RENEWABLE ENERGIES: A STRATEGIC MOVE FOR SOUTHEAST ASIA

An “all-green” strategy to preserve resources security and independence

Known as the “City in a Garden”, Singapore built international reputation for its strong commitment to a green and sustainable city. Loved by some or decried by others who claim that the city has lost its original soul, the result is anyway quite astonishing when compared to other international bubbling financial hubs.

Such an obsessive approach couldn’t come however without a clear subtended interest. Given Singapore’s geographical location, soaring population and industrial booming sector, a huge amount of power generation capacity is needed. Likewise, water supply poses a long-term challenge that desalination and water catchment solutions (NEWater program) have not yet completely solved (50% of the city’s water still comes from Malaysia).

Singapore’s support for green oriented projects set-up

Thanks to attractive connections with the rest of South East Asia, Singapore is strategically positioned to play a leading role in supporting the development of cleantech industries in South-East Asia. Among some of Singapore key strengths, let’s name a few:

  • Strong logistic capabilities supported by world-class infrastructure facilitating regional distribution.
  • Strong R&D capabilities thanks to significant government funding for energy, water and green building sectors.
  • A cleantech incubator & accelerator aimed at: 1/ providing cleantech companies with business support in Singapore and 2/ help international enterprises expand their technology and business to the region, using Singapore as a springboard.

South East Asia urgent need for renewable energy resources

Be it strategic or purely philanthropic, green issues are a growing matter in emerging markets particularly in Asia where the expected urban population boom and related energy needs pose massive challenges: infrastructures, access to water and electricity are among the most important ones that the region will have to tackle over the next decades.

On top of environmental issues (water supply, pollution), an exacerbated reliance on imported fossil fuel energies represent a tremendous economical and geopolitical risk that governments have to tackle so as to support the expected economical growth prospects of the region.

According to a report published by the IEA (International Energy Agency), the region’s energy demand has expanded two and a half times since 1990 and it should keep increasing dramatically over the next decade as per capita use of energy in the region is still very low (half of global average). IEA estimated that about USD1.7trillion of cumulative investments in energy-supply infrastructure are required by 2035 in order to match South East Asia needs. Renewable energy sources are abundant in South East Asia: the potential of bioenergy (agricultural and animal feedstocks) is large while hydro already plays an important role in the region. Geothermal is under used relative  to its potential while Wind and Solar PV remain small but deployment is growing. According to Armstrong – clean energy Asset Management, the installed capacity of solar power systems in South East Asia was close to 400MW in 2012 and should exceed 2400MW by the end of 2014.

Much to be done still but initiatives and financial supports are gaining ground

Although the renewable energy sector is still encountering some difficulties (financings, oil subsidies, grid issues administrative hurdles), governments have been clearly encouraging initiatives and gradually improving energy policies in favour of renewables. In the meantime, development banks such as IFC or ADB are playing leading roles, actively participating to the financing of the sector. Specialized investment funds have also joined the effort, providing the sector with additional financing support.

All in all, South East Asia offers incredible potential for renewable energy investment projects. International equipment providers have already settled in the region, utilizing Singapore as a regional hub. Additional players keep investing in the region. Non-outstanding the fact that fossil fuels will still be needed in the future, a rebalancing of the energy mix is one of the top priorities on which Asian governments are working on. Much needs to be done yet but a gradual shift is on track.  The soon to be launched regional economic integration (AEC) should also further enhance common energy policies and regulations in the region, therefore facilitating the development of the sector.

Athenia-Link under the spotlight

This week, Athenia-Link appeared in Singapore French Chamber of Commerce (FCCS) newsletter.

Click here to read the full story.


 

With a business platform of about 600 company and additional individual members, the FCCS is a very active chamber.

Acting as a business and social pillar for any executive working in the region, the chamber offers a vast area of business services and organises many events all over the year. At Athenia-Link, we appreciate their efforts in supporting entrepreneurs initiatives!

WHY SINGAPORE HAS BEEN SHARPENING ITS TASTE FOR TEQUILA..

Latin America and Asia : two different worlds, two different cultures but common interests in embracing their role as new world economic locomotives. Both regions are increasingly important in each other’s economy and face the same challenges, including among others the need for investments and productivity growth.

Still an unstable region but isn’t it the case of most emerging markets?

Truly, countries such as Venezuela, Bolivia and Argentina still carry the hazard of asset expropriation, Brazil is experiencing a serious slowdown and violence issues remain key issues in Mexico and Colombia. But isn’t it it common disparities in any emerging regional market? When looking at Asia, Africa or Middle East the same puzzled situation appears. The whole regional picture is unstable but “picking” opportunities exist as long as you dare buckling up your belt and experience long term growth interspersed by punctual downsides.

As a visionary and pragmatic nation, Singapore has been gradually moving towards Latin America

  • GIC, prominent Singapore sovereign wealth fund opened an office in Brazil in June 2014 in order to benefit from Latin American potential.
  • For the first time, Singapore was officially represented at the 9th Pacific Alliance Summit, held in Mexico in June 2014.
  • Singapore is currently Mexico’s second largest investor from the Asia Pacific after Japan with total direct investments amounting to USD1,2bn between 1999 and 2012.
  • Reversely , more and more Latin American companies are using singapore as a base from which they can manage their investments in South East Asia

But..Caramba! what is all this fuss about Mexico?

Although risks and uncertainties remain, let’s summarize below some of the main positive drivers of Mexico’s potential:

  • Free market engagement is reflected in the network of 12 FTAs that Mexico has signed. This clearly grants Mexican products preferential access to 45 coutries. Apart from these bilateral agreements, Mexico’s participation in other international agreements demonstrate Mexico’s willingness to assert its trade liberalisation.
  • According to cost index Alix Partners, Mexico ranks among the most competitive manufacturing destination globally.
  • Since inception of the NAFTA agreements, the US, Mexico and Canada have formed the world’s largest free trade area, creating along the way a true integrated supply chain between these countries.
  • Thanks to Mexico’s deep integration with US, the country will definitely benefit from US economic rebound.
  • The structural and energetic reforms launched and already approved gave a serious sign of seriousness to international investors, providing the country with soaring investments and economic growth.

All in all, no one can assert about Latin America and more particularly Mexico’s steady growth. However, investments in social welfare and economical structures are definitely solid pilars that can further support strong economic growth and help for softer and sustainable landing. This has been the bet taken by Singapore and Mexico and it proved to be a winning one so far.