Bangkok: On Tuesday ( Jun 18 ), the Thai Senate passed the final reading of a marriage equality law, making it the third nation in Asia to recognize same-sex couples after Nepal and Taiwan. The legislation was approved by almost all members of the upper house, and it will nowContinue Reading
The electronics sector is a positive force for Southeast Asia’s economy, according to a report from Oxford Economics that was commissioned by the Institute of Chartered Accountants in England and Wales ( ICAEW). The region is projected to grow by 4.0 % in 2024 and 2025. Nevertheless, this is below the pre-pandemic average of 5 % in the previous five years, mostly as a result of anticipated difficulties in private use as interest rates rise more.
The report argues that Southeast Asian electronics-focused exporters gained a better grip in Q1 2024, in large part as a result of the technology sector’s bottoming out. It said the treatment in global silicon sales, which saw a 15.3 % year- on- yr increase in Q1 2024, has mainly benefited Vietnam, where export growth soared to an estimated 16.8 % year- on- year. Singapore also experienced a rise in non-oil home exports in April with an estimated 9.4 % month-on-month growth, which is a good turn after two consecutive weeks of collapse, intermittently adjusted.
Given its position farther down the electrical value chain, Malaysia is anticipated to benefit from the gadgets healing in the second half of the season. However, Southeast Asia’s electronics industry’s enhance is still less encouraging than those of Taiwan and South Korea, two other major Asian silicon players.
International tight monetary policies are likely to measure down additional need for the region’s exports, making recovery reasonable, the report stated, adding that the global growth forecast of 2.6 % for 2024, lower than pre- pandemic levels, did likewise lessen local export growth.
On the positive side, Southeast Asia’s tourism sector has experienced steady visitor growth since November 2023, partially as a result of various visa-free travel arrangements with China. This has resulted in more frequent intraregional travel within Southeast Asia. However, supply- side constraints, such as limited flight capacity and a shortage of hotel rooms, could hinder the region’s ability to fully meet resurgent tourist demand. As a result, the recent rapid growth in tourist arrivals is likely to decelerate.
Domestic consumption faces near- term challenges
In the report, domestic consumption in Southeast Asia was stronger than anticipated in Q1 2024. However, it is unlikely to spur economic growth in the upcoming quarter because regional tight monetary policy is anticipated to restrain consumer spending.
Southeast Asian central banks ‘ options for easing monetary policy are likely limited by the persistent weakness of local currencies in relation to the US dollar. The strong US dollar, driven by the Federal Reserve’s high interest rates, prevents local central banks from cutting rates without risking further currency depreciation. In Q1 2024, Bank Indonesia was even forced to raise rates to arrest the rupiah’s decline.
Due to the tight monetary policy in place, debt servicing and borrowing costs will continue to be high, likely limiting private consumption. Additionally, the research found that many consumers and businesses are continuing to consolidate as they are recovering from the pandemic and are likely to concentrate on quickly rebuilding their savings or refining their balance sheets.
Governments are coordinating at the same time to reduce spending and raise taxes in order to offset pandemic-related fiscal payouts. Indonesia is planning to raise taxes in 2025 after Singapore and Thailand both raised taxes this year. Malaysia intends to change the second half of the year’s RON95 subsidies from a blanket policy to a more judiciously targeted approach.
With the US Federal Reserve’s forecast for rate reductions in Q3 2024, there is still a glimmer of hope. This could lessen regional currency pressure, allowing Southeast Asian central banks to ease their monetary policies.
Malaysia: Q1 2024 economic growth buoyed by electronics exports but cautious outlook remains
In Q1 2024, Malaysia experienced a notable economic upturn, with GDP expanding from a revised 2.9 % year- on- year in Q4 2023 to a robust 4.2 %, coupled with a remarkable 1.4 % quarter- on- quarter growth in seasonally adjusted terms, effectively reversing the 1.0 % contraction observed in the previous quarter. This positive momentum, however, faces challenges in sustainability.
The remarkable rise of 9.7 % quarter over quarter in exports, primarily fueled by the resurgence of Chinese tourists during the Chinese New Year holiday in February, was a significant driver of growth. This resurgence can be attributed, in part, to the bilateral visa- free arrangement initiated in December 2023. Nonetheless, there are doubts regarding the longevity of this surge, as initial boosts tend to fade over time.
