SINGAPORE: On a research trip in the middle of April, we found ourselves in Washington, bathed in springtime sunshine, with smiling tourists taking photos outside the White House. Speaking to US government officials and think tank analysts provided us quite a different picture: The raft of “Liberation Day” tariffs announced just days earlier, they said, was “an exercise in unbridled chaos”. 

Now that the US and China are finally starting trade talks this weekend, there is some hope that weeks of brinksmanship between the world’s two largest economies might finally give way to something constructive.

Both sides need a deal. For Southeast Asia, it must be a deal that does not create more collateral damage, better still a deal that does not force countries to walk a tightrope between the two strategic rivals.

Southeast Asia worries about becoming the dumping ground for excess Chinese goods, about being forced to cough up exorbitant tariff fees to continue exporting to America, and the expectation to impose trade or investment restrictions on China.

It’s really all about China. American officials are brutally frank when it comes to Southeast Asia. They don’t hide their disinterest in the region.

The Trump 2.0 administration is focused on righting the “wrongs” of trade imbalances between the US and its trading partners. For now, it is less concerned about Washington’s strategic approach to Southeast Asia and the Indo-Pacific. Any ounce of interest comes in the form of lamenting the region’s sanguine approach to China, when Washington is keen to line up a defensive perimeter around China.

A COHERENT CHINA STRATEGY, OR LACK THEREOF

Yet it does not appear that Mr Trump has formed a coherent China strategy, apart from what is effectively a trade embargo on China and using tariffs to exert pressure on everyone else to limit their relationship with Beijing.

In the interim, it appears that the US’ lazy default on Taiwan and the South China Sea will be implicit deterrence. One think tank analyst reminded us of his favourite Trump quote about his relationship with Chinese President Xi Jinping: “I wouldn't have to (use military force), because he respects me and he knows I'm f****** crazy,”.

But Washington cannot have a coherent China strategy if it does not have at least some Southeast Asian cooperation or acquiescence.

The Indo-Pacific is the world’s new centre of gravity, and Southeast Asia lies at its core. The region’s economy will eventually reach US$4.5 trillion to become the world’s fourth biggest economy come 2030, overtaking economic powerhouses like Japan and Germany. With ASEAN and its related entities such as the East Asia Summit in its diplomatic toolkit, the grouping exercises some form of convening power among the major powers.

Southeast Asia also sees the US as a way to balance China, as suggested in the ISEAS-Yusof Ishak Institute’s 2025 State of Southeast Asia Survey. A significant portion of respondents welcomed Mr Trump’s strongman persona and his ability to stand up to China’s aggression, particularly in the South China Sea, though it should be noted the survey was conducted before “Liberation Day”.

The centre cannot hold, however. Speaking at this year's edition of the S Rajaratnam lecture in April, Singapore Prime Minister Lawrence Wong underscored how the post-World War II rules-based international order was fraying, given that the US is retreating from its traditional role as the guarantor of global order and no country is able to fill the void.

COURTING PARTNERS INTO EXISTING TRADE PACTS

A changed global order does not mean that Southeast Asian countries have no agency. The region is not without ammunition in the ongoing trade war between China and the US.

Courting trading partners who are looking for alternatives in the face of US tariffs is one. ASEAN may be a distinctive group of 10 economies but it has spun a complex web of bilateral and regional free trade agreements (FTAs) together as a collective grouping.

These include the Regional Comprehensive Economic Partnership (RCEP), the world’s largest FTA comprising 30 per cent of the world’s total GDP and population. Four ASEAN countries are also part of the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP), the precursor of which was abandoned by the first Trump Administration.

ASEAN’s proposed Digital Economic Framework Agreement, the world’s first regional digital economic trade agreement, could be another game changer in the burgeoning digital services trade. 

Despite on-off talks of an FTA with ASEAN, the EU has held back due to reservations about ASEAN’s ability to harmonise and meet up to stringent EU trade, environment and human rights rules. The perfect cannot be the enemy of good. It would be timely for the two blocs to revive and accelerate these talks. 

