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Thai "Climate Capitalism" Takes Root

Thailand is witnessing the rise of a new economic model— ‘climate capitalism’—which is gaining momentum as businesses and investors focus on sustainability while driving profit. This shift comes as global climate change concerns intensify, prompting the private sector to embrace environmentally friendly practices and contribute to the country’s green economy.

With growing awareness of the impact of climate change, companies in Thailand are increasingly integrating sustainability into their business strategies. This includes adopting renewable energy solutions, reducing carbon emissions, and investing in green technologies. Thai businesses are also looking to align with international climate goals and environmental, social, and governance (ESG) standards, which are becoming more important to investors and consumers alike.

The Thai government is playing a key role in this shift by promoting green policies and incentives aimed at encouraging businesses to adopt more sustainable practices. The country has set ambitious targets to reduce its carbon emissions by 30% by 2030 and achieve carbon neutrality by 2065. These efforts align with global sustainability goals and position Thailand as a growing player in the green economy. The rise of ‘climate capitalism’ is also attracting foreign investment, with both local and international companies looking to capitalize on the opportunities presented by sustainable development. Thailand’s robust industrial sector, particularly in manufacturing and energy, is increasingly being shaped by the demand for cleaner, more efficient technologies.

Despite the progress, experts stress that challenges remain. The full implementation of sustainability strategies will require significant investment in technology, infrastructure, and regulatory support. However, the shift toward climate capitalism is already reshaping Thailand’s economic landscape, with businesses increasingly realizing that a commitment to sustainability is not only good for the planet but also good for business. As Thailand continues to embrace climate-conscious capitalism, it is becoming clear that sustainability is no longer just a trend but an integral part of the future economy.

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Enabling MSMEs to adopt ESG practices is key to sustainable supply chains

[SINGAPORE] There is growing momentum among micro, small and medium-sized enterprises (MSMEs) in South-east Asia to adopt sustainability practices, but stumbling blocks such as financial constraints remain.

This issue was raised in a report by the Centre for Impact Investing and Practices (CIIP), titled Transforming for Sustainability: Driving Impact and Value through Supply Chain Action, released on Wednesday (May 7) at an Ecosperity Week event.

The report found that MSMEs in the region recognise the business value of adopting sustainability practices, with 39 per cent of respondents agreeing that they lower costs and improve long-term efficiency. Twenty-seven per cent believe these practices can attract or retain talent in a values-driven workforce.

This is a crucial trend as many multinational corporations are setting higher expectations across their supply chains in pursuit of their long-term sustainability commitments, the report noted.

MSMEs are often key suppliers for these global companies. Therefore, aligning themselves with the evolving standards is increasingly vital for these businesses to remain competitive and secure long-term growth opportunities, the study added.

Dawn Chan, chief executive officer of CIIP, said: “MSMEs are the backbone of South-east Asia’s economies and essential partners in advancing sustainable supply chains.”

The findings are based on a survey of more than 3,500 MSMEs from countries in the region – such as Indonesia and Vietnam – as well as interviews with about 85 organisations in Asia.

The report also revealed that 84 per cent of MSMEs have adopted at least one environmental, social and governance (ESG) practice, with social measures being the most common due to mandated employee protection policies in each of the countries studied.

However, financial constraints remain a key hurdle to adopting more of such practices, with many of the MSMEs surveyed citing high upfront costs. This is despite half of them planning to increase their ESG budgets by 2027.

Manpower also remains an issue, with 60 per cent of respondents reporting moderate to significant difficulties in hiring staff for sustainability or related roles.

Some also cited the inability to derive immediate benefits from embracing ESG practices. Thirty-two per cent said the ability to gain new clients or enter new markets would be an important motivating factor for the future adoption of ESG approaches.

Key enablers

To help MSMEs, the report identified five key enablers – among them is making the concept of ESG clear and simple. This would require the commercial benefits of ESG practices to be emphasised.

Another enabler is financing the change. While sustainability-linked loans are increasingly available, uptake by MSMEs remains low. This suggests that concessional rates alone are not enough, and investments in innovative MSME-targeted solutions are needed.

