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Speaker 1: This is Dana Perkins and you're listening to Switched On,

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Speaker 1: the podcast brought to you by BNF. South of China,

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Speaker 1: east of India north of Australia is the vast region

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Speaker 1: referred to as Southeast Asia, comprised of eleven countries where

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Speaker 1: an abundance of natural resources and manufacturing capacity can be found.

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Speaker 1: It's important to supply chains around the world. However, recently

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Speaker 1: tariffs on goods destined for the United States, including clean

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Speaker 1: energy equipment, have been impacted, and several countries in the

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Speaker 1: region are reacting. Closer to home. Within Southeast Asia, a

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Speaker 1: transformation is taking place with high electric vehicle adoption and

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Speaker 1: supportive clean energy policies. To tell us more about Southeast Asia,

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Speaker 1: I'm joined by Chantanujaiswaal, who heads b and EF's India

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Speaker 1: and Southeast Asia research, alongside analyst Felix Kosse. They draw

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Speaker 1: from their recent research notes titled US Climate Fund Withdrawal

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Speaker 1: in Perils, Indonesia's Transition, and Southeast Asia in short Energy

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Speaker 1: Storage net zero Push, which b any F clients can

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Speaker 1: find at BNF go on the Boomberg terminal or on

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Speaker 1: BNF dot Com. All right, let's get to talking about

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Speaker 1: Southeast Asia. Chantanu, thank you very much for joining today. Hey,

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Speaker 1: thanks for me and Felix. Great having you on the

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Speaker 1: show as well.

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Speaker 2: Thanks for inviting me.

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Speaker 1: So we're going to have a conversation today about Southeast

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Speaker 1: Asia as a region. But of course every region is

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Speaker 1: comprised of individual countries and subregions that have their own

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Speaker 1: fascinating story to tell, and we at BNF are always

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Speaker 1: trying to find opportunities as the world is changing, and

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Speaker 1: certainly when we think about a lot of the industries

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Speaker 1: covered at BNF, we're thinking about global trade, we're thinking

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Speaker 1: about manufacturing, supply chains and everything actually across the value

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Speaker 1: chain for the energy transition, and there are a number

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Speaker 1: of countries here that are either changing the way regulations

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Speaker 1: work and creating for an opportunities for investment, or maybe

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Speaker 1: particularly blessed with different natural resources which are really critical

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Speaker 1: for the energy transition. So let's get into what each

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Speaker 1: of these countries. We're not going to have time for

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Speaker 1: all of them, but what some of the countries in

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Speaker 1: Southeast Asia really have to offer for the future of

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Speaker 1: the transition. So let's start with definitions. There are eleven

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Speaker 1: countries broadly considered as Southeast Asia. Can we go through

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Speaker 1: and just make sure everyone is in agreement that we're

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Speaker 1: talking about the same set of countries? What are they?

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Speaker 3: Thanks Sana, and thanks for starting off with that very

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Speaker 3: important question. And I say that because when I started

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Speaker 3: looking at Southeast Asia, when I started covering Southeast Asia,

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Speaker 3: it was very difficult for me to understand their region

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Speaker 3: because before I started working in the region, I always

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Speaker 3: thought of it as one coherent block and really didn't

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Speaker 3: understand the local nuances. But if you look at Southeast Asia,

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Speaker 3: there are eleven countries in the region. The popular of

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Speaker 3: this entire region is about seven hundred million, and if

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Speaker 3: you just look at the breadth of the region, it

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Speaker 3: is as big as Europe. It's a massive region. But

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Speaker 3: we at BNF we try to focus mostly on six

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Speaker 3: countries in the region, and they are Indonesia, Malaysia, Philippines, Vietnam,

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Speaker 3: Singapore and Thailand. If you look at all of these

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Speaker 3: six countries, then I tried a lot, but there is

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Speaker 3: no one way to categorize these countries into different buckets.

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Speaker 3: What usually needs to be done is to apply different

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Speaker 3: lenses and then see these countries from the lens of language, geography,

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Speaker 3: natural resources, economic output, politics, etc. All of these countries,

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Speaker 3: they do have some common attributes, but they also compete

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Speaker 3: with themselves. The region is actually laden with natural resources,

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Speaker 3: but it's spread out across vatest countries. There countries which

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Speaker 3: are rich in oil and gas deposits. There are countries

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Speaker 3: which are rich in coal deposits. Then there are countries

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Speaker 3: which have different renewers energy sources distributed amongst them while

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Speaker 3: they are between the tropics, and solar is definitely something

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Speaker 3: we just common to all the countries. But then there

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Speaker 3: is wind resources which are in very small pockets in

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Speaker 3: Vietnam or Philippines.

