March 26, 2025 • 19 mins
Southeast Asia is an up-and-coming player in the energy transition. As the region’s production capacity has grown, so have its exports of key clean-power technologies. Within Southeast Asia, favorable policy has encouraged the growth of cheap renewable energy and electric vehicle adoption. Yet recent US tariffs and aid cuts have had an impact. Just how damaging have they been, and can better regional cooperation help mitigate the fallout? On today’s show, Dana Perkins is joined by Shantanu Jaiswal, BNEF’s head of India and Southeast Asia research, and analyst Felix Kosasih, to discuss some of BNEF’s recent research including “US Climate Fund Withdrawal Imperils Indonesia’s Transition” and “Southeast Asia in Short: Energy Storage, Net Zero Push”.
Complementary BNEF research on the trends driving the transition to a lower-carbon economy can be found at BNEF<GO> on the Bloomberg Terminal or on bnef.com
Links to research notes from this episode:
Southeast Asia in Short: Energy Storage, Net-Zero Push - https://www.bnef.com/insights/35639
US Climate Fund Withdrawal Imperils Indonesia’s Transition - https://www.bnef.com/shorts/ssqqiot0g1kw00?context=eyJxIjoic2luZ2Fwb3JlIiwiY29udGVudFR5cGUiOiJzaG9ydCIsInJlZ2lvbiI6W10sInNlY3RvciI6W10sImF1dGhvciI6W119
Net Zero Transition: Opportunities for Vietnam - https://www.bnef.com/insights/35529?context=eyJxIjoib3Bwb3J0dW5pdGllcyBmb3IgdmlldG5hbSIsImNvbnRlbnRUeXBlIjoiaW5zaWdodCIsInJlZ2lvbiI6W10sInNlY3RvciI6W10sImF1dGhvciI6W10sImluc2lnaHQtdHlwZSI6W119
Southeast Asia and Energy: Things to Watch in 2025 - https://www.bnef.com/insights/35745?context=eyJxIjoic2hhbnRhbnUiLCJjb250ZW50VHlwZSI6Imluc2lnaHQiLCJyZWdpb24iOltdLCJzZWN0b3IiOltdLCJhdXRob3IiOltdLCJpbnNpZ2h0LXR5cGUiOltdfQ==
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
This is Dana Perkins and you're listening to Switched On,
the podcast brought to you by BNF. South of China,
east of India north of Australia is the vast region
referred to as Southeast Asia, comprised of eleven countries where
an abundance of natural resources and manufacturing capacity can be found.
It's important to supply chains around the world. However, recently
(00:23):
tariffs on goods destined for the United States, including clean
energy equipment, have been impacted, and several countries in the
region are reacting. Closer to home. Within Southeast Asia, a
transformation is taking place with high electric vehicle adoption and
supportive clean energy policies. To tell us more about Southeast Asia,
I'm joined by Chantanujaiswaal, who heads b and EF's India
(00:45):
and Southeast Asia research, alongside analyst Felix Kosse. They draw
from their recent research notes titled US Climate Fund Withdrawal
in Perils, Indonesia's Transition, and Southeast Asia in short Energy
Storage net zero Push, which b any F clients can
find at BNF go on the Boomberg terminal or on
BNF dot Com. All right, let's get to talking about
(01:07):
Southeast Asia. Chantanu, thank you very much for joining today. Hey,
thanks for me and Felix. Great having you on the
show as well.
Speaker 2 (01:24):
Thanks for inviting me.
Speaker 1 (01:26):
So we're going to have a conversation today about Southeast
Asia as a region. But of course every region is
comprised of individual countries and subregions that have their own
fascinating story to tell, and we at BNF are always
trying to find opportunities as the world is changing, and
certainly when we think about a lot of the industries
covered at BNF, we're thinking about global trade, we're thinking
(01:48):
about manufacturing, supply chains and everything actually across the value
chain for the energy transition, and there are a number
of countries here that are either changing the way regulations
work and creating for an opportunities for investment, or maybe
particularly blessed with different natural resources which are really critical
for the energy transition. So let's get into what each
(02:11):
of these countries. We're not going to have time for
all of them, but what some of the countries in
Southeast Asia really have to offer for the future of
the transition. So let's start with definitions. There are eleven
countries broadly considered as Southeast Asia. Can we go through
and just make sure everyone is in agreement that we're
talking about the same set of countries? What are they?