To this end, venture capital firms and impact investors are a third vital enabler. They play a crucial role in facilitating ESG adoption across supply chains by providing catalytic funding to incentivise innovation and reduce the barriers to adopting such practices.

These investors are particularly important in backing early-stage solutions and business models which are priced and designed for MSMEs.

“(These enterprises’) growing interest in ESG signals a real opportunity to unlock business resilience and long-term value,” Chan said.

“This report aims to provide a clearer view of what MSMEs need to succeed (in), and how ecosystem players, from industry leaders to governments and financial institutions, can work together to accelerate scalable, sustainable impact,” she added.

Themed “Impact for Outcomes – Perspectives from the Ground”, the Impact Investing Roundtable 2025 where the report was released was co-organised by CIIP and Temasek.

Fashioning a solution

In the same vein, CIIP on Wednesday signed a memorandum of understanding with the Singapore Fashion Council (SFC) to advance supply chain sustainability within the fashion industry – with a particular focus on empowering MSMEs.

Under the agreement, SFC will lead the development and implementation of three key initiatives to support the sustainability transformation of the fashion and textiles sector. CIIP will contribute insights and ecosystem-building support.

The initiatives comprise:

  • a sectoral plan identifying the key challenges and strategic priorities for the local and regional fashion industries;
  • a guidebook with resources and practical road maps to help companies at different stages of their sustainability journeys; and
  • a digital toolkit providing MSMEs with access to ESG tools to facilitate decarbonisation and broader adoption of sustainability practices.

Zhang Ting-Ting, CEO of SFC, said: “The future of fashion lies not just on the runway, but in the roots of our supply chains. MSMEs are the heartbeat of Asia’s fashion industry – collective action and practical support are key to meaningful progress in sustainability.”

She added: “By partnering with forward-thinking organisations like Temasek Trust’s CIIP, we are bridging insight with implementation – empowering businesses with the tools and knowledge to future-proof their supply chains and thrive.”

Source: The Business Times (published 7/5/2025)

Enabling MSMEs to adopt ESG practices is key to sustainable supply chains: report - The Business Times

ASEAN to sign improved China, internal trade deals as bloc weighs ‘bolder’ moves to tackle US tariffs

The regional bloc has concluded negotiations to upgrade agreements that target easier trade - not just within the grouping itself, but also with its top economic partner, China.

Easier trade among members of the Association of Southeast Asian Nations (ASEAN) as well as with the regional bloc’s top economic partner, China, is on the horizon as the grouping pushes ahead with “bolder” moves to stave off the threat of steep US tariffs.

ASEAN has concluded negotiations on upgrading the ASEAN Trade In Goods Agreement (ATIGA) and the China-ASEAN Free Trade Area (CAFTA), with the enhanced deals set to be signed in October, Malaysia’s Investment, Trade and Industry Minister Tengku Zafrul Abdul Aziz told reporters on Sunday (May 25) ahead of the 46th ASEAN summit.

“We remain confident that these milestones will serve as a pivotal enabler for ASEAN's sustained growth and competitiveness,” Tengku Zafrul said after chairing an ASEAN Economic Community Council Meeting.

“The successful conclusion of these negotiations is expected to enhance the region's economic integration and generate significant economic benefits for ASEAN as we continue to navigate an increasingly volatile global economic landscape.Top of Form

Bottom of FormAs the rotating chair for ASEAN this year, Malaysia has urged the bloc to diversify its trading partners in the face of sweeping tariffs imposed by US President Donald Trump. 

Speaking on Sunday, Tengku Zafrul warned the bloc against staying still at a time of economic uncertainty.

“ASEAN would need to break away from a business-as-usual approach,” he said.

“We need to adopt bolder, more agile and more forward-looking strategies. We need to safeguard and advance ASEAN socioeconomic interests.”

ASEAN has reaffirmed its commitment to stand by the principles of multilateralism and a rules-based global trading order, even as it continues to maintain a policy of non-retaliation against the US tariffs, Tengku Zafrul said.

“We don't plan to have any measures that will represent a retaliation to what has been introduced,” he said.

Tengku Zafrul said every ASEAN member is a “sovereign nation” and should be supported in pursuing bilateral tariff negotiations with the US.

“But it's important that in all these meetings, we also reiterate the ASEAN position,” he added.