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Speaker 1: So I mean, what I'm hearing from you is there

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Speaker 1: are sort of two conversations that we're going to have

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Speaker 1: which have to do first of all, with how countries

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Speaker 1: are investing in their own domestic energy supply and in

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Speaker 1: many respects adopting best available technologies and really thinking about

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Speaker 1: a really interesting grid that might be much more diverse

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Speaker 1: than other parts of the world. On the other side,

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Speaker 1: there are the natural resources that exist and you know,

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Speaker 1: as I referenced at the very beginning of the show,

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Speaker 1: things that we need for other parts of the energy

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Speaker 1: transition and will ultimately be exported to places all over

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Speaker 1: the world. Can you talk about some of the natural

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Speaker 1: resources that are so critical that are found in this

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Speaker 1: part of the world.

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Speaker 3: So the region is actually quite blessed with natural resources.

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Speaker 3: It includes all oil, gas, coal, copper, gold, nickel, aluminum, titanium,

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Speaker 3: you just name it. Starting with the Militia for example,

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Speaker 3: it is one of the biggest producers of natural gas.

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Speaker 3: We have countries which are also producing goal in big quantities,

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Speaker 3: such as Indonesia. It is also the country that houses

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Speaker 3: forty percent of the world's liquor reserves, and in addition

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Speaker 3: to that, it also has significant quantities of rock, copper,

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Speaker 3: and box site, whereas Vietnam and Myanmar, they possess a

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Speaker 3: big chunk of the world's rare earth materials.

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Speaker 1: So we did a show last year where we were

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Speaker 1: talking about how the United States had raised tariffs on

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Speaker 1: solar imports, and there are a number of countries in

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Speaker 1: Southeast Asia that were really involved in the solar manufacturing

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Speaker 1: and parts of the supply chain. So what I want

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Speaker 1: to understand is beyond what's happened most recently regarding increases

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Speaker 1: in tariffs for various countries all over the world, How

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Speaker 1: have those that were part of twenty twenty three in

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Speaker 1: the first half twenty twenty four. How have those tariffs

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Speaker 1: impacted solar in that region? What markets are they looking at?

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Speaker 3: Last year, the US Department of Commerce, they introduced some

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Speaker 3: preliminary determinations for anti dumping and counterweilling duties.

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Speaker 2: In the region.

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Speaker 3: If you look at the total imports of solar cells

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Speaker 3: and modules in two e twenty three and to eight

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Speaker 3: twenty four, then about eighty percent of all of these

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Speaker 3: were exported from four countries in Southeast Asia Cambodia, Thaighland,

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Speaker 3: Vietnam and Malaysia. And the tariffs which were introduced they

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Speaker 3: ranged between fifteen percent to about sixty percent, and they

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Speaker 3: have had quite a bit of an impact over here.

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Speaker 3: So some Chinese manufacturers that we know of in these

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Speaker 3: four countries, they have cut down their production and open

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Speaker 3: facilities in Indonesia and Lawers which do not have a

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Speaker 3: tariff right now. In a way, what manufacturers are doing,

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Speaker 3: if they are trying to dodge tariffs from one country

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Speaker 3: and moving out to other, it's a game of waka mohle.

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Speaker 3: I think that they are trying to play over here.

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Speaker 3: What we also see I think is that battery makers

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Speaker 3: DA might also want to follow what Soudar manufacturers are

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Speaker 3: doing and try to touch their talents and move their

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Speaker 3: manufactually location to countries which are currently except from it.

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Speaker 1: Okay, So bringing us up to speed with what's happening

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Speaker 1: then right now, there has been a lot of discussion

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Speaker 1: regarding tariffs and it's changing almost daily at the moment.

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Speaker 1: But when it comes to the US, with cuts in

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Speaker 1: US funding overseas and with raising tariffs for various countries,

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Speaker 1: how much of an impact has this had on some

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Speaker 1: of the countries in Southeast Asia?

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Speaker 2: So far, we think the Trauma administration has not targeted

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Speaker 2: any particular southist Asian countries specifically, but as you frightly

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Speaker 2: pointed out, there's a huge element of uncertainty here going on.