The EU also needs to consider if joining the RCEP and CPTPP could help to bolster its own trade resilience and strengthen its equally precarious trade position vis-a-vis the US. Similarly, an expansion of the CPTPP – which Indonesia, China, Taiwan, Costa Rica, Uruguay and Ecuador have applied to join –  would serve to extend and strengthen trade linkages between Asia, Latin America and Europe.

The real cherry on the cake will be getting India to join the club. It is the fifth-largest economy by gross domestic product and soon-to-be the world’s third-largest consumer economy, and its young demographic dividend is alluring.

Getting India to enter more trade pacts has been difficult. But on May 6, it struck a mega deal with the United Kingdom which may be indicative that India is open to trade agreements in this volatile geoeconomic environment.

A DEFENCE SHAKEDOWN

On the security front, regional countries are not holding their breath either. If Mr Trump can settle tariff negotiations with Southeast Asian countries, a proper approach would be to use the “Free and Open Indo-Pacific” strategy to get US allies and partners to uphold principles, such as freedom and navigation and no recourse to the use of force, as an implicit deterrent on China.

For now, Trump 2.0 appears to be heading in the right direction. In his first meeting with Quad leaders in January, Secretary of State Marco Rubio upheld this strategy. In his inaugural tour of Japan and the Philippines in March, Secretary of Defense Pete Hegseth stressed that America First does not mean America Alone.

But such a traditional US approach to regional security cannot be assured. The fear is that the US will shake down its allies and partners to carry more of the defence burden as the US cuts back on its forward-deployed posture. 

No wonder, there is talk about Southeast Asian countries deepening security cooperation with Quad countries sans the US, and revived debates about South Korea and Japan breaking the taboo on nuclear weapons.

As the US-led world order frays in a multipolar one, Southeast Asian countries still retain agency to chart their own paths.

Source: Channel News Asia (published 10/5/2025)

Link: Commentary: Time for ASEAN to court new partners in its web of free trade agreements

[SINGAPORE] A regional power grid that allows for electricity trade between Asean nations, if fully realised, could unlock projects that can deliver up to 25 gigawatts (GW) of renewable power and energy storage, based on research by Rystad Energy.

The projects, spanning hydropower, solar and offshore wind, would be worth more than US$40 billion in investment across the region, and benefit Singapore the most, said the energy research firm on Tuesday (Jun 3).

However, realising the regional power grid blueprint, which was first brought up in the late 1990s, will not be smooth sailing.

“Singapore stands to benefit the most from South-east Asia’s emerging regional grid, but realising these gains will require coordinated, win-win cooperation with supplier countries, many of which may see limited direct advantage in linking up with another market,” said Raksit Pattanapitoon, lead renewables and power analyst of Asia-Pacific at Rystad Energy.

The city-state can help neighbouring countries, where land is more abundant and power demand is less concentrated, by leveraging its financial strength and partnerships to unlock the infrastructure capital needed, noted Raksit.

He added that grid resilience, with strong interconnections and sufficient grid-connected storage, must be a key priority, as highlighted by the recent blackouts in the Iberian Peninsula.

“Cost-effective alternative”

Singapore relies heavily on natural gas for power generation, with gas currently accounting for 96 per cent of its power mix, according to Rystad Energy’s report.

The Republic has been using combined-cycle gas turbine (CCGT) plants that burn natural gas to generate electricity, and use the resulting hot exhaust to produce steam that drives a secondary turbine.

Rystad Energy’s analysis shows that electricity imports via the power grid would offer a “more cost-effective alternative to building new domestic CCGT capacity”.

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While these projects to import power are already more affordable than building a new CCGT, they also lower the cost of electricity with higher efficiency of energy usage, as proxied by the load factor, said Raksit.