At the summit on Monday and Tuesday, ASEAN is expected to explore the expansion of regional free trade agreements alongside engaging other economic blocs and dialogue partners, measures which Tengku Zafrul said were discussed at the economic council meeting.

FACILITATING TRADE WITHIN ASEAN

“We also discussed how ASEAN can improve trade within,” the minister added, noting that intra-ASEAN trade accounts for approximately 23 per cent of the bloc's total trade.

“There's a lot of room for improvement. When we look at other economic blocs, they trade with each other internally more than what ASEAN is doing today.”

ATIGA is aimed at achieving a free flow of goods between ASEAN member states, resulting in lower business costs, increased trade, and a larger market and economies of scale for businesses.

The upgraded agreement targets the further lowering of tariffs and the removal of non-tariff barriers among member countries.

It will feature “forward-looking and commercially meaningful provisions aimed at further boosting regional trade, enhancing supply chain resilience, and also boosting deeper economic integration within ASEAN”, Tengku Zafrul said.

Singapore, which chaired the upgrade negotiations, said it will continue to work with ASEAN and global partners to secure the bloc's long-term growth, competitiveness, and shared prosperity.

The successful conclusion of the upgrade negotiations "demonstrates ASEAN’s commitment to building a more seamless and resilient economic region, as well as to preserve a rules-based trading environment to better support businesses’ operations in the ASEAN region amidst an uncertain global economic climate", Singapore Trade and Industry Minister Gan Kim Yong, also the country's deputy prime minister, said in a statement on Sunday.

Earlier on Sunday, Malaysia’s Foreign Minister Mohamad Hasan highlighted that ASEAN nations are among those most heavily hit by US tariffs.

“We must seize this moment to deepen regional economic integration, so that we can better shield our region from external shocks,” he said in opening remarks at a meeting of ASEAN foreign ministers.

The US-China trade war is “dramatically disrupting” production and trade patterns worldwide, Mohamad said, cautioning that a global economic slowdown was likely to happen.

TAKING ASEAN-CHINA TRADE FORWARD

ASEAN 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 CAFTA will "promote the deep integration of the production and supply chains of both sides", China's commerce ministry said in a statement on Wednesday, when it announced the completion of negotiations.

The upgraded pact will also “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 ministry said.

China has intensified engagement with ASEAN since 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.

In his Sunday remarks, Mohamad described ASEAN as a region where geopolitical ambitions, as well as economic and security interests, intersect.

“External pressures are rising, and the scope of challenges has never had higher stakes,” he said, stressing that ASEAN unity is now “more important than ever”.

“It is therefore crucial that we reinforce the ties that bind us, so as to not unravel under external pressures.”

 

Source: Channel News Asia (published 25/5/2025)

ASEAN to sign improved China, internal trade deals as bloc weighs ‘bolder’ moves to tackle US tariffs

Thai Negotiators Target EU Trade Deal by Year-End

Thai negotiators are aiming to finalize a trade deal with the European Union (EU) by the end of 2023, which could boost Thailand’s exports and strengthen its economic ties with one of its key trading partners. The deal is expected to enhance access for Thai goods and services to the European market, providing a significant economic opportunity.

Thailand and the EU have been engaged in negotiations for a free trade agreement (FTA) since 2013, but progress has been slow due to various challenges, including concerns over issues like sustainability, labor rights, and environmental standards. Despite these hurdles, both parties are now focused on accelerating talks to reach an agreement by December. The trade deal is seen as crucial for Thailand, especially as the country seeks to diversify its export markets in the face of economic uncertainties. Thailand’s key exports to the EU include automobiles, electronics, and agricultural products. A successful deal would lower trade barriers, reduce tariffs, and provide greater market access for these goods. In addition to trade benefits, the FTA is expected to foster deeper cooperation in areas such as technology, green energy, and investment. Both sides have emphasized the importance of aligning the agreement with sustainability goals and international standards.

Thai officials are optimistic about reaching a deal by the end of the year, as both sides have shown increased commitment to concluding negotiations. However, there are still several areas of disagreement, particularly regarding environmental and labor standards, that will require careful negotiation. A successful trade deal with the EU would be a significant achievement for Thailand, boosting its exports, enhancing economic growth, and positioning the country as a key player in the global economy.