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Speaker 2: We do know that President Trump quite dislikes thread deficits

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Speaker 2: with the United States, and if we look at the

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Speaker 2: top twenty countries with whom the US has a thread deficit,

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Speaker 2: there are actually five southast Asian countries on the top

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Speaker 2: twenty list, with Vietnam in particular sitting on number four,

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Speaker 2: with the deficit of about one hundred billion dollars as

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Speaker 2: of twenty twenty three. Generally, southis Asian governments are cautious

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Speaker 2: now and adopting a with n C approach now with

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Speaker 2: regards to the cuts in overseas funding. The most tangible

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Speaker 2: impact for South East Asia so far is definitely the

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Speaker 2: US departure from jet P Indonesia and Vietnam. Jet P

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Speaker 2: or CHESS Energy Transition Partnership is a program that were

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Speaker 2: meant to mobilize roughly twenty one and fifteen billion the

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Speaker 2: dollars for Indonesia and Vietnam, respectively, to accelerate the energy

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Speaker 2: transition in those countries. Now, developed countries commit roughly half

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Speaker 2: of the money in the form of grants, concessional loans,

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Speaker 2: commercial loans, and development banking guarantees, while the rest are

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Speaker 2: supposed to come from private financing. So we think the

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Speaker 2: impact of the US living jet P would be fed

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Speaker 2: relatively more strongly in Indonesia. That's because before it left,

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Speaker 2: the US was actually a co leader of jet B

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Speaker 2: Indonesia alongside Japan. In fact, it was the biggest single

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Speaker 2: country funder, contributing about a fifth of the program's eleven

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Speaker 2: billion public funding plot and furthermore, on top of that,

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Speaker 2: another fifth of JETP Indonesia's pub financing comes from the

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Speaker 2: countries Energy Transition Mechanism or ETM, which is a pool

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Speaker 2: of public and private funds meant to finance early retirement

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Speaker 2: of coal plants in emerging economies. The ETM is capitalized

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Speaker 2: by the WORD Bank, Asian Development Bank, and the Climate

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Speaker 2: Investment Funds, all of which the US is a major

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Speaker 2: contributor to. So if the US ends up cutting funding

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Speaker 2: to these institutions, then jet B Indonesia's funding may diminish.

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Speaker 2: Further Still, for Vietnam, roughly thirteen percent of Jetpea's public

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Speaker 2: funding was supposed to come from the US. The good

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Speaker 2: news here is we have seen new climate and REGI

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Speaker 2: related investment plans coming from countries like Japan and the

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Speaker 2: UK recently to Vietnam. Vietnam's government is pushing renewables development

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Speaker 2: quite strongly, as indicated by the latest Power Development Plan,

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Speaker 2: which contains plenty of win solar and battery storage. Now,

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Speaker 2: one thing I'd like to note here is that after

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Speaker 2: the US announced their departure from JETP, there have been

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Speaker 2: assurances coming from other countries like Japan, the EU and

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Speaker 2: European country that the JETP programs would continue However, at

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Speaker 2: the same time, we also know that Europe would need

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Speaker 2: to channel hundreds of billions of dollars into defense spending

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Speaker 2: in the near future. So it remains to be seen

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Speaker 2: whether they will be able to fill the hole that

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Speaker 2: the US has left in terms of climate financing well.

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Speaker 1: And have these assurances come in the form of actual

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Speaker 1: financing as of yet or have they mostly been statements.

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Speaker 2: Mostly they've been statements. There have been some plan funding,

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Speaker 2: So Japan, for example, have committed twenty billion dollars for Vietnam,

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Speaker 2: and the Development financing arm of the UK government has

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Speaker 2: said they will infest about two point eight billion to

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Speaker 2: countries in Southeast Asia, not just Indonesia and Vietnam.

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Speaker 1: So Southeast Asia is full of a lot of countries

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Speaker 1: that have very different but important natural resources that are

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Speaker 1: part of the energy transition as well as manufacturing capacity.

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Speaker 1: So what I want to do is kind of deal

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Speaker 1: rapid fire through a couple of these countries and talk

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Speaker 1: about the things that have really stood out to you

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Speaker 1: and your research over the past year and kind of

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Speaker 1: what has been the most interesting thing. Let's start and

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Speaker 1: the most populous country in the region, which is Indonesia,

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Speaker 1: which is also the fourth most populous country in the world.

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Speaker 1: What stood out to you most about where they are

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Speaker 1: in terms of opportunities for investors and for really where

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Speaker 1: they are in the energy transition as a manufacturer of

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Speaker 1: really critical equipment.