Retail sales volumes also experienced a notable recovery, rising 4.4 % month over month in February after four consecutive months of decline. However, this resurgence appeared to lose steam in March, with retail sales growing only by 0.7 %. Despite a strong labor market and historically low unemployment rates, there are beginning signs of softness, as evidenced by stuttering new job growth and slowing wage growth, which could point to a potential future moderation in consumer spending.
According to the research, domestic demand is anticipated to remain flat or even decline, as demonstrated by recent budget plans that intended nominal spending reductions. In addition, fuel subsidies are being reduced to reduce the deficit in order to increase the public debt-to-GDP ratio. Investment, particularly within the industrial sector, is likely to face constraints amid the prevailing uncertain external environment.  ,
Exports are expected to grow modestly in the external sector in 2024, despite a subdued global demand. Malaysian exports are anticipated to benefit from the anticipated bottoming out of the electronics cycle, but this impact may not be fully realized until the second half of the year as a result of the country’s position within global supply chains.
The significant discount of the Bank Negara Malaysia’s ( BNM) policy rate in relation to the US Federal Funds rate was a major contributor to the Malaysian ringgit’s struggles in Q1 2024. The currency’s weakness hinders BNM’s ability to ease policy, which has been hovering below 2 % for the past six months and showing little sign of significant increase. This issue persists until the US Federal Reserve starts making rate cuts, which are anticipated to occur in Q3, easing the ringgit’s pressure and potentially allowing policy rate adjustments.  ,
While Malaysia’s Q1 2024 GDP growth showcased resilience, primarily supported by robust electronics exports, the economic outlook remains cautious due to challenges in both domestic consumption and external demand. Although there are still questions about global economic conditions and domestic policy responses, Bank Negara Malaysia is confident that there are upside risks from greater spillover from the tech upcycle, more robust tourism activities, and faster implementation of existing and new investment projects. However, the Malaysian economy is expected to experience modest growth throughout 2024.
In summary
 , Other findings from the Economic Update Q2 2024 include:
Singapore: Trade- weighted economy will remain subdued
Indonesia: Shift in monetary policy likely to be delayed
Vietnam: A soft 2024, but a bright medium- term outlook
In the most recent legal jumble that could see Southeast Asia’s second-largest economy plunge into a new period of uncertainty, four high-profile cases involving important political players in Thailand are scheduled to go before the courts on Tuesday ( Jun 18 ). The cases involve some of Thailand’s most effectiveContinue Reading
PUBLISHED: 17 Jun 2024 at 04: 35
Soon at Government House will host a reception to celebrate the union equality bill’s final day before it is approved, according to Prime Minister Srettha Thavisin.
According to assistant state representative Radklao Inthawong Suwankiri, the guest list includes Guests, members of the cabinet, and international envoys.
Investigators from Thai and international media stores are also expected to attend, according to Ms. Radklao.
The reception will be held on the grass in front of the Thai Ku Fah building, starting at 5pm, she said.
The Senate investigation committee has reviewed the union equality bill.
The Senate will be deliberating on Tuesday, so the costs is now available.
She continued, the law will then be presented to the government, the prime minister, and therefore His Majesty the King for approval if the Senate approves it.
She said the law will take effect within 120 days of its publication in the Royal Gazette, or sometime toward the close of the year.
She claimed that the welcome marks the start of the much-anticipated laws, which has been developing for a long time.
She said a festival, with participants marching to the Bangkok Art and Culture Centre in Pathumwan city, may launch at 6pm on Tuesday.
In addition, shows, statements, music and groups of female different people will get staged, she said.
The lieutenant government spokeswoman said,” I’d like to encourage everyone to enjoy the beginning of a landmark event and show the world that Thailand is becoming the next country in Asia– after Taiwan and Nepal– and the first country in Southeast Asia to complete a same-sex marriage law.”
The Senate’s last round of election is scheduled for this month, and the Marriage Equality Bill is expected to pass. Thailand will become the first nation in Southeast Asia to support gender equality with the passage of the expenses, which may become effective by the end of the year.