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Thai Pork Industry: A Backbone of National Food Security and Economic Growth

Pork is a staple protein in Thai households and plays a crucial role in the nation’s food security, supporting over 100,000 farming families and providing employment for millions. However, the growing push to open Thailand’s pork market to imports, particularly from the United States, threatens the integrity of this vital industry.

A Thai swine farmer, who wished to remain anonymous, warns that U.S. pork is produced at a much larger scale and lower cost, putting the livelihoods of over 145,000 to 190,000 Thai pig farmers—many of them smallholders—at risk. "If U.S. pork gains unrestricted access to our market, tens of thousands of Thai farmers could be forced out of business," he cautions. Such a shift would disrupt not only the farmers but the entire agricultural value chain, impacting rural economies and communities.
While advocates of trade liberalization argue for short-term consumer savings and diplomatic benefits, the long-term costs could be severe. History has shown that over-reliance on imports leaves nations vulnerable to global supply shocks, price instability, and loss of disease control.

In an era of global trade, it’s easy to overlook the crucial role of domestic producers. But true food security is rooted in the ability to produce and supply food from within. Thai pig farmers are the frontline defenders of the nation’s food stability, ensuring the country can feed itself, meal by meal.

To ensure a resilient, self-sufficient food system, policymakers must invest in local agriculture—strengthening veterinary health systems, modernizing smallholder farms, and fostering competitiveness. Empowering the farmers who dedicate their lives to feeding the nation is essential.

A nation that cannot sustain its own food supply risks its future. Thai pig farmers are at the forefront of preserving the foundation of Thailand’s food security.

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Thailand Urged to Move into Smart Production to Boost Economy

Thailand is being urged to embrace smart production technologies to stay competitive in the global economy. Industry leaders and experts are calling for the country to accelerate its shift toward advanced manufacturing and digitalization in order to meet the demands of the modern economy. As the world continues to evolve with technological advancements, Thailand's manufacturing sector—one of the key pillars of its economy—faces increasing pressure to adopt innovations such as robotics, artificial intelligence (AI), and the Internet of Things (IoT). These technologies are critical to improving efficiency, product quality, and overall productivity.

The call for smart manufacturing comes at a time when Thailand’s traditional industries are struggling to keep up with rapid technological shifts globally. The global pandemic and the supply chain disruptions that followed have exposed vulnerabilities in the current system, making it clear that Thailand must modernize to remain globally competitive.

Experts argue that Thailand has the potential to lead in smart manufacturing if it invests in the right infrastructure, workforce training, and technology adoption. The government has already introduced several initiatives, including the Thailand 4.0 policy, aimed at transforming the country into a more innovative, digital economy. However, experts stress that faster implementation is essential to keep pace with regional and global competitors. The move towards smart production not only promises to enhance Thailand’s industrial capabilities but also offers opportunities for job creation in high-tech sectors, boosting economic growth and improving the country's global standing.

To successfully transition, Thailand must address several challenges, including digital literacy, a skilled workforce, and investment in cutting-edge technologies. This shift will require collaboration between the public and private sectors to create the necessary environment for innovation and growth. In conclusion, experts are urging Thailand to act swiftly to adopt smart manufacturing and ensure that it does not fall behind in the increasingly competitive global market. Embracing digital transformation will be key to securing the nation’s economic future and improving its position on the global stage.

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Thai business group cuts 2025 GDP forecast as US tariffs threaten exports

Thailand’s economic growth forecast for 2025 has been downgraded, with the Joint Standing Committee on Commerce, Industry, and Banking now predicting growth of just 1.5% to 2.0%, down from an earlier estimate of 2.0% to 2.2%. The revision comes amid concerns over the impact of US tariffs on Thai exports.
The export sector, a critical driver of the Thai economy, is expected to see minimal growth, with the latest forecast showing a potential decline of up to 0.5% or, at best, a rise of 0.3%. This marks a significant cut from the previous prediction of 0.3% to 0.9% growth. The second half of the year is expected to be particularly weak, with growth potentially falling below 1%, compared to 3% in the first half.