The Energy Market Authority (EMA) requires projects to achieve an annual load factor of at least 60 per cent within five years of commercial operation, ensuring a steady and dependable power supply for the nation, noted Rystad Energy. It highlighted that the projects’ developers have a “strong economic incentive” to exceed the 60 per cent benchmark for the load factor.

“Developers of these import projects are sizing the installed capacity to exceed EMA’s minimum 60 per cent load factor and seem to be aiming for near 100 per cent load factor,” Raksit shared with The Business Times.

The analysis shows that raising the load factor target from 60 per cent to 100 per cent can substantially lower the average cost of electricity generation over the lifetime of a power plant, or the overall levelised cost of electricity (LCOE), by spreading transmission costs more effectively and unlocking capital expenditure efficiencies through economies of scale.

“This impact is particularly significant (for renewable energy imports) in countries such as Malaysia (Sarawak), Cambodia and Vietnam, where long transmission distances amplify cost-optimisation benefits. Hydropower projects, in particular, benefit from these scaling effects, resulting in even-greater cost reductions,” stated the report.

Solar-plus-storage hybrid systems can already achieve load factors above 90 per cent, both technically and economically. Rystad Energy noted that such systems, with both a battery energy storage system (Bess) and necessary backups, can reach the level of reliability required by Singapore’s EMA and could be comparable to other dispatchable energy sources.

Nevi Cahya Winofa, analyst of renewables and power research at Rystad Energy, said: “Current cost analyses indicate these hybrid systems could deliver lower LCOEs than many in the industry currently anticipate.”

She added that Singapore must proactively identify and secure unique advantages to maximise shared value in the emerging regional power grid.

EMA, on Friday, granted the sixth conditional licence to a low-carbon electricity import project, after raising the import target to around 6 GW by 2035, up from the initial target of 4 GW announced in 2021.

The Singapore government would be open to more electricity imports beyond the current 6 GW target as the country’s energy needs grow, EMA’s director of energy connections office Faith Gan told BT.

Source: The Business Times (published 3/6/2025)

Link: Asean power grid could unlock 25 GW of renewable capacity, lowering Singapore’s electricity costs: Rystad Energy - The Business Times

Consolidation will benefit the region’s major players such as Shopee and Grab.

[SINGAPORE] E-commerce in South-east Asia has reached profitability in 2024, with regional sales expected to more than double from US$184 billion last year to US$410 billion by 2030 – a 14 per cent compound annual growth rate over the period.

This was one of the key findings of the DBS Nextwave Southeast Asia 2025 report that was released on Wednesday (May 14). This report is the first edition in a series exploring Asia’s digital economy and was developed in partnership with market data and insights firm Cube.

The report noted that e-commerce sales in the region today has increased from US$4 billion to more than US$180 billion between 2012 and 2024, as more consumers embrace e-commerce as their preferred mode to purchase goods.

It added that the likes of Shopee, Lazada and Grab were among the key winners of this growth as they achieved profitability, as increased consolidation among the top platforms in recent years have seen them gain market share from the smaller competitors.

These larger platforms currently command more than 70 per cent of total online sales in South-east Asia, with many smaller firms shutting down due to competition and market dominance.

The report said the factors contributing to the e-commerce giants’ profitability include greater consolidation, commission fee increases and a greater prioritisation of core business offerings.

“Several also invested in vertical ‘e-commerce-adjacent’ business models – such as warehousing and last-mile delivery – to drive operational efficiency and improve customer service,” the report said.

“There is now a class of profitable and entrenched winners who guarantee greater stability while simultaneously making it harder for new entrants to compete.”

Over in China, major players such as Alibaba experienced declining market shares from 2015 to 2024 due to stiff competition from newer entrants such as ByteDance and Pinduoduo.

And in the US, which is seen as a more mature e-commerce market, top platforms such as Amazon and MercadoLibre largely maintained their market shares, while smaller entrants provide specialised e-commerce experiences to cater to a more diverse set of preferences from consumers.

