Innovation-led growth is becoming a structural necessity for Indonesia, Malaysia, Singapore, Thailand and Vietnam. Traditional export-led industrialisation faces diminishing returns, while digital and knowledge-based activity increasingly determines value capture.
The regional picture remains two-tiered. Singapore ranked fifth globally in the 2025 Global Innovation Index, while Malaysia ranked 34th, Vietnam 44th, Thailand 45th and Indonesia 55th. Vietnam's rise from 71st in 2014 was the strongest improvement among the group.
Each country has policy plans that point toward science, technology, digitalisation, artificial intelligence or advanced manufacturing. The issue is less the absence of ambition than the difficulty of converting plans and inputs into commercialisable outputs.
The weakest areas are found in business sophistication, innovation linkages and knowledge workers. These measures capture whether firms collaborate with universities, build clusters, finance research and absorb external technology.
The innovation efficiency ratio shows why aggregate rankings are not enough. Except for Singapore, the ratio fell across the group, and all remained below one in 2025, signalling that innovation ecosystems are not yet converting inputs into outputs at the required level.