US Tariffs and Regional Competition
Thailand faces a potential 36% tariff on goods exported to the US if no deal is reached by July, a prospect causing growing concern among businesses. In contrast, neighboring Vietnam, which is engaged in active tariff negotiations with the US, could secure a more favorable deal, further complicating Thailand's competitiveness.
Kriangkrai Thianuku, chair of the Federation of Thai Industries, warned that if Vietnam receives a lower tariff rate, the impact on Thailand’s economy could be severe.

Rising Currency and Structural Pressures
In addition to the tariff threat, the appreciating Thai baht is raising concerns about Thailand’s price competitiveness in global markets. The country is also facing longer-term challenges, including an ageing population and high household debt, which are expected to slow economic growth.
With these combined pressures, the outlook for Thailand in the second half of 2025 remains uncertain.

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AI and design will see wider adoption only if tools and systems are designed well

[SINGAPORE] More companies in Singapore view artificial intelligence (AI) as a “practical tool” for growth and innovation today, with many already moving past the experimentation stage and actively deploying AI in their daily operations.

Senior Minister of State for Digital Development and Information Tan Kiat How said this at the inaugural Design AI and Tech Awards ceremony on Monday (May 19), an event that recognised enterprises that harness design, AI and technology to tackle real business challenges.

Tan noted that, according to latest available figures, enterprise adoption of AI has grown steadily from 34 per cent in 2022 to 46 per cent last year.

In 2024, close to 3,000 small and medium-sized enterprises (SMEs) here adopted AI-enabled solutions from local retailers – making use of the technology to help them forecast demand, optimise venues and reduce wastage.

Tan added that with this greater adoption of AI, SMEs should take advantage of various government initiatives and make use of the platforms and tools on offer.

He cited examples such as the Chief Technology Officer-as-a-Service, which offers over 300 pre-approved digital solutions, nearly a third of which were AI-enabled last year alone. 

It supported more than 330,000 users and helped some 3,000 SMEs adopt AI to enhance operations, improve customer efficiency and make informed decisions.

Another tool is the SME Go Digital programme, which has benefited close to 100,000 SMEs since 2017 by helping them digitalise at their own pace to suit their needs.

“Innovators and startups in Singapore who find solutions to common issues should make use of these platforms to reach out to SMEs and firms,” he said.

These platforms are not just for end-users but also for innovators to scale up and implement their solutions in Singapore and overseas.

Beyond SMEs, Tan also highlighted the importance of helping workers outside of traditional tech sectors, by providing clear and practical guidance on how roles are evolving and to keep pace with them.

In his speech at the Singapore University of Technology and Design (SUTD), Tan also spoke of the focus on enrolling more students in information and digital technology (IDT) courses. Last year, around 8,000 students were enrolled in such courses across universities, polytechnics and the Institute of Technical Education.

IDT places at universities have increased from 3,000 in 2020 to 4,000 this year, accounting for more than one in four degree places, he said.

Universities are also making AI more accessible, practical and relevant across fields beyond tech, such as architecture, sustainable design and engineering product development.

“It’s not about our technology, it’s our people and talent. AI and design will only be widely adopted if the tools are designed well with the user interface and experience fitting into existing workflows. Designers not only need skills but (they) also need to understand users and their needs,” said Tan.

The Design AI and Tech Awards, jointly organised by The Business Times and the SUTD, saw three finalists named as this year’s winners – LionsBot, MetaOptics Technologies and Sengkang General Hospital. 

The awards were open to all companies, international and locally, including SMEs, startups and large corporations. 

Applicants were assessed across six criteria: design thinking process and strategies; originality; utilisation of AI and advanced technologies; ethical consideration and sustainability; aesthetic and functional qualities; and whether the design has made quantitative and qualitative impact.

 

Source: The Business Times (published 19/5/2025)

AI and design will see wider adoption only if tools and systems are designed well: Tan Kiat How - The Business Times

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

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

ASEAN power grid could unlock 25 GW of renewable capacity, lowering electricity costs

[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

E-commerce sales in South-east Asia to more than double to US$410 billion by 2030

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

Private green investments in South-east Asia rise 43% to US$8 billion in 2024

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)

Link: Private green investments in South-east Asia rise 43% to US$8 billion in 2024: report - The Business Times