Speaker 3 (02:33):
Thanks Sana, and thanks for starting off with that very
important question. And I say that because when I started
looking at Southeast Asia, when I started covering Southeast Asia,
it was very difficult for me to understand their region
because before I started working in the region, I always
thought of it as one coherent block and really didn't
(02:54):
understand the local nuances. But if you look at Southeast Asia,
there are eleven countries in the region. The popular of
this entire region is about seven hundred million, and if
you just look at the breadth of the region, it
is as big as Europe. It's a massive region. But
we at BNF we try to focus mostly on six
(03:14):
countries in the region, and they are Indonesia, Malaysia, Philippines, Vietnam,
Singapore and Thailand. If you look at all of these
six countries, then I tried a lot, but there is
no one way to categorize these countries into different buckets.
What usually needs to be done is to apply different
lenses and then see these countries from the lens of language, geography,
(03:38):
natural resources, economic output, politics, etc. All of these countries,
they do have some common attributes, but they also compete
with themselves. The region is actually laden with natural resources,
but it's spread out across vatest countries. There countries which
are rich in oil and gas deposits. There are countries
which are rich in coal deposits. Then there are countries
(03:58):
which have different renewers energy sources distributed amongst them while
they are between the tropics, and solar is definitely something
we just common to all the countries. But then there
is wind resources which are in very small pockets in
Vietnam or Philippines.
Speaker 1 (04:15):
So I mean, what I'm hearing from you is there
are sort of two conversations that we're going to have
which have to do first of all, with how countries
are investing in their own domestic energy supply and in
many respects adopting best available technologies and really thinking about
a really interesting grid that might be much more diverse
than other parts of the world. On the other side,
(04:37):
there are the natural resources that exist and you know,
as I referenced at the very beginning of the show,
things that we need for other parts of the energy
transition and will ultimately be exported to places all over
the world. Can you talk about some of the natural
resources that are so critical that are found in this
part of the world.
Speaker 3 (04:55):
So the region is actually quite blessed with natural resources.
It includes all oil, gas, coal, copper, gold, nickel, aluminum, titanium,
you just name it. Starting with the Militia for example,
it is one of the biggest producers of natural gas.
We have countries which are also producing goal in big quantities,
(05:17):
such as Indonesia. It is also the country that houses
forty percent of the world's liquor reserves, and in addition
to that, it also has significant quantities of rock, copper,
and box site, whereas Vietnam and Myanmar, they possess a
big chunk of the world's rare earth materials.
Speaker 1 (05:33):
So we did a show last year where we were
talking about how the United States had raised tariffs on
solar imports, and there are a number of countries in
Southeast Asia that were really involved in the solar manufacturing
and parts of the supply chain. So what I want
to understand is beyond what's happened most recently regarding increases
(05:54):
in tariffs for various countries all over the world, How
have those that were part of twenty twenty three in
the first half twenty twenty four. How have those tariffs
impacted solar in that region? What markets are they looking at?
Speaker 3 (06:07):
Last year, the US Department of Commerce, they introduced some
preliminary determinations for anti dumping and counterweilling duties.
Speaker 2 (06:14):
In the region.
Speaker 3 (06:15):
If you look at the total imports of solar cells
and modules in two e twenty three and to eight
twenty four, then about eighty percent of all of these
were exported from four countries in Southeast Asia Cambodia, Thaighland,
Vietnam and Malaysia. And the tariffs which were introduced they
ranged between fifteen percent to about sixty percent, and they
(06:35):
have had quite a bit of an impact over here.
So some Chinese manufacturers that we know of in these
four countries, they have cut down their production and open
facilities in Indonesia and Lawers which do not have a
tariff right now. In a way, what manufacturers are doing,
if they are trying to dodge tariffs from one country
and moving out to other, it's a game of waka mohle.
(06:55):
I think that they are trying to play over here.
What we also see I think is that battery makers
DA might also want to follow what Soudar manufacturers are
doing and try to touch their talents and move their
manufactually location to countries which are currently except from it.
Speaker 1 (07:10):
Okay, So bringing us up to speed with what's happening
then right now, there has been a lot of discussion
regarding tariffs and it's changing almost daily at the moment.
But when it comes to the US, with cuts in
US funding overseas and with raising tariffs for various countries,
how much of an impact has this had on some
of the countries in Southeast Asia?
Speaker 2 (07:31):
So far, we think the Trauma administration has not targeted
any particular southist Asian countries specifically, but as you frightly
pointed out, there's a huge element of uncertainty here going on.