According to the DBS report, the US is where advanced digital infrastructure and consumer preferences have shaped a more diverse online landscape.

“Convenience-focused platforms Amazon and Walmart share the market with a long tail of omni-channel players and specialised e-tailers. The US market offers a clue that South-east Asia’s consumers may seek a more diverse set of e-commerce experiences over time,” the report said.

What future entrants should be aware of

Investors prefer more sustainable business models and realistic projects to provide their funding to. This is even as they conduct more rigorous due diligence, suggesting a greater difficulty in attracting funding for new entrants.

The report said that investors prefer companies with proven business models, such as personalised shopping experiences, to grow customer loyalty, which shows future growth potential in their market shares. 

Chua Shih Guan, head of Digital Economy Group, Institutional Banking at DBS, said: “As the region’s e-commerce sector matures, we are seeing a shift from simply offering promotions and discounts to more innovative and differentiated customer experiences.”

“We believe these platforms will grow profitably and play a crucial role as conduits for the next wave of South-east Asian innovation,” says DBS’ Chua Shih Guan. PHOTO: DBS

Entrants should also focus sustainable growth such as seeking balanced capital structures with a focus on credit-backed growth to lower the cost of capital. 

For example, utilising credit reduces costs compared to equity due to more tax-deductibles and the use of credit not diluting existing shareholders’ equity.

Other tools that can be capitalised are new lines of financing such as term loans to finance specific projects and revolving credit which provides companies to a line of credit that can be drawn as needed. 

“We believe these platforms will grow profitably and play a crucial role as conduits for the next wave of South-east Asian innovation. This evolution may also require founders to pair fundraising with credit solutions earlier on in their journey,” said Chua.

Source: The Business Times (published 14/5/2025)

Link: E-commerce sales in South-east Asia to more than double to US$410 billion by 2030: DBS report - The Business Times

Singapore and Malaysia take lion’s share of the amount, notes study by Bain & Co and Temasek.

[SINGAPORE] South-east Asia managed to attract US$8 billion in green investments from the private sector in 2024, up 43 per cent from the previous year, according to a joint report by Bain & Company and Temasek released on Tuesday (May 6).

About 70 per cent of these investments came from foreign investors. This was a stark contrast from the previous year, when only 30 per cent were from foreign sources.

Out of the six South-east Asian markets studied in the report – which was also authored by Google, Standard Chartered, as well as Temasek-backed decarbonisation investment platform GenZero – it found that Malaysia and Singapore took the lion’s share of the US$8 billion.

Green investment into Malaysia increased by 124 per cent to US$2.3 billion, making up about 29 per cent of the total sum of investments. Green fund flows into Singapore accounted for 33 per cent, as they jumped 194 per cent from the previous year to US$2.7 billion.

The other four markets – the Philippines, Thailand, Indonesia and Vietnam – saw a reduction in green investments.

Indonesia suffered the worst decline, dropping 22 per cent to US$1.2 billion. This was followed by Vietnam, which had a 19 per cent reduction to US$161 million.

Green investments into the Philippines went down by 12 per cent to US$1.3 billion, while Thailand experienced a drop of 10 per cent to US$355 million.

When analysing the allocation of green investments across different project types, about two-thirds went into clean power projects, particularly solar which saw capital flows doubling from the previous year and accounted for 21 per cent of the total green investments in 2024.

Investments into industrial waste management, which made up 9 per cent of the total fund flows, also increased, primarily driven by water treatment and recycling projects.

In contrast, electric vehicles (EVs) and agricultural productivity experienced a decline in investments.

Despite the jump in green investments, the report noted that there is still a funding gap of about US$50 billion for these six Asean markets to meet their stated climate pledges by 2030.

To make good on these promises by 2030, South-east Asia has to reduce its emissions by another 600 million tonnes of carbon dioxide equivalent (tCO2e).

