the bottom line for owner-operators, elevating competitiveness domestically and internationally.

Businesses in emerging Southeast Asian economies – specifically the industrial sector – are primed and ready to the embrace the digital revolution. The region’s digital economy is exploding (exceeding the rate of GDP growth, which is already substantial and outpacing that of developed economies), with projections of reaching upwards of USD 1 trillion by 2030. 

And, digital adoption rates are way below market value. For foreign technological service providers, this gap presents a massive opportunity. It’s one that demands robust, seasoned digital consultancy, but the window is there and it’s huge.

For industrial businesses throughout Southeast Asia, specialised digitalisation resources and knowledge may be limited. This is the barrier to entry. But with government incentives blowing as backwinds, hands will be reaching forward through those ajar windows looking for solutions and support to get on the digitalisation ladder towards enhanced productivity and competitiveness.

From regional to local: The policy landscape advancing digitalisation in Southeast Asian industrial businesses 

Governments across Southeast Asia are rolling out targeted policy incentives to drive digital adoption for businesses, including for those in the industrial sector. Many of these measures provide direct financial support, and all aim to create an enabling environment for businesses to adopt productivity-enhancing technologies. 

Here’s a closer look at how some emerging economies throughout Southeast Asia are accelerating industrial digitalisation through policy incentives:

Malaysia: Tax incentives and sustainability in digitalisation

Malaysia is posturing itself as a digital hub through the Malaysia Digital (MD) Tax Incentive, an outcome-based scheme supporting businesses that leverage promoted tech enablers such as cloud-based industrial software solutions. Additionally, the MD 100 Go Digital initiative provides access to digital funding, making it easier for businesses to transition into the digital economy.

Sustainability is also a core focus, with the Malaysia Digital Climate Action Pledge (MDCAP) encouraging businesses to adopt digital technologies that reduce their carbon footprint. Signing a pledge along the lines of MDCAP reflects a corporate intention to do better and comes with massive PR benefits. Technologies that streamline key workflows, minimising time and other resource waste, and that reduce embodied carbon in materials, in construction projects and in industrial assets. Adopting productivity-enhancing software solutions is an easy way to honour such a pledge and elevate a business’ public profile.

These Malaysian initiatives collectively foster an ecosystem where industrial businesses can innovate and grow while ensuring environmental responsibility. Then, it’s a matter of selecting a software-as-a-service provider who can consult through the early stages where any resource challenges may be at their most perilous.

Singapore: Leading the region with digital-ready policies

Singapore is leading digitalisation in Southeast Asia. Higher levels or digitalisation equate to enhanced productivity and, as a result, Singaporean businesses are keeping ahead of the competition. And there’s no sign of slowing down. In fact, government schemes such as the Productivity Solutions Grant (PSG) are levelling up, further emphasising the importance of onboarding productivity-enhancing technologies. 

The PSG is playing a pivotal role by covering up to 50 percent of the cost for local small and medium enterprises (SMEs) investing in digital and ICT solutions, up to approximately £18,000 per company per year. Businesses can access sector-specific or general solutions that have been pre-approved by Enterprise Singapore and other participating agencies. 

Singapore actively encourages digital cloud-based solutions, with domestically-registered software providers able to register as pre-approved vendors under the Infocomm Media Development Authority (IMDA) framework. Such policy incentives ensure that Singaporean businesses maintain their competitive edge in an increasingly digital world.

Vietnam: Unlocking first-mover advantages in industrial digitalisation

Vietnam’s Digital Transformation Plan underscores the government’s commitment to fostering widespread technology adoption. The national government has prioritised digitalisation in eight sectors, including energy. Further, the Vietnam National Committee on Digital Transformation has identified industrial digitisation and digital data as key pillars of the country’s digital economy. 

There is some exciting new legislation on the table, as well. The Draft Law on Digital Technology Industry is expected to come into action around January 2026. It is loaded with incentives to fuel the growth of digital technology in Vietnam, mostly regarding domestic software development capacity, but it is looking like it may also include incentives to facilitate the purchasing of digital technology products, such as cloud-based industrial software. Regarding the latter, support levels are likely to be between 30 and 80 percent of a company’s investment in new digital solutions, which is a phenomenal way to catalyse the activation energy needed for change. 

The emerging Vietnamese policy and economic landscape is ripe for domestic industrial companies to take flight with the onboarding of efficiency-enhancing digital technologies. Businesses that move early stand to benefit significantly from government-backed digitalisation initiatives, paving the way for enhanced productivity and industry leadership.

Philippines: Overcoming infrastructure challenges through digital innovation

The Philippines presents a high-growth opportunity for aspirational digital-first businesses brave enough to navigate infrastructure and other resource challenges. Forward-thinking companies able to navigate such resource constraints effectively can and will gain a massive strategic advantage. It need not be overwhelming, either, as foreign software providers bring a wealth of proven knowledge to help navigate the start of an industrial digital transformation journey. Government incentives and funding schemes are available to help businesses integrate digital solutions, though the competitive landscape requires strategic planning and execution, which can be solved by selecting the right digital consultant.

Indonesia: Southeast Asia’s fastest-growing digital economy

Indonesia boasts one of the region’s fastest-growing digital economies, making digitalisation a key priority for industrial businesses to stay competitive. The government is actively supporting businesses in overcoming infrastructure and resource limitations, ensuring they can capitalise on the nation’s digital transformation wave. Again, experienced digital consultancy will prove worth its weight in gold for Indonesian industrial organisations on the precipice of digital transformation. Companies that embrace digital innovation now will be better positioned to lead in Indonesia’s evolving industrial landscape.

Thailand: A digital economy poised for massive growth

Thailand’s digital economy is projected to reach USD 165 billion by 2030, underscoring the nation’s commitment to digital transformation. The Thailand Board of Investment (BOI) actively champions and incentivises the adoption of technology to enhance business value. By integrating advanced industrial software solutions, industrial companies can achieve unparalleled productivity and returns on investment. 

While the BOI tax incentive scheme for investing in productivity-enhancing digital tech expired at the end of 2022, strong policy support remains, positioning the Thai industrial sector in a potentially lucrative landscape for the most competitive businesses. And what makes for the most competitive industrial businesses? Those embracing productivity-enhancing digitalisation of key workflows.

A digital southeast asian industrial future driven by policy support

Can national policy incentives catalyse industrial digital transformation? Harkening back to the Norway electric vehicle example, the answer is a resounding yes. Emerging economies throughout Southeast Asia are banking on that coming to fruition in the digitalisation across sectors, including the industrial sector. And, as with Norway’s success, Southeast Asia is primed for significant impact: industrial digitalisation will increase regional competitiveness, contributing positively to national economies, sustainably.  

Across Southeast Asia, governments are prioritising digitalisation as a key driver of industrial growth. Whether through tax incentives, funding programs, or regulatory support, emerging countries in the region are fostering an ecosystem that is rewarding industrial businesses investing in technology, such as cloud-based productivity enhancing software. By taking advantage of these incentives in digital partnership so as to seamlessly navigate any resource constraints, the region’s industrial companies can future proof their operations and gain a competitive edge at the interface of the rapidly evolving digital landscape and heavy industry.

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