We do know that President Trump quite dislikes thread deficits
with the United States, and if we look at the
top twenty countries with whom the US has a thread deficit,
there are actually five southast Asian countries on the top
(07:52):
twenty list, with Vietnam in particular sitting on number four,
with the deficit of about one hundred billion dollars as
of twenty twenty three. Generally, southis Asian governments are cautious
now and adopting a with n C approach now with
regards to the cuts in overseas funding. The most tangible
impact for South East Asia so far is definitely the
US departure from jet P Indonesia and Vietnam. Jet P
(08:14):
or CHESS Energy Transition Partnership is a program that were
meant to mobilize roughly twenty one and fifteen billion the
dollars for Indonesia and Vietnam, respectively, to accelerate the energy
transition in those countries. Now, developed countries commit roughly half
of the money in the form of grants, concessional loans,
commercial loans, and development banking guarantees, while the rest are
(08:36):
supposed to come from private financing. So we think the
impact of the US living jet P would be fed
relatively more strongly in Indonesia. That's because before it left,
the US was actually a co leader of jet B
Indonesia alongside Japan. In fact, it was the biggest single
country funder, contributing about a fifth of the program's eleven
billion public funding plot and furthermore, on top of that,
(08:57):
another fifth of JETP Indonesia's pub financing comes from the
countries Energy Transition Mechanism or ETM, which is a pool
of public and private funds meant to finance early retirement
of coal plants in emerging economies. The ETM is capitalized
by the WORD Bank, Asian Development Bank, and the Climate
Investment Funds, all of which the US is a major
(09:18):
contributor to. So if the US ends up cutting funding
to these institutions, then jet B Indonesia's funding may diminish.
Further Still, for Vietnam, roughly thirteen percent of Jetpea's public
funding was supposed to come from the US. The good
news here is we have seen new climate and REGI
related investment plans coming from countries like Japan and the
(09:38):
UK recently to Vietnam. Vietnam's government is pushing renewables development
quite strongly, as indicated by the latest Power Development Plan,
which contains plenty of win solar and battery storage. Now,
one thing I'd like to note here is that after
the US announced their departure from JETP, there have been
assurances coming from other countries like Japan, the EU and
(09:59):
European country that the JETP programs would continue However, at
the same time, we also know that Europe would need
to channel hundreds of billions of dollars into defense spending
in the near future. So it remains to be seen
whether they will be able to fill the hole that
the US has left in terms of climate financing well.
Speaker 1 (10:16):
And have these assurances come in the form of actual
financing as of yet or have they mostly been statements.
Speaker 2 (10:22):
Mostly they've been statements. There have been some plan funding,
So Japan, for example, have committed twenty billion dollars for Vietnam,
and the Development financing arm of the UK government has
said they will infest about two point eight billion to
countries in Southeast Asia, not just Indonesia and Vietnam.
Speaker 1 (10:38):
So Southeast Asia is full of a lot of countries
that have very different but important natural resources that are
part of the energy transition as well as manufacturing capacity.
So what I want to do is kind of deal
rapid fire through a couple of these countries and talk
about the things that have really stood out to you
and your research over the past year and kind of
what has been the most interesting thing. Let's start and
(11:00):
the most populous country in the region, which is Indonesia,
which is also the fourth most populous country in the world.
What stood out to you most about where they are
in terms of opportunities for investors and for really where
they are in the energy transition as a manufacturer of
really critical equipment.
Speaker 2 (11:19):
So I think in Indonesia, I think that's most exciting
is that Indonesia is finally becoming quite good at not
just mining and extracting its resources, but also processing them
at adding value that it can capture instead of just
exporting row minerals to other countries, which is what tends
to happen in the past. Since the past approximately I
think five to seven years or so, Indonesia has aggressively
(11:41):
been pursuing this policy called mineral downstreaming, and what it
means is basically, Indonesia wants the row minerals that are
mined in its territory to be refined, process and then
made into a final product also within Indonesia, and then
those final products can get exported so that Indonesia gets
more value economic value from the products. One good example
(12:01):
for this is Indoniesia is no longer just mining its
fast nickel wealth, but now it's building refining plants. It's
starting to build a strong battery and ev supply chain
within the country, and we have seen many investors coming
from China, South Korea. They are building battery plants here,
electric vehicle plants here. And what Indoniesia has been planning
for a few years is finally starting to turn into
(12:23):
reality that it is able to produce electric vehicles and
batteries using local materials. We didn't region.
Speaker 1 (12:29):
Okay, so let's now go to Vietnam, which is a
country that is installing a lot of renewable energy capacity domestically.
Why is that happening and what is the most interesting
thing happening in Vietnam at the moment.
Speaker 3 (12:40):
The most interesting thing happening in Vietnam right now is
the policy push towards having more corporate cream power purchases.
Just has been a big manufacturing hub for major companies,
but has lacked the incentives that some of the other
countries can provide. But it is blessed with plenty of
human resources and it is one of the leaders in
Southeast Asia for having policies which encourage investments from private
(13:04):
sector participants into renewable energy. In fact, looking at Vietnam now,
all major countries are also starting to come up with
their own direct power purchaser remian policies, which will encourage
more renewables to be built out just for corporate purchases.
