Jakarta, INTI - Indonesia still lags behind Singapore, Malaysia, and Vietnam in developing a technology manufacturing ecosystem, particularly the semiconductor industry.
Nugroho Adi Sasongko, Director of Research Center for Sustainable Industrial and Manufacturing System (PRSIMB) at National Research and Innovation Agency (BRIN), stated that Malaysia has succeeded in becoming a high-value-added manufacturing hub, controlling around 12–13% of the global semiconductor packaging and testing market. Malaysia’s electronics and electrical industry is also valued at US$116 billion, contributing around 43% of its manufacturing exports.
"Malaysia excels in sophistication, innovation, and mastery of the high-end semiconductor value chain. They are the kings of added value in ASEAN," he said.
According to Nugroho, Malaysia is supported by an outsourced semiconductor assembly and test (OSAT) ecosystem that has developed since the 1970s, focusing on advanced packaging technology, supported by engineering talent and consistent investment policies.
Meanwhile, Vietnam is rapidly developing as an emerging manufacturing hub, with total merchandise trade reaching US$405 billion by 2025 and foreign investment reaching US$38.2 billion, of which approximately 71% is in the manufacturing sector. The country has attracted semiconductor investments from Samsung to LG Innotek.
On the other hand, Singapore remains a center for research, design, and high technology thanks to the quality of its human resources, intellectual property protection, and regulatory certainty.
Indonesia, however, is considered to lack the key foundations of a semiconductor industry, such as silicon wafer factories, adequate talent, and competitive investment incentives. This is despite Indonesia having large reserves of nickel, tin, and silica, as well as a large domestic market.
"The problem is, we don't have a clear national focus on semiconductors. Talent is still limited, and there are no specific fiscal policies or infrastructure, such as economic zones for the chip packaging industry," Nugroho explained. He believes Indonesia needs to take more realistic steps by focusing on specific segments, such as substrates and raw materials.
Strengthen Collaboration with Other Countries
Indonesia also needs to strengthen cooperation with Singapore in research and development. The same goes with Malaysia, with its packaging and assembly sectors. Indonesia also can develop vocational programs linked to industry needs and involving companies such as Infineon, NXP, and Onsemi.
Nugroho proposed the construction of one to two locally sourced silicon wafer factories between 2026–2028, producing at least 5,000 semiconductor technicians per year, and strengthening the national chip design ecosystem. In the 2029–2034 period, Indonesia could build global-standard assembly, testing, and packaging (ATP) facilities in industrial areas such as Batam and the Tanjung Sauh Special Economic Zone (SEZ).
"If we are consistent, Indonesia can become a player in the assembly, testing, and raw materials sectors in the next three to five years. However, to become a manufacturing hub like Malaysia is today, it will take at least 10 to 15 years," said Nugroho.
Conclusion
Indonesia is considered to still lag behind Malaysia, Vietnam, and Singapore in the semiconductor industry due to the lack of a strong supply chain, adequate talent, and competitive policies and incentives. According to Nugroho Adi Sasongko, Head of PRSIMB BRIN, Malaysia excels in the industry thanks to its mature OSAT ecosystem and consistent investment support. Vietnam has succeeded in attracting significant investment with its strategy of building competitive manufacturing ecosystem. Singapore remains a hub for high-tech research and design due to the quality of its human resources and the certainty of its regulations.
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