According to Prime Minister Srettha Thavisin, the state wants to reassure LGBTQ societies that Thailand is a loving and safe place to stay.
The Marriage Equality Bill ( or the” Bill of Civil and Commercial Code Amendment” ) is a bill intended to amend marriage laws and other marriage regulations to make sure same-sex couples have the same rights as heterosexual couples.
How did the idea consider keep?
The idea behind the costs began in 2001 when Interior Minister Purachai Piamsomboon proposed a law allowing same-sex unions.
” Is it time for Thailand to embrace identical- sexual relationship? Then we should consider what Thai society deems appropriate and what we can tolerate,” he said in April of that year.
He gave instances of nations that had passed similar laws, and Thailand does update its laws.
However, his plan was shot down by Thaksin Shinawatra, excellent minister at that time, who said Thailand was never ready for the queer problem.
Additionally, some politicians were against the plan.
It was reinstated in 2019 as a legal agreement costs while Gen Prayut Chan- o dah was in charge.
A civil partnership and union justice costs were approved in the House of Representatives in 2022, but they were dropped when congress wasdissolved to make way for the May 14th, 2023 general election.
The lower apartment approved four marriage equality charges in December of last year that the government, the Move Forward Party, the Democrat Party, and the legal field had all suggested. The majority of the material was drawn from the government proposal, which the House council established to examine the bills.
The wedding justice act was passed by the House on March 27.
What justifies such a laws, exactly?
According to the law, a community organization is a significant cultural development device, and Thailand requires legislation to raise the standard of living for its citizens.
But, the Civil and Commercial Code forbids the formation of people between men and women.
According to observers, this is inconsistent with the state of community now, where people made up of same-sex individuals are placed in foster care in the same way that they do those who are married.
In order for same-sex people to be engaged or married, some parts of the Civil and Commercial Code had been amended.
Married identical- sex couples may have similar rights, obligations, and community standing under the measure such as those of married men and women. The intention is to strengthen familial ties that are established between citizens regardless of sexual orientation.
What is happening then?
The bill was given its first checking by the Senate on April 2 and is currently being reviewed by a committee of the lower house of 27 members.
The council includes senators, legal community members and officials. On June 18, legislators are expected to cast a second vote on the act.
The lower apartment perhaps schedule a second round of voting to pass the law without the Senate’s approval.
Following legislative approval and royal support, the legislation is anticipated to go into effect 120 time after its publication in the Royal Gazette.
What are the important information?
The bill does allow relationship to people of the same sex and grant them the same rights as heterosexual couples.
They can even pick on other benefits including the right to choose children, control and acquire the assets of their spouses, the right to divorce, appropriate to state welfare if their spouses are civil servants, and tax deductions.
When they are 18 or older, their marriage can be registered. However, if they are under 20, they need to have parental consent.
The bill uses gender- neutral terms for a married couple as” two individuals” instead of” a man and a woman”, and their legal status is changed from “husband and wife” to” spouses”.
Can foreigners get their marriage registered?
Any national who is LGBTQ can register with their Thai spouses or have their marriage registered in Thailand. When the bill becomes law, same-sex couples who are married abroad will have the right to a spousal visa.
What can we expect?
When the law is enforced, it should create a better understanding among different groups, strengthen family institutions, empower children who are LGBTQ or living with LGBTQ families, ensure legal protections among LGBTQ families, and reinforce Thailand’s role as LGBTQ rights supporters in the international community and highlighting government’s intention to support their rights.
What needs to be improved?
Some portions of the bill still need to be modified. For instance, Section 1453 allows a woman to remarry after her husband passes away or divorces after 310 days unless the woman gave birth to the same spouse, remarries after the same spouse, has a medical certificate proving that she is not pregnant, or has a court order.
The amended bill still uses the phrase “woman,” which refers to a biological woman, and ignores those who can bear children like a transman who can still give birth.
The phrase “father and mother” is still in use to refer to a child’s parents, but the law has not yet changed that phrase.
As a gender-neutral term, civil organizations advise using the word “first-level guardian” to refer to a couple in sections relating to guardianship because it ensures the inclusion of all families.