Speaker 1 (13:17):
So speaking of leaders PENAF does an assessment of renewable
energy investment across developing countries all over the world and
number two has been the Philippines this last year. Why
is the Philippines such an exciting place for investment at
the moment?
Speaker 3 (13:32):
Philippino is one of the most exciting places in Southeast
Asia because it has the most liberalized power market in
the country. While there have been some restrictions in the past,
the country is trying to overcome some of those bottlenecks
and have more private sector participation. We have seen a
lot of investments and batteries. In fact, Philippines is the
only country in the Southeast Asia region where some meaningful
(13:55):
amount of batteries are being deployed on the grid, all
because of its liberal power market, which enables batteries to
play a role in the an sile services market. There
are big companies, big powerhouse chiant companies that are in
the region which are also developing projects not only in
the country, but now are expanding outwards as well.
Speaker 1 (14:16):
So geographically limited but certainly ambitious when it comes to
emissions targets. Is Singapore, can you talk us through what
their emissions targets are and what their path is to
actually reaching them. Is really a place to set the
example for other parts of the world on how to
go after really ambitious targets.
Speaker 3 (14:34):
So Singapore is one of the smallest countries in the region,
but it has massive power requirements. It is one of
the developed countries in the region which has the ability
to pay for expensive power as well. Currently, it produces
ninety four percent of its electricity from gas fed power
plants and very little of it comes from deniber energy.
But the Singapore Energy Market Authority wants to change that.
(14:56):
It is trying four different strategies to decognize the country.
First of all, it wants to ramp up solar deployment
across the country, especially rooftop solar projects, but there are
limitations because of the overall physical land that Singapore has.
But in the long term, the country wants to increase
newer energy imports from various neighboring countries. Currently, Singapore imports
(15:18):
power from Malaysia, but it's in very small megawatt scale capacities,
but we are going to see kigawatt scale capacities come
online very soon, especially in neighboring Indonesia, where three point
five gigawatsoft projects could be powered up in the near future.
Speaker 1 (15:33):
So what's really interesting about this is that Singapore's plans
for meeting their net zero targets is actually working with
other Southeast Asian countries as a block in order to
make sure that power production is clean and it's being
piped from the right places where that might be happening.
So their physical limitations actually aren't limitations at all if
you see them as a member of Southeast Asia.
Speaker 3 (15:53):
I think I think the idea would be that the
new power demand that is created in the country that
could be met by renewables or cleaner sources of energy
from these neighboring countries, because it also has a target
for NED zero by twenty fifty, so they need to
do something.
Speaker 1 (16:08):
So while we started the show by saying all of
these countries are so different and they have different policies
and different natural resources, and so the dynamics so we're
going to talk about are different, I think we've seen
that is certainly the case as we have gone country
by country, I'm going to now ask you to bring
your thoughts back to Southeast Asia as a region. So
when we think about assion as a group of countries,
(16:31):
so the Association of Southeast Asian Nations, so this is Indonesia, Vietnam, Laos, Brunei, Thailand,
Me and mar the Philippines, Cambodia, Singapore and Malaysia. There
are discussions at the moment about interconnectors and having a
grid that would actually create connections between these countries. Where
does that currently stand and how might we see a
(16:53):
power network that actually does see this region as something
that is cohesive.
Speaker 3 (16:58):
So the idea of having interconnected grid in Southeast Asia
or ic and region is not new. And the critics,
if you talk to them right now, they'd argue that
the countries in Southeast Asia, they have aspired to build
a regional power since the nineteen nineties, but the progress
has been very slow for most of the time since then.
(17:18):
It was a good idea even then to have interconnected grid,
but perhaps because of energy security concerns, many countries, including Singapore,
considered it was best to generate power within the country.
But recently we have seen a much stronger momentum because
renewable energy has become much cheaper and countries realized that
deploying more clean power can help them attract more foreign investments,
(17:41):
especially in sectors like data centers, industry, and mining. And
Singapore is in the heart of this discussion right now
because it's a small country with very few resources. It
imports almost everything, and so why not electricity as well.
Building high capacity grid connections between Singapore and its neighbors
(18:01):
would be a very important step in realizing in ACA
and white power grid and this would boost network stability
and reliability in the region as well as it will
help intermittent renewals grow in the coming decades as demand
for renewbrielogy increases not only in Singapore but across the
region as well.
Speaker 1 (18:19):
So this is a dynamic region that is looking at
tariffs but actually finding ways to ensure that the manufacturing
equipment that they're making is still very much a part
of the energy transition. I'm sure there's a lot to watch,
and as we see global supply chains maintain this level
of dynamism, I'm sure Southeast Asia will stay front and center.