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Speaker 2: So I think in Indonesia, I think that's most exciting

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Speaker 2: is that Indonesia is finally becoming quite good at not

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Speaker 2: just mining and extracting its resources, but also processing them

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Speaker 2: at adding value that it can capture instead of just

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Speaker 2: exporting row minerals to other countries, which is what tends

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Speaker 2: to happen in the past. Since the past approximately I

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Speaker 2: think five to seven years or so, Indonesia has aggressively

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Speaker 2: been pursuing this policy called mineral downstreaming, and what it

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Speaker 2: means is basically, Indonesia wants the row minerals that are

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Speaker 2: mined in its territory to be refined, process and then

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Speaker 2: made into a final product also within Indonesia, and then

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Speaker 2: those final products can get exported so that Indonesia gets

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Speaker 2: more value economic value from the products. One good example

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Speaker 2: for this is Indoniesia is no longer just mining its

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Speaker 2: fast nickel wealth, but now it's building refining plants. It's

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Speaker 2: starting to build a strong battery and ev supply chain

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Speaker 2: within the country, and we have seen many investors coming

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Speaker 2: from China, South Korea. They are building battery plants here,

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Speaker 2: electric vehicle plants here. And what Indoniesia has been planning

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Speaker 2: for a few years is finally starting to turn into

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Speaker 2: reality that it is able to produce electric vehicles and

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Speaker 2: batteries using local materials. We didn't region.

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Speaker 1: Okay, so let's now go to Vietnam, which is a

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Speaker 1: country that is installing a lot of renewable energy capacity domestically.

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Speaker 1: Why is that happening and what is the most interesting

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Speaker 1: thing happening in Vietnam at the moment.

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Speaker 3: The most interesting thing happening in Vietnam right now is

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Speaker 3: the policy push towards having more corporate cream power purchases.

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Speaker 3: Just has been a big manufacturing hub for major companies,

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Speaker 3: but has lacked the incentives that some of the other

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Speaker 3: countries can provide. But it is blessed with plenty of

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Speaker 3: human resources and it is one of the leaders in

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Speaker 3: Southeast Asia for having policies which encourage investments from private

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Speaker 3: sector participants into renewable energy. In fact, looking at Vietnam now,

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Speaker 3: all major countries are also starting to come up with

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Speaker 3: their own direct power purchaser remian policies, which will encourage

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Speaker 3: more renewables to be built out just for corporate purchases.

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Speaker 1: So speaking of leaders PENAF does an assessment of renewable

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Speaker 1: energy investment across developing countries all over the world and

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Speaker 1: number two has been the Philippines this last year. Why

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Speaker 1: is the Philippines such an exciting place for investment at

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Speaker 1: the moment?

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Speaker 3: Philippino is one of the most exciting places in Southeast

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Speaker 3: Asia because it has the most liberalized power market in

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Speaker 3: the country. While there have been some restrictions in the past,

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Speaker 3: the country is trying to overcome some of those bottlenecks

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Speaker 3: and have more private sector participation. We have seen a

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Speaker 3: lot of investments and batteries. In fact, Philippines is the

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Speaker 3: only country in the Southeast Asia region where some meaningful

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Speaker 3: amount of batteries are being deployed on the grid, all

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Speaker 3: because of its liberal power market, which enables batteries to

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Speaker 3: play a role in the an sile services market. There

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Speaker 3: are big companies, big powerhouse chiant companies that are in

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Speaker 3: the region which are also developing projects not only in

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Speaker 3: the country, but now are expanding outwards as well.

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Speaker 1: So geographically limited but certainly ambitious when it comes to

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Speaker 1: emissions targets. Is Singapore, can you talk us through what

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Speaker 1: their emissions targets are and what their path is to

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Speaker 1: actually reaching them. Is really a place to set the

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Speaker 1: example for other parts of the world on how to

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Speaker 1: go after really ambitious targets.

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Speaker 3: So Singapore is one of the smallest countries in the region,

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Speaker 3: but it has massive power requirements. It is one of

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Speaker 3: the developed countries in the region which has the ability

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Speaker 3: to pay for expensive power as well. Currently, it produces

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Speaker 3: ninety four percent of its electricity from gas fed power

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Speaker 3: plants and very little of it comes from deniber energy.

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Speaker 3: But the Singapore Energy Market Authority wants to change that.

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Speaker 3: It is trying four different strategies to decognize the country.

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Speaker 3: First of all, it wants to ramp up solar deployment

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Speaker 3: across the country, especially rooftop solar projects, but there are

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Speaker 3: limitations because of the overall physical land that Singapore has.