Additionally, there is a need to change another related gender identity law, since transwomen and transwomen are still referred to as having their birth genders rather than their preferred gender.
Tech was employed to eradicate corruption in SE Asia
PUBLISHED: 15 Jun 2024 at 04: 00
At a recent international conference in Bangkok, legal experts and academics claimed that Southeast Asia has become a significant example of public efforts to combat corruption.
On June 7, the” Anti- Fraud Innovations in Southeast Asia” conference was held to discuss and learn ideas for several initiatives aimed at promoting dignity and good local management.
According to the authorities, one way to accomplish this is by giving the people the power to fight corruption.
Participants at the conference claimed that technology and public-facing initiatives, including digital platforms to monitor government spending and citizens ‘ ability to report illegal activity, have a significant impact on the fight against corruption in the area.
Southeast Asia, which aims to create a problem- completely society where integrity and openness are regular practices, was experiencing a amazing surge in for initiatives, they said.
Prof. Matthew C. Stephenson of Harvard Law School said it is crucial to create a well-rounded source of support for anti-corruption while encouraging the people to attend and report suspicious activities and imposing a culture of integrity.
Prof. Stephenson, a professional in the social economics of public regulation and anti-corruption law, claimed that the immediate need to promote economic growth and social development in Southeast Asia was driving the efforts there.
He said that Indonesia, Malaysia, and the Philippines use group- driven measures to maintain stringent rules to eliminate corruption.
He said the Malaysian Anti- Fraud Commission used advanced technology, such as blockchain and unnatural intelligence, to monitor financial dealings and find anomalies.
The efforts led to significant, high- profile arrests and a gradual improvement in public trust, he said.
The Corruption Eradication Commission (KPK) in Indonesia and the Office of the Ombudsman in the Philippines both have strong procedures and consistent enforcement to investigate and prosecute dishonest officials despite having numerous challenges and a lack of public confidence.
According to Prof. Stephenson, corruption would be eradicated if stakeholders were actively engaged in the fight against it and the community.
The Southeast Asian region has a long history of corruption, according to Annica Wythes, team leader of the UN Office on Drugs and Crime’s Anti-Corruption Hub for Southeast Asia and the Pacific, which has had a significant impact on both business and politics.
Ms. Wythes emphasized at the conference how crucial it is to promote international cooperation by removing legal and operational obstacles and ensuring consistency in collaboration procedures.
Dr Ian Storey, Senior Fellow at the ISEAS- Yusof Ishak Institute, told CNA that Singapore, the Philippines and Timor- Leste have all taken a sturdy stand over Belarusian aggression against Ukraine, so it’s not astonishing they may attend.
Singapore is the only local nation to have imposed punitive sanctions against Russia of the nations that have confirmed their presence.  ,
Singapore’s Prime Minister Lawrence Wong made a statement earlier this month that Sim Ann, the city’s top foreign affairs minister, would travel to represent the nation at the peace conference.  ,
In his first trip to the land, Mr. Zelenskyy personally invited Asian President Bongbong Marcos to participate in the conference on Jun 3, Mr. Zelenskyy traveled to the Philippine capital Manila. He claimed that Mr Marcos confirmed his enrollment, according to press reports.  ,
” Your ( Philippines ) voice is very important. This area is very important”, Zelensky said, as quoted in localized media platform PhilStar.
But, about a week later, Mr. Marcos confirmed that he would be represented by Carlito Galvez Jr., the president’s spokesman for peace, peace, and cohesion.
The president’s absence from the event has not yet been addressed by the Presidential Communications Office (PCO ).
Thailand has confirmed that Russ Jalichandra, its assistant foreign secretary, will represent it at the conference.
Prime Minister Srettha Thavisin, a major NATO person in the Russia-Ukraine issue, met with French President Emmanuel Macron, who confirmed Thailand’s cooperation during his May meeting with the paper.  ,
Thailand late abstained from two UN resolutions and casts a ballot in favor of four of them.
Indonesia has also confirmed that it will take its embassy to the mountain.