Thank you for sharing your thoughts. On your research and
(18:41):
for taking us around the region and telling us some
of the most interesting things happening. Shantanu Felix, thank you
so much for joining the show today.
Speaker 3 (18:48):
Well, thanks Jenna, it was great to be on the
show as well.
Speaker 2 (18:50):
Thank you, Thanks Lena, and this was fun.
Speaker 1 (19:00):
Today's episode of Switched On was produced by Cam Gray
with production assistance from Kamala Shelling. Bloomberg NEIF is a
service provided by Bloomberg Finance LP and its affiliates. This
recording does not constitute, nor should it be construed as investment,
a vice, investment recommendations, or a recommendation as to an
investment or other strategy. Bloomberg ANIF should not be considered
(19:21):
as information sufficient upon which to base an investment decision.
Neither Bloomberg Finance LP nor any of its affiliates makes
any representation or warranty as to the accuracy or completeness
of the information contained in this recording, and any liability
as a result of this recording is expressly disclaimed.
This is Dana Perkins and you're listening to Switched On,
the podcast brought to you by BNF. South of China,
east of India north of Australia is the vast region
referred to as Southeast Asia, comprised of eleven countries where
an abundance of natural resources and manufacturing capacity can be found.
It's important to supply chains around the world. However, recently
(00:23):
tariffs on goods destined for the United States, including clean
energy equipment, have been impacted, and several countries in the
region are reacting. Closer to home. Within Southeast Asia, a
transformation is taking place with high electric vehicle adoption and
supportive clean energy policies. To tell us more about Southeast Asia,
I'm joined by Chantanujaiswaal, who heads b and EF's India
(00:45):
and Southeast Asia research, alongside analyst Felix Kosse. They draw
from their recent research notes titled US Climate Fund Withdrawal
in Perils, Indonesia's Transition, and Southeast Asia in short Energy
Storage net zero Push, which b any F clients can
find at BNF go on the Boomberg terminal or on
BNF dot Com. All right, let's get to talking about
(01:07):
Southeast Asia. Chantanu, thank you very much for joining today. Hey,
thanks for me and Felix. Great having you on the
show as well.
Speaker 2 (01:24):
Thanks for inviting me.
Speaker 1 (01:26):
So we're going to have a conversation today about Southeast
Asia as a region. But of course every region is
comprised of individual countries and subregions that have their own
fascinating story to tell, and we at BNF are always
trying to find opportunities as the world is changing, and
certainly when we think about a lot of the industries
covered at BNF, we're thinking about global trade, we're thinking
(01:48):
about manufacturing, supply chains and everything actually across the value
chain for the energy transition, and there are a number
of countries here that are either changing the way regulations
work and creating for an opportunities for investment, or maybe
particularly blessed with different natural resources which are really critical
for the energy transition. So let's get into what each
(02:11):
of these countries. We're not going to have time for
all of them, but what some of the countries in
Southeast Asia really have to offer for the future of
the transition. So let's start with definitions. There are eleven
countries broadly considered as Southeast Asia. Can we go through
and just make sure everyone is in agreement that we're
talking about the same set of countries? What are they?
Speaker 3 (02:33):
Thanks Sana, and thanks for starting off with that very
important question. And I say that because when I started
looking at Southeast Asia, when I started covering Southeast Asia,
it was very difficult for me to understand their region
because before I started working in the region, I always
thought of it as one coherent block and really didn't
(02:54):
understand the local nuances. But if you look at Southeast Asia,
there are eleven countries in the region. The popular of
this entire region is about seven hundred million, and if
you just look at the breadth of the region, it
is as big as Europe. It's a massive region. But
we at BNF we try to focus mostly on six
(03:14):
countries in the region, and they are Indonesia, Malaysia, Philippines, Vietnam,
Singapore and Thailand. If you look at all of these
six countries, then I tried a lot, but there is
no one way to categorize these countries into different buckets.
What usually needs to be done is to apply different
lenses and then see these countries from the lens of language, geography,
(03:38):
natural resources, economic output, politics, etc. All of these countries,
they do have some common attributes, but they also compete
with themselves. The region is actually laden with natural resources,
but it's spread out across vatest countries. There countries which
are rich in oil and gas deposits. There are countries
which are rich in coal deposits. Then there are countries
(03:58):
which have different renewers energy sources distributed amongst them while
they are between the tropics, and solar is definitely something
we just common to all the countries. But then there
is wind resources which are in very small pockets in
Vietnam or Philippines.
