Sun setting on Malaysia, Indonesia solar exports

US tariffs testing whether ASEAN is all talk on regional integration for renewable energy generation

SYDNEY, Australia (MNTV) — Southeast Asia’s once-booming solar manufacturing industry is now facing a major downturn, and for Malaysia and Indonesia—the region’s key players—the pressure is intensifying, reports The Interpreter. 

After years of benefiting from U.S. trade policies targeting China, the region’s solar producers are now on the receiving end of those same restrictions, threatening thousands of jobs and billions in exports.

For Malaysia, long considered the region’s solar manufacturing hub, the crisis is especially painful. Despite receiving the lowest tariff rates under new U.S. trade measures, Malaysian firms are reporting production cuts and workforce reductions. 

“We’re being penalized for being efficient,” said a senior executive at a Penang-based solar firm. “Even with lower duties, the market we built over a decade has practically vanished.”

Washington’s recent trade decisions mark a dramatic reversal. After Barack Obama’s administration first imposed duties on Chinese solar panels in 2012, Chinese manufacturers shifted production to Southeast Asia—particularly Vietnam, Thailand, and Malaysia—to bypass the tariffs. By 2023, these four countries accounted for nearly 80% of all U.S. solar photovoltaic (PV) imports, worth more than $14 billion.

That success, however, also created dependency. The U.S. market represented the same 80% share of the region’s total solar exports. When President Joe Biden imposed sweeping anti-dumping and countervailing duties in 2024, and Donald Trump raised them even further this year, the fallout was immediate. 

Effective rates now average 34% for Malaysia, exceed 300% for Vietnam and Thailand, and reach an astonishing 652% for Cambodia, with some firm-specific tariffs surpassing 3,000%.

While Malaysia’s factories were among the first to feel the chill, neighboring Indonesia initially seemed to offer hope. The country rapidly expanded its solar manufacturing capacity—from 1 gigawatt in 2022 to 20 gigawatts by 2024—backed largely by Chinese and U.S. investment. 

But that optimism is fading fast. In August, Washington launched new anti-dumping and countervailing duty investigations into solar imports from Indonesia and Laos, effectively putting their exports at risk too.

“Indonesia’s solar expansion was meant to diversify global supply chains,” said Jakarta-based energy analyst Rizky Hidayat. “But now, we’re facing the same barriers that pushed the industry south from China in the first place.”

Much of Southeast Asia’s solar boom has been fueled by Chinese investment, which accounts for over 80% of foreign capital in new solar projects. Yet local governments have also made efforts to localize production. 

Malaysia has developed domestic polysilicon capacity—critical for solar cell manufacturing—while Indonesia is positioning itself as a regional solar assembly hub tied to its broader clean energy ambitions.

With the U.S. market closing, both countries are being forced to rethink their export strategies. Competing with China is virtually impossible, while India and Europe—the next-largest markets—are building protectionist frameworks of their own. The region’s manufacturers may have little choice but to turn inward.

Analysts say that boosting regional solar deployment could be the way forward. The International Energy Agency estimates that if Southeast Asia follows a net-zero emissions pathway, it would need over 250 gigawatts of installed solar capacity—creating both domestic demand and new jobs. 

The ASEAN Power Grid initiative, which aims to integrate electricity networks across the region, could provide the framework to make that happen.

For Malaysia and Indonesia, the challenge now is to turn the crisis into opportunity—by using their industrial base not just to export solar panels abroad, but to power Southeast Asia’s own clean energy future.