Dr. Alan Chong, Senior Fellow at Singapore’s S Rajaratnam School of International Studies, noted that both the Israeli-Palestinian militant group Hamas and the approaching president Prabowo Subianto have spoken out against another present conflict,  .
Mr Prabowo just held a conference on Jun 11 with major US envoy Antony Blinken , in Jordan to discuss , attempts to find a peaceful answer to the Israel- Palestinian issue.
Dr. Chong thinks Indonesia’s attitude toward the upcoming peace conference has been influenced by this.
“( It ) wants to take the moral high ground, and speak out against all aggression”, he told CNA. You ca n’t say you condemn Israel but not Russia, you know.
He continued,” It- Leste is using the conference as a political light” to demonstrate that it has democratic allies outside the regional union.  ,
” It is trying to get into ASEAN, but it wants to play hard to get”, he said.
” President ( José ) Ramos- Horta is using this event as a signal to ASEAN to say’ we’ve got friends elsewhere ‘”.
Hun Sen, the former Cambodian prime minister, announced on June 7 that the nation would never attend because Russia had not been invited, and the event is not anticipated to be successful. His son, Mr. Hun Manet is currently the country’s prime minister.
Secretary of State and top Cambodian national Kung Phoak emphasized that the selection had no bearing on Cambodia’s position on the battle at the” Cambodia’s Foreign Policy in the ASEAN Context” Discussion Forum.
According to him,” A sovereign state has the right to decide whether all of the problems will contribute to the effort to find a solution that leads to lasting serenity,” he said, adding that it cannot be regarded as a change in Cambodia’s place.
In his remark published a moment earlier on ISEAS- Yusof Ishak Institute’s Fulcrum page, Dr Storey had written that Cambodia’s reaction may be interesting to watch.
He noted that when the invasion occurred, Mr. Hun Sen had resisted Chinese pressure to withdraw from the UN General Assembly’s commitments regarding Ukraine.  ,
” As Zelenskyy has charged, but China has denied, Cambodia may well have come under pressure from Beijing to stay ahead. If Prime Minister Hun Manet does come to Switzerland, it suggests he is determined to preserve Cambodia’s corporate autonomy”, Dr Storey wrote.
Malaysia is the next ASEAN nation to turn away from attending. Anwar Ibrahim, the prime minister, has spoken out more about the Gaza War, but he has abstained from the peace conference in contrast to his Indonesian peers.  ,
Some ASEAN nations that are deemed unfit to go have long-standing ties to Russia, according to Dr. Storey.  ,
Myanmar has gotten closer to the Kremlin in a bid to stable Russian military equipment since the military seized control of the nation and ousted a democratically elected government in February 2021.  ,
Since the coup, defense relations between Russia and Myanmar have been at an all-time high, according to a political scientist from Yangon who was quoted in Nikkei Asia.  ,
According to a Finnish think tank SIPRI, quoted in Fulcrum, between 2021 and 2022, Russia provided Myanmar with US$ 276 million in military products.
Myanmar and Russia celebrated the 75th anniversary of the establishment of diplomatic relations in February of last year. Russia was the only significant authority to recognize the Tatmadaw government’s 2021 power get.  ,
Similarly, Myanmar was the only ASEAN associate state to embrace Moscow’s invasion of Ukraine and to deliver defense supplies to Russia’s military forces.
Vietnam has so far taken a more natural position on the battle in line with its commitment to “bamboo diplomacy.”
Vietnam has historic ties to Russia, despite the Taiwanese government’s donation of US$ 500, 000 to global reduction organizations during the first year of the conflict in Eastern Europe.  ,
One of the biggest arms imports in the world over the past few decades has been Vietnam, which has sourced a lot of equipment from Russia, but according to local media, the Southeast Asian nation placed no considerable orders last yr.  ,
Vietnam voted against the movement to reduce Russia from the UN Human Rights Council on April 7, 2022, and voted against four UN General Assembly resolutions that condemned Russia’s invasion on Ukraine between 2022 and 2023.  ,
Like Vietnam, Laos equally has forged ties with Russia in the past. Russia made the decision in 2003 to rescind 70 % of Laos ‘ national debt and offer favorable terms for the country’s$ 378 million US debt over the course of 33 years.