Speaker 1 (04:15):
So I mean, what I'm hearing from you is there
are sort of two conversations that we're going to have
which have to do first of all, with how countries
are investing in their own domestic energy supply and in
many respects adopting best available technologies and really thinking about
a really interesting grid that might be much more diverse
than other parts of the world. On the other side,
(04:37):
there are the natural resources that exist and you know,
as I referenced at the very beginning of the show,
things that we need for other parts of the energy
transition and will ultimately be exported to places all over
the world. Can you talk about some of the natural
resources that are so critical that are found in this
part of the world.
Speaker 3 (04:55):
So the region is actually quite blessed with natural resources.
It includes all oil, gas, coal, copper, gold, nickel, aluminum, titanium,
you just name it. Starting with the Militia for example,
it is one of the biggest producers of natural gas.
We have countries which are also producing goal in big quantities,
(05:17):
such as Indonesia. It is also the country that houses
forty percent of the world's liquor reserves, and in addition
to that, it also has significant quantities of rock, copper,
and box site, whereas Vietnam and Myanmar, they possess a
big chunk of the world's rare earth materials.
Speaker 1 (05:33):
So we did a show last year where we were
talking about how the United States had raised tariffs on
solar imports, and there are a number of countries in
Southeast Asia that were really involved in the solar manufacturing
and parts of the supply chain. So what I want
to understand is beyond what's happened most recently regarding increases
(05:54):
in tariffs for various countries all over the world, How
have those that were part of twenty twenty three in
the first half twenty twenty four. How have those tariffs
impacted solar in that region? What markets are they looking at?
Speaker 3 (06:07):
Last year, the US Department of Commerce, they introduced some
preliminary determinations for anti dumping and counterweilling duties.
Speaker 2 (06:14):
In the region.
Speaker 3 (06:15):
If you look at the total imports of solar cells
and modules in two e twenty three and to eight
twenty four, then about eighty percent of all of these
were exported from four countries in Southeast Asia Cambodia, Thaighland,
Vietnam and Malaysia. And the tariffs which were introduced they
ranged between fifteen percent to about sixty percent, and they
(06:35):
have had quite a bit of an impact over here.
So some Chinese manufacturers that we know of in these
four countries, they have cut down their production and open
facilities in Indonesia and Lawers which do not have a
tariff right now. In a way, what manufacturers are doing,
if they are trying to dodge tariffs from one country
and moving out to other, it's a game of waka mohle.
(06:55):
I think that they are trying to play over here.
What we also see I think is that battery makers
DA might also want to follow what Soudar manufacturers are
doing and try to touch their talents and move their
manufactually location to countries which are currently except from it.
Speaker 1 (07:10):
Okay, So bringing us up to speed with what's happening
then right now, there has been a lot of discussion
regarding tariffs and it's changing almost daily at the moment.
But when it comes to the US, with cuts in
US funding overseas and with raising tariffs for various countries,
how much of an impact has this had on some
of the countries in Southeast Asia?
Speaker 2 (07:31):
So far, we think the Trauma administration has not targeted
any particular southist Asian countries specifically, but as you frightly
pointed out, there's a huge element of uncertainty here going on.
We do know that President Trump quite dislikes thread deficits
with the United States, and if we look at the
top twenty countries with whom the US has a thread deficit,
there are actually five southast Asian countries on the top
(07:52):
twenty list, with Vietnam in particular sitting on number four,
with the deficit of about one hundred billion dollars as
of twenty twenty three. Generally, southis Asian governments are cautious
now and adopting a with n C approach now with
regards to the cuts in overseas funding. The most tangible
impact for South East Asia so far is definitely the
US departure from jet P Indonesia and Vietnam. Jet P
(08:14):
or CHESS Energy Transition Partnership is a program that were
meant to mobilize roughly twenty one and fifteen billion the
dollars for Indonesia and Vietnam, respectively, to accelerate the energy
transition in those countries. Now, developed countries commit roughly half
of the money in the form of grants, concessional loans,
commercial loans, and development banking guarantees, while the rest are
(08:36):
supposed to come from private financing. So we think the
impact of the US living jet P would be fed
relatively more strongly in Indonesia. That's because before it left,
the US was actually a co leader of jet B
Indonesia alongside Japan. In fact, it was the biggest single
country funder, contributing about a fifth of the program's eleven
billion public funding plot and furthermore, on top of that,
(08:57):
another fifth of JETP Indonesia's pub financing comes from the
countries Energy Transition Mechanism or ETM, which is a pool
of public and private funds meant to finance early retirement
of coal plants in emerging economies. The ETM is capitalized
by the WORD Bank, Asian Development Bank, and the Climate
Investment Funds, all of which the US is a major
(09:18):
contributor to. So if the US ends up cutting funding
to these institutions, then jet B Indonesia's funding may diminish.
