In 2016, then-president Tsai Ing-wen (蔡英文) introduced the New Southbound Policy (NSP) to reduce Taiwan’s economic dependence on China by strengthening ties with Southeast Asia, South Asia and Australia.
Initially focused on trade, investment and people-to-people ties, the policy was upgraded to “NSP Plus” under President William Lai (賴清德) and emphasizes technological collaboration in areas such as semiconductors, artificial intelligence (AI), 5G and digital infrastructure. The shift coincides with Southeast Asia’s digital transformation, with the region’s digital economy expected to surpass US$1 trillion by 2030, positioning NSP Plus to capitalize on that growth and enhance Taiwan’s strategic role in the region.
As Southeast Asia undergoes a technological revolution, Taiwan’s expertise in semiconductors and digital infrastructure is crucial. NSP Plus aligns Taiwan with the region’s push for digital innovation, especially in sectors such as AI, cloud computing and 5G, which are expected to drive substantial growth. That presents Taiwan with an opportunity to expand its economic influence while supporting Southeast Asia’s transition to a more technology-driven economy.
Taiwan is a global leader in semiconductor manufacturing, which is crucial to Southeast Asia’s growing tech industries. Countries such as Vietnam, Indonesia and Malaysia are aiming to become regional tech hubs, and Taiwan’s tech expertise would play an essential role in those efforts.
Vietnam aims to become a key player in semiconductor production. Foxconn and Pegatron have established operations in Vietnam, helping boost the tech sector. Its national action plan for digital economy development for this year, which focuses on improving digital infrastructure, also complements Taiwan’s expertise in semiconductors and AI, creating opportunities for collaboration.
Indonesia is investing heavily in digital infrastructure to become a regional tech leader, and Taiwan’s progress in 5G technology and smart manufacturing could help modernize its economy. Chunghwa Telecom has already worked with Indonesian telecom companies to expand 5G networks, improve connectivity and boost the country’s technological capabilities.
Malaysia’s Shared Prosperity Vision 2030 emphasizes advancing electronics and semiconductors. Foxconn has partnered with Dagang NeXchange Berhad to build a semiconductor plant that would produce critical components such as microcontrollers and sensors, which are essential for new technologies.
Despite the vast opportunities for technological collaboration between Taiwan and Southeast Asia, the region faces several hurdles in its digital transformation. Those challenges include limited access to cutting-edge technologies, a shortage of skilled labor, high infrastructure costs and regulatory hurdles in adopting emerging technologies. NSP Plus provides a framework for addressing those challenges by positioning Taiwan as a technology enabler and a knowledge partner.
One initiative that addresses the skill gap in the region is the International Industrial Talents Education Special Program, which recruits Southeast Asian students into Taiwan’s semiconductor industry. That helps bridge the talent gap in chip manufacturing and design and supports the development of local expertise.
By training the next generation of semiconductor experts, Taiwan is playing a crucial role in supporting Southeast Asia’s digital transformation.
As a leader in telemedicine technologies, Taiwan could also offer support in digital healthcare. Southeast Asia’s healthcare challenges make digital solutions particularly important. For example, the One Country, One Center program allows Taiwan to share its expertise with countries such as Thailand and Indonesia. That program has had a tangible impact, such as National Cheng Kung University and Thai hospitals collaborating to implement AI-powered diagnostics, improving healthcare in remote areas.
The US-China trade war has disrupted global supply chains, especially in high-tech sectors such as semiconductors, telecommunications and electronics. While Southeast Asia faces uncertainty, it also has the chance to diversify its technology sources, reducing reliance on the two countries. Taiwan, strategically positioned amid that tension, has emerged as a neutral partner for Southeast Asia, offering secure, advanced technologies without the political baggage associated with superpowers.
Taiwan’s 5G technology is seen as safer than China’s Huawei, due to security concerns in telecom systems. The nation’s expertise in 5G and cloud technology is helping Southeast Asia’s digital growth, with partnerships such as those between Chunghwa Telecom and ASEAN countries helping improve digital connectivity across the region.
The economic ties between Taiwan and Southeast Asia are well-established and have provided a strong foundation for the success of the NSP and the NSP Plus. Taipei is one of ASEAN’s top trading partners, ranking 6th last year, with exports reaching US$87.8 billion, a 15.1 percent increase from the previous year. The nation’s technology-focused, non-political approach allows it to sidestep the geopolitical challenges typically associated with diplomatic relations. While competing with global powers such as the US, the EU, Japan and South Korea, which are ramping up investments in Southeast Asia, Taiwan’s leadership in semiconductors and digital infrastructure gives it a distinct competitive advantage, making it a key player in the region’s digital future.
As Southeast Asia pursues digital growth, Taiwan’s technology and expertise can be pivotal. However, Taiwan should navigate the evolving geopolitical landscape carefully. By positioning itself as a trusted technology partner, the nation could strengthen its economic and strategic ties with Southeast Asia, securing its role in the region’s digital future.
Tran Thi Mong Tuyen is a doctoral student at National Cheng Chi University, a former fellow at the Ministry of Foreign Affairs and a visiting scholar at National Taiwan University.
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