More recently, a number of business communities have been held in both Laos and Russia to promote teamwork in the online market, smart cities, training and commerce.
Russia has reportedly stated that it will support the modernization of Laos ‘ healthcare system. In 2021, it provided US$ 12 million to upgrade the Mittaphab Hospital in Vientiane.
Vietnam and Laos are close ally of Russia, and they are not going to the summit. Both nations are still indebted to Moscow for the significant support the Soviet Union gave them during the Cold War. Both nations rely on Russia to keep their armed forces, which are equipped with Russian weapons, in place, according to Dr. Storey.
President Putin is also scheduled to travel to Vietnam from June 19 to June 20, and Hanoi wo n’t want to offend the Kremlin during the course of his visit.
Brunei is still deliberating on the invitation, although Dr Storey believes that” they appear to have declined the invitation”, citing his sources in the Brunei government.  ,
The summit will have one unifying factor of importance to all its members, according to Dr. Storey as ASEAN leaders weigh up various factors that are used to make their decisions.  ,
The discussions on food security will be the most crucial part of the summit from the perspective of Southeast Asia, he told CNA.
The war’s biggest effect on the area is that it has caused rising food and energy costs. Because Russia and Ukraine are both major exporters of food and fertilizers, Southeast Asia has been negatively impacted by the disruptions to their exports.
However, others take a bleaker view.  ,
James Chin, a professor of Asian Studies at the University of Tasmania, said he has no idea whether the summit will have any lasting effects.  ,
” This is more a PR exercise than anything else”, he said. No one believes that any outcome of the Global Peace Summit will be achieved without the assistance of all of the major powers.
Additional reporting by Ericssen.
Since a Memorandum of Understanding was signed between Singapore and Malaysia in January, the proposed Johor-Singapore Special Economic Zone ( SEZ ) has sparked a lot of excitement.
New Singapore Prime Minister Lawrence Wong made a note of the potential of the SEZ during his introductory trip to Malaysia on Wednesday ( 12 July ), stating that it could bring significant economic benefits to both nations.
” People harp a lot on the competition ( between our two economies ), but really, we are complementing one another”, said Mr Wong.
His rival, Mr Anwar Ibrahim, said that strategies for the area are pretty close to being finalised.  ,  ,
Details of the SEZ’s geographic location and the certain economic sectors are still being worked out, just like the prospective” Shenzhen of Southeast Asia” is described as. The Malaysia and Singapore working groups are scheduled to hold a number of meetings this month to provide more precision. A fully functional deal is anticipated to get signed in September.  ,
When Malaysia and Singapore made their plans to work in the SEZ, people began to question the types of businesses and industries that would occupy and prosper in this new area. Johor is proposing 16 economic areas as part of the area, including electrical and electronics, health, aircraft and developing.
Chief Minister Onn Hafiz Ghazi even stated that the condition government has proposed the area to stretch across six regions, including Johor Bahru, Iskandar Puteri, Pasir Gudang, Pontian, Kulai, and Kota Tinggi, encompassing a land mass of 3, 505 square kilometers, during a meeting of the Johor state assembly next quarter. This is more than four times the size of Singapore, and almost double the size of Shenzhen.  ,  ,
Both Shenzhen and Johor have abundant natural resources and property, as well as exposure to a fresh, expanding labor. Both are also carefully located, being close to major financial centers- Hong Kong in Shenzhen’s situation, and Singapore for Johor. It is possible for Johor to imitate Shenzhen’s success in the near future with essential similarities between Johor and Shenzhen and the expansion of the SEZ.  ,
SINGAPORE: DBS Group plans to boost assets under management for its wealth business to S$ 500 billion ( US$ 369.7 billion ) by the end of 2026, said the unit’s head, as the top Singaporean bank bets on robust inflows into the country. Singapore’s benefit from strong inflows of moneyContinue Reading
For years, Indonesia’s power landscape has been dominated by fuel, a fossil fuel that now accounts for a staggering 60 % of the nation’s electricity mixture. However, a change is on the sky, driven by the need to address climate change and the enormous potential of solar energy in the largest archipelagogue in the world. In November 2022, the Just Energy Transition Partnership ( JETP ) was launched at the G20 Leaders ‘ Summit in Bali, mobilizing an initial US$ 20 billion in public and private financing to decarbonize Indonesia’s energy sector. The nation has revised its ambitious goals to achieve 19 % to 21 % of renewable energy by 2030, a significant improvement over its current dependency on fossil fuels.