Further Still, for Vietnam, roughly thirteen percent of Jetpea's public
funding was supposed to come from the US. The good
news here is we have seen new climate and REGI
related investment plans coming from countries like Japan and the
(09:38):
UK recently to Vietnam. Vietnam's government is pushing renewables development
quite strongly, as indicated by the latest Power Development Plan,
which contains plenty of win solar and battery storage. Now,
one thing I'd like to note here is that after
the US announced their departure from JETP, there have been
assurances coming from other countries like Japan, the EU and
(09:59):
European country that the JETP programs would continue However, at
the same time, we also know that Europe would need
to channel hundreds of billions of dollars into defense spending
in the near future. So it remains to be seen
whether they will be able to fill the hole that
the US has left in terms of climate financing well.
Speaker 1 (10:16):
And have these assurances come in the form of actual
financing as of yet or have they mostly been statements.
Speaker 2 (10:22):
Mostly they've been statements. There have been some plan funding,
So Japan, for example, have committed twenty billion dollars for Vietnam,
and the Development financing arm of the UK government has
said they will infest about two point eight billion to
countries in Southeast Asia, not just Indonesia and Vietnam.
Speaker 1 (10:38):
So Southeast Asia is full of a lot of countries
that have very different but important natural resources that are
part of the energy transition as well as manufacturing capacity.
So what I want to do is kind of deal
rapid fire through a couple of these countries and talk
about the things that have really stood out to you
and your research over the past year and kind of
what has been the most interesting thing. Let's start and
(11:00):
the most populous country in the region, which is Indonesia,
which is also the fourth most populous country in the world.
What stood out to you most about where they are
in terms of opportunities for investors and for really where
they are in the energy transition as a manufacturer of
really critical equipment.
Speaker 2 (11:19):
So I think in Indonesia, I think that's most exciting
is that Indonesia is finally becoming quite good at not
just mining and extracting its resources, but also processing them
at adding value that it can capture instead of just
exporting row minerals to other countries, which is what tends
to happen in the past. Since the past approximately I
think five to seven years or so, Indonesia has aggressively
(11:41):
been pursuing this policy called mineral downstreaming, and what it
means is basically, Indonesia wants the row minerals that are
mined in its territory to be refined, process and then
made into a final product also within Indonesia, and then
those final products can get exported so that Indonesia gets
more value economic value from the products. One good example
(12:01):
for this is Indoniesia is no longer just mining its
fast nickel wealth, but now it's building refining plants. It's
starting to build a strong battery and ev supply chain
within the country, and we have seen many investors coming
from China, South Korea. They are building battery plants here,
electric vehicle plants here. And what Indoniesia has been planning
for a few years is finally starting to turn into
(12:23):
reality that it is able to produce electric vehicles and
batteries using local materials. We didn't region.
Speaker 1 (12:29):
Okay, so let's now go to Vietnam, which is a
country that is installing a lot of renewable energy capacity domestically.
Why is that happening and what is the most interesting
thing happening in Vietnam at the moment.
Speaker 3 (12:40):
The most interesting thing happening in Vietnam right now is
the policy push towards having more corporate cream power purchases.
Just has been a big manufacturing hub for major companies,
but has lacked the incentives that some of the other
countries can provide. But it is blessed with plenty of
human resources and it is one of the leaders in
Southeast Asia for having policies which encourage investments from private
(13:04):
sector participants into renewable energy. In fact, looking at Vietnam now,
all major countries are also starting to come up with
their own direct power purchaser remian policies, which will encourage
more renewables to be built out just for corporate purchases.
Speaker 1 (13:17):
So speaking of leaders PENAF does an assessment of renewable
energy investment across developing countries all over the world and
number two has been the Philippines this last year. Why
is the Philippines such an exciting place for investment at
the moment?
Speaker 3 (13:32):
Philippino is one of the most exciting places in Southeast
Asia because it has the most liberalized power market in
the country. While there have been some restrictions in the past,
the country is trying to overcome some of those bottlenecks
and have more private sector participation. We have seen a
lot of investments and batteries. In fact, Philippines is the
only country in the Southeast Asia region where some meaningful
(13:55):
amount of batteries are being deployed on the grid, all
because of its liberal power market, which enables batteries to
play a role in the an sile services market. There
are big companies, big powerhouse chiant companies that are in
the region which are also developing projects not only in
the country, but now are expanding outwards as well.
Speaker 1 (14:16):
So geographically limited but certainly ambitious when it comes to
emissions targets. Is Singapore, can you talk us through what
their emissions targets are and what their path is to
actually reaching them. Is really a place to set the
example for other parts of the world on how to
go after really ambitious targets.
Speaker 3 (14:34):
So Singapore is one of the smallest countries in the region,
but it has massive power requirements. It is one of
the developed countries in the region which has the ability
to pay for expensive power as well. Currently, it produces
ninety four percent of its electricity from gas fed power
plants and very little of it comes from deniber energy.