Solutions to accelerate the green transition

To accelerate the clean energy transition, the report advocates for a systems-based approach that involves identifying systemic barriers, finding high-impact solutions and prioritising those with the highest ability to drive lasting change. 

This is because the region’s green economy is a set of linked systems, where changes in one area can affect others.

The report identified three systems-level solutions that are important for South-east Asia to decarbonise: a sustainable bio-economy, an EV ecosystem, as well as growing its renewable energy along with developing the Asean Power Grid.

A sustainable bio-economy would involve leveraging South-east Asia’s natural capital for economic benefit and carbon reduction through sustainable agriculture, expanding nature-based solutions, and scaling bio-waste utilisation.

EV adoption could be accelerated by implementing buyer incentives, developing the necessary infrastructure as well as its regional supply chains.

Investing in grid infrastructure can help eliminate a critical bottleneck in scaling up renewable power generation, with long-term positive impacts on regional energy security and affordability.

The report estimates that such an approach could help these Asean economies grow by US$120 billion by 2030, potentially bring about 900,000 green economy jobs, and close the emissions gap of 600 million tCO2e by half to 300 million tCO2e.

It also noted that these three systems-based solutions may also attract up to US$55 billion in annual investments by 2030, which could potentially serve to shore up foreign direct investments during an economic slowdown.

Climate and transition finance, carbon markets, as well as green artificial intelligence (AI) have also been identified in the report as key enabling solutions.

Growing the sum of sustainable and transition financing requires expanding access to capital through innovative financing models, regional financing frameworks and enhanced risk-sharing mechanisms.

To grow the region’s carbon markets, the report said there was a need to establish domestic and regionally connected carbon markets, put in place stronger carbon policies to drive demand, as well as increase the supply of large-scale verifiable credit projects.

As for green AI, it involves advancing AI-driven sustainability solutions while ensuring viable data-centre growth.

Source: The Business Times (Published 6/5/2025)

[BANGKOK] Massive planned US duties on solar panels made in South-east Asia could be a chance for the region to ramp up its own long-stalled energy transition, experts say.

Earlier this month, Washington announced plans for hefty duties on solar panels made in Cambodia, Vietnam, Thailand and Malaysia.

The levies follow an investigation, launched before US President Donald Trump took office, into “unfair practices” in the countries, particularly by Chinese-headquartered firms.

If approved next month, they will pile upon tariffs already imposed by the Trump administration, including blanket 10per cent levies for most countries, and 145 per cent on Chinese-made goods.

For the US market, the consequences are likely to be severe. China makes eight out of every 10 solar panels globally, and controls 80 per cent of every stage of the manufacturing process.

The new tariffs “will practically make solar exports to US impossible commercially”, said Putra Adhiguna, managing director at the Energy Shift Institute think tank.

South-east Asia accounted for nearly 80 per cent of US solar panel imports in 2024.

And while investment in solar production has ramped up in the United States in recent years, the market still relies heavily on imported components.

For Chinese manufacturers, already dealing with a saturated domestic market, the raft of tariffs is potentially very bad news.

Many shifted operations to South-east Asia hoping to avoid punitive measures imposed by Washington and the European Union as they try to protect and nurture domestic solar industries.

The proposed new duties range from around 40 per cent for some Malaysian exports to an eye-watering 3,521 per cent for some Cambodia-based manufacturers.

Tariffs ‘accelerate’ transition

But there may be a silver lining for the region, explained Ben McCarron, managing director at Asia Research & Engagement.

“The tariffs and trade war are likely to accelerate the energy transition in South-east Asia,” he said.

China will “supercharge efforts” in regional markets and push for policy and implementation plans to “enable fast adoption of green energy across the region”, driven by its exporters.

Analysts have long warned that countries in the region are moving too slowly to transition from planet-warming fossil fuels such as coal.

“At the current pace, it (South-east Asia) risks missing out on the opportunities provided by the declining costs of wind and solar, now cheaper than fossil fuels,” said energy think tank Ember in a report last year.