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Speaker 3: But in the long term, the country wants to increase

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Speaker 3: newer energy imports from various neighboring countries. Currently, Singapore imports

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Speaker 3: power from Malaysia, but it's in very small megawatt scale capacities,

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Speaker 3: but we are going to see kigawatt scale capacities come

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Speaker 3: online very soon, especially in neighboring Indonesia, where three point

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Speaker 3: five gigawatsoft projects could be powered up in the near future.

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Speaker 1: So what's really interesting about this is that Singapore's plans

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Speaker 1: for meeting their net zero targets is actually working with

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Speaker 1: other Southeast Asian countries as a block in order to

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Speaker 1: make sure that power production is clean and it's being

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Speaker 1: piped from the right places where that might be happening.

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Speaker 1: So their physical limitations actually aren't limitations at all if

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Speaker 1: you see them as a member of Southeast Asia.

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Speaker 3: I think I think the idea would be that the

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Speaker 3: new power demand that is created in the country that

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Speaker 3: could be met by renewables or cleaner sources of energy

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Speaker 3: from these neighboring countries, because it also has a target

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Speaker 3: for NED zero by twenty fifty, so they need to

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Speaker 3: do something.

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Speaker 1: So while we started the show by saying all of

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Speaker 1: these countries are so different and they have different policies

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Speaker 1: and different natural resources, and so the dynamics so we're

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Speaker 1: going to talk about are different, I think we've seen

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Speaker 1: that is certainly the case as we have gone country

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Speaker 1: by country, I'm going to now ask you to bring

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Speaker 1: your thoughts back to Southeast Asia as a region. So

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Speaker 1: when we think about assion as a group of countries,

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Speaker 1: so the Association of Southeast Asian Nations, so this is Indonesia, Vietnam, Laos, Brunei, Thailand,

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Speaker 1: Me and mar the Philippines, Cambodia, Singapore and Malaysia. There

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Speaker 1: are discussions at the moment about interconnectors and having a

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Speaker 1: grid that would actually create connections between these countries. Where

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Speaker 1: does that currently stand and how might we see a

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Speaker 1: power network that actually does see this region as something

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Speaker 1: that is cohesive.

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Speaker 3: So the idea of having interconnected grid in Southeast Asia

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Speaker 3: or ic and region is not new. And the critics,

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Speaker 3: if you talk to them right now, they'd argue that

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Speaker 3: the countries in Southeast Asia, they have aspired to build

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Speaker 3: a regional power since the nineteen nineties, but the progress

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Speaker 3: has been very slow for most of the time since then.

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Speaker 3: It was a good idea even then to have interconnected grid,

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Speaker 3: but perhaps because of energy security concerns, many countries, including Singapore,

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Speaker 3: considered it was best to generate power within the country.

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Speaker 3: But recently we have seen a much stronger momentum because

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Speaker 3: renewable energy has become much cheaper and countries realized that

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Speaker 3: deploying more clean power can help them attract more foreign investments,

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Speaker 3: especially in sectors like data centers, industry, and mining. And

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Speaker 3: Singapore is in the heart of this discussion right now

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Speaker 3: because it's a small country with very few resources. It

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Speaker 3: imports almost everything, and so why not electricity as well.

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Speaker 3: Building high capacity grid connections between Singapore and its neighbors

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Speaker 3: would be a very important step in realizing in ACA

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Speaker 3: and white power grid and this would boost network stability

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Speaker 3: and reliability in the region as well as it will

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Speaker 3: help intermittent renewals grow in the coming decades as demand

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Speaker 3: for renewbrielogy increases not only in Singapore but across the

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Speaker 3: region as well.

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Speaker 1: So this is a dynamic region that is looking at

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Speaker 1: tariffs but actually finding ways to ensure that the manufacturing

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Speaker 1: equipment that they're making is still very much a part

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Speaker 1: of the energy transition. I'm sure there's a lot to watch,

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Speaker 1: and as we see global supply chains maintain this level

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Speaker 1: of dynamism, I'm sure Southeast Asia will stay front and center.

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Speaker 1: Thank you for sharing your thoughts. On your research and

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Speaker 1: for taking us around the region and telling us some

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Speaker 1: of the most interesting things happening. Shantanu Felix, thank you

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Speaker 1: so much for joining the show today.

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Speaker 3: Well, thanks Jenna, it was great to be on the

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Speaker 3: show as well.

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Speaker 2: Thank you, Thanks Lena, and this was fun.

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Speaker 1: Today's episode of Switched On was produced by Cam Gray

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Speaker 1: with production assistance from Kamala Shelling. Bloomberg NEIF is a

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