But the Singapore Energy Market Authority wants to change that.
(14:56):
It is trying four different strategies to decognize the country.
First of all, it wants to ramp up solar deployment
across the country, especially rooftop solar projects, but there are
limitations because of the overall physical land that Singapore has.
But in the long term, the country wants to increase
newer energy imports from various neighboring countries. Currently, Singapore imports
(15:18):
power from Malaysia, but it's in very small megawatt scale capacities,
but we are going to see kigawatt scale capacities come
online very soon, especially in neighboring Indonesia, where three point
five gigawatsoft projects could be powered up in the near future.
Speaker 1 (15:33):
So what's really interesting about this is that Singapore's plans
for meeting their net zero targets is actually working with
other Southeast Asian countries as a block in order to
make sure that power production is clean and it's being
piped from the right places where that might be happening.
So their physical limitations actually aren't limitations at all if
you see them as a member of Southeast Asia.
Speaker 3 (15:53):
I think I think the idea would be that the
new power demand that is created in the country that
could be met by renewables or cleaner sources of energy
from these neighboring countries, because it also has a target
for NED zero by twenty fifty, so they need to
do something.
Speaker 1 (16:08):
So while we started the show by saying all of
these countries are so different and they have different policies
and different natural resources, and so the dynamics so we're
going to talk about are different, I think we've seen
that is certainly the case as we have gone country
by country, I'm going to now ask you to bring
your thoughts back to Southeast Asia as a region. So
when we think about assion as a group of countries,
(16:31):
so the Association of Southeast Asian Nations, so this is Indonesia, Vietnam, Laos, Brunei, Thailand,
Me and mar the Philippines, Cambodia, Singapore and Malaysia. There
are discussions at the moment about interconnectors and having a
grid that would actually create connections between these countries. Where
does that currently stand and how might we see a
(16:53):
power network that actually does see this region as something
that is cohesive.
Speaker 3 (16:58):
So the idea of having interconnected grid in Southeast Asia
or ic and region is not new. And the critics,
if you talk to them right now, they'd argue that
the countries in Southeast Asia, they have aspired to build
a regional power since the nineteen nineties, but the progress
has been very slow for most of the time since then.
(17:18):
It was a good idea even then to have interconnected grid,
but perhaps because of energy security concerns, many countries, including Singapore,
considered it was best to generate power within the country.
But recently we have seen a much stronger momentum because
renewable energy has become much cheaper and countries realized that
deploying more clean power can help them attract more foreign investments,
(17:41):
especially in sectors like data centers, industry, and mining. And
Singapore is in the heart of this discussion right now
because it's a small country with very few resources. It
imports almost everything, and so why not electricity as well.
Building high capacity grid connections between Singapore and its neighbors
(18:01):
would be a very important step in realizing in ACA
and white power grid and this would boost network stability
and reliability in the region as well as it will
help intermittent renewals grow in the coming decades as demand
for renewbrielogy increases not only in Singapore but across the
region as well.
Speaker 1 (18:19):
So this is a dynamic region that is looking at
tariffs but actually finding ways to ensure that the manufacturing
equipment that they're making is still very much a part
of the energy transition. I'm sure there's a lot to watch,
and as we see global supply chains maintain this level
of dynamism, I'm sure Southeast Asia will stay front and center.
Thank you for sharing your thoughts. On your research and
(18:41):
for taking us around the region and telling us some
of the most interesting things happening. Shantanu Felix, thank you
so much for joining the show today.
Speaker 3 (18:48):
Well, thanks Jenna, it was great to be on the
show as well.
Speaker 2 (18:50):
Thank you, Thanks Lena, and this was fun.
Speaker 1 (19:00):
Today's episode of Switched On was produced by Cam Gray
with production assistance from Kamala Shelling. Bloomberg NEIF is a
service provided by Bloomberg Finance LP and its affiliates. This
recording does not constitute, nor should it be construed as investment,
a vice, investment recommendations, or a recommendation as to an
investment or other strategy. Bloomberg ANIF should not be considered
(19:21):
as information sufficient upon which to base an investment decision.
Neither Bloomberg Finance LP nor any of its affiliates makes
any representation or warranty as to the accuracy or completeness
of the information contained in this recording, and any liability
as a result of this recording is expressly disclaimed.
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Therapy Gecko
An unlicensed lizard psychologist travels the universe talking to strangers about absolutely nothing. TO CALL THE GECKO: follow me on https://www.twitch.tv/lyleforever to get a notification for when I am taking calls. I am usually live Mondays, Wednesdays, and Fridays but lately a lot of other times too. I am a gecko.