For example, Malaysia relied on fossil fuels for over 80 per cent of its electricity generation last year.

It aims to generate 24 per cent from renewables by 2030, a target that has been criticised as out of step with global climate goals.

The tariff regime represents a double opportunity for the region, explained Muyi Yang, senior energy analyst at Ember.

So far, the local solar industry has been “largely opportunistic, focused on leveraging domestic resources or labour advantages for export gains”, he told AFP.

Cut off from the US market, it could instead focus on local energy transitions, speeding green energy uptake locally and driving a new market that “could serve as a natural hedge against external volatility”.

Still, replacing the US market will not be easy, given its size and the relatively nascent state of renewables in the region.

“Success hinges on turning this export-led momentum into a homegrown cleantech revolution,” said Yang.

“Clearance prices” may be attractive to some, but countries in the region and beyond may also be cautious about a flood of solar, said Adhiguna.

Major markets such as Indonesia and India already have measures in place intended to favour domestic solar production.

“Many will hesitate to import massively, prioritising trade balance and aims to create local green jobs,” he said. AFP

Source: The Business Times (Published 4/5/2025)

China and the Association of Southeast Asian Nations (ASEAN) have completed negotiations to further refine their free trade area to include the digital and green economy and other new industries, China's commerce ministry said on Wednesday (May 21).

ASEAN, made up of 10 Southeast Asian countries, is China's largest trading partner, with the value of total trade reaching US$234 billion in the first quarter of 2025, according to Chinese customs data.

The so-called 3.0 version of the free trade area will "inject greater certainty into regional and global trade and play a leading and exemplary role for countries to adhere to openness, inclusiveness and win-win cooperation," the statement said.

Negotiations began in November 2022, and the agreement covers areas including the digital economy, green economy, and supply chain connectivity, the statement said.

The pact will "promote the deep integration of the production and supply chains of both sides", it added.

China has intensified engagement with ASEAN since US President Donald Trump announced hefty import tariffs on countries around the world and targeted China with even heavier levies. Some of the levies have since been delayed while China and the US agreed this month to pause some of their tariffs.

President Xi Jinping took a three-nation tour of Southeast Asia in April to consolidate ties with some of China's closest neighbours, calling on Asian nations to unite against what he called geopolitical confrontation, unilateralism and protectionism.

The formal signing of the trade agreement is expected to take place before the end of the year. The ASEAN-China Free Trade Area was first signed in 2002 and came into force on Jan 1, 2010.

Brunei Darussalam’s economy recorded a growth of 4.2 per cent in 2024, with a decline in domestic inflation by 0.4 per cent, according to the Annual Report and Financial Stability Report for 2024 released by Brunei Darussalam Central Bank (BDCB).

The decline was supported by government subsidies and price controls on certain consumer items, as well as the country’s monetary policy, based on a currency board arrangement and underpinned by the Currency Interchangeability Agreement with Singapore.

The annual report highlights the central bank’s key achievements in delivering its mandates and policy developments in 2024 as well as its strategic priorities for 2025. Among the key highlights covered are as follows:

The central bank continued to support a strong and stable financial sector that protects consumers and aligns with international standards by introducing several key policies in 2024. These focused on enhancing liquidity risk management for banks, strengthening customer due diligence and transparency and improving the resilience and cybersecurity of critical systems of financial institutions.

Extensive onsite and offsite inspections on financial institutions were conducted throughout 2024 to assess their governance and internal controls, risk management, financial resilience, adherence to anti-money laundering and combating the financing of terrorism (AML/CFT) regulations, Syariah compliance and technology risk controls.

In its efforts to nurture the development of Brunei Darussalam’s financial sector, the central bank launched the inaugural Brunei Darussalam Islamic Finance Symposium, which showcased Islamic finance as a driver of economic growth. The central bank also launched the Mekar FinTech Innovation Centre to support the growing FinTech ecosystem in Brunei Darussalam.

Source: Borneo Bulletin

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