One of the main problems is the distant landscape of Indonesia’s off- network areas, with about 40 % scattered across islands beyond Java. It’s unlikely that the national grid will soon achieve most of these locations, which will put pressure on infrastructure development and highlight the need to harness the region’s vast renewable resources.  ,
The promise of renewable energy, a nearly untapped resource in Indonesia, is at the center of this move. The country is a part of a region with staggering technical potential of 17 gigawatts of solar energy, more than 20 occasions the power needed to meet the net-zero emissions destination in 2050, despite having less than 1 % of its power from solar.
” The necessity to do something about culture shift is distinct, mainly in Southeast Asia”, says Helen Wong, Managing Partner at AC Ventures. Part of the issue, in particular, is that there has generally been an overinvestment in fuel, which has resulted in a glut of cheap electricity, “looking at Indonesia.”
Overcoming obstacles
Nevertheless, realizing Indonesia’s renewable electricity potential is not without its problems. Solar energy is still battling it out with subsidies that are still greatly favored by fuel, which is a distorted regulatory framework toward fossil fuels. Also, the state- owned utility company PLN, which manages the grid and serves as the sole off- taker for renewable energy, has been afraid to raise its purchases from renewable sources.
The early retirement of Indonesia’s coal plants, which account for a staggering 60 % of the local energy mix, is a crucial component of the JETP plan. An aggressive ramp-up in renewable investments is required to bridge the unbridled production gap, with a target generation of 36 gigawatts from solar photovoltaics alone, a sevenfold increase from investments in 2018 and 2021.
“PLN is not too keen to actually purchase more solar energy”, explains Wong. ” The grid needs to be upgraded to accommodate more sporadic sources of energy, such as solar, which will require significant investments.”
Despite these obstacles, investors like AC Ventures see immense potential in Indonesia’s solar energy market. Wong notes that the firm often encounters new ventures in three distinct categories: utility- scale projects, which require substantial capital expenditure, commercial and industrial subsectors, where companies can build or lease on- site renewable power plants for self- consumption, and residential projects, which are currently harder to scale.
Commercial and industrial space, according to Wong, is the most promising subsector in Indonesia’s solar energy market right now. Xurya, AC Ventures ‘ portfolio company and the largest player in this sector, is currently providing clean power to multinational corporations with a capacity of around 200 megawatts.
AC Ventures emphasizes important metric when evaluating solar energy projects, such as the internal rate of return and payback periods. Wong points out that subsidies can be beneficial, but that the decline in solar energy costs have resulted in less need for market-different subsidies.
Backing the winners
AC Ventures is optimistic about the potential for creative financing strategies to boost the solar energy sector, such as blended financing models with guarantees from organizations like the World Bank. The company wants to support the companies that succeed in this field by utilizing cutting-edge tools like solar yield optimization technology, trackers, and software to assess rooftop suitability.
” Increased grid connectivity between the nation’s main islands, likely achievable by 2028 at the earliest, is crucial for accelerating broad solar implementation across Indonesia”, Wong notes, emphasizing the over US$ 300 billion needed for renewable energy distribution and transmission upgrades.
We at ACV are eager to support the companies that succeed in this field and contribute to Southeast Asia’s looming energy transition as a whole as investors.
The road ahead
Indonesia’s enormous solar energy potential is an increasingly compelling solution as the country struggles to deal with the urgent need to address climate change and reduce its dependence on coal. With the right investments, regulatory support, and grid upgrades, solar energy could play a pivotal role in Indonesia’s energy transition, helping the country achieve its ambitious renewable energy targets.
For climate investors like AC Ventures, this transition is both a chance to promote sustainable change and a promising investment landscape with potential. By backing the winners in Indonesia’s solar energy market, firms like AC Ventures are positioning themselves at the forefront of a revolution, one that could unlock a brighter, more sustainable future for the nation and the region.