ASEAN Energy FDI and Canadian Opportunities

Authors: Kai Kagetsu, Matthew Klukas – Criterium Energy Ltd.

The Canada ASEAN Business Council (CABC), as Canada’s first and only accredited entity associated with ASEAN, is establishing the Sustainable Energy Working Group for Canadian and ASEAN companies who are interested deepen collaboration in the area of sustainable energy. The Sustainable Energy Working group is aimed to foster the exchange of insights, best practices, and opportunities and it will further provide a platform to promote Canada as ASEAN’s reliable partner in decarbonizing energy sector and enhancing energy security in the ASEAN region.

The ASEAN economic scene has historically offered substantial opportunity. Beginning in the 1960s, the Asian Tigers of Singapore, Hong Kong, South Korea, and Taiwan rose to global prominence with the implementation of export-led growth. These approaches led to an increase in GDP per capita, financial influence, and technological innovation persisting to the present day. In recent times, the emerging economies of Indonesia, Malaysia, Philippines, Thailand, and Viet Nam are now being dubbed the ‘New Asian Tigers’ due to their growth trajectories. Key drivers of the New Asian Tiger’s economic growth can be attributed towards an increase in export driven manufacturing, favorable demographic trends, infrastructure growth, urbanization, and a significant increase in foreign direct investment (FDI) inflows.

The United States has been a major contributor to ASEAN FDI, accounting for a $74.4 billion increase in FDI for 2023 alone, which represented 32% of total ASEAN FDI inflows1. With the newly elected Trump administration straddling the US FDI initiatives with an ‘America First’ mindset, focused on shifting American FDI away from China, ASEAN lies as the perfect middle ground of neutrality.

Consequently, China has also been increasing FDI into ASEAN, with significant increases since 2016 in response to the first election of President Trump. This trend is underscored by the increase in ASEAN FDI inflows totaling US$170 billion since 2016, nearly doubling the US$96 billion from 2006-20152. Notably, Singapore is the top recipient of Chinese FDI at US$13.1 billion3 , with the economies of Indonesia and Viet Nam following closely.

ASEAN Development Plans and FDI Opportunities

Energy trends in ASEAN center around two main priorities: (1) an increase in investment in renewable energy solutions and (2) meeting the demands of the ever-increasing energy demands of the region. These priorities open significant opportunities to prospecting companies and countries looking to invest into ASEAN. This is most notably demonstrated in ASEAN Regional Investment Promotion Action Plan 2025-2030, which aims to enhance political and economic collaboration and alignment among member states to encourage sustainable investment inflows4.

How other countries are increasing involvement in energy with ASEAN FDI

The race is underway to secure energy-related FDI into ASEAN. Major global economies are increasing their investment in large-scale projects rapidly popping up around South-East Asia. In Indonesia, there are many domestic initiatives that have been kickstarted with FDI support. In 2023, Pertamina Geothermal Energy lead the charge with a $1.6 billion investment into expanding geothermal energy in Indonesia5. The United Arab Emirates similarly recognizes Indonesia’s potential as an emerging economy, subsequently investing $32.7 billion in renewable energy, health, port infrastructure, and food production across the country6. Elsewhere, Viet Nam has emerged as the region’s prime destination for renewable energy investment by ranking first across South-East Asias7. With $5.5 billion invested in renewable energy alone, Viet Nam maintains close relationships with Japan, Thailand, and South Korea through collaboration on solar and wind projects aimed to support the power demand across the entire country.

These are not isolated efforts of world investment turning towards ASEAN for the future in energy, many projects are present in every single country. From the green financing project in Malaysia, Thailand’s ‘Absolute Energy’ Project, Meralco Terra Solar Project in the Philippines, and the Dầu Tiếng solar project in Viet Nam, there is no shortage of investment opportunities. Global superpowers all over the world are staking their names into the future of South-East Asia. The United States, European Union, China, Japan, and South Korea all have FDI inflows into ASEAN by $20 billion or more8 . With such momentum, one must ask: where is Canada?

Source: Statistics Canada (2023). Table 36-10-0433-01 International investment position, Canadian direct investment abroad and foreign direct investment in Canada by ultimate investor country (x 1,000,000)

Canada’s role

Leaders in both ASEAN and Canada have recognized strategic value of strengthening global ties, as Canada is well positioned to play a key role in filling critical institutional voids. Despite being rich in nickel, tin, RRE, and Bauxite9 , South-East Asia has a substantial shortage of aluminum, steel, and copper, all necessary minerals in the energy transition. In contrast, Canada is rich in aluminum, copper, and iron ore necessary for steel production10 . Recognizing this, several implementations have been made to try to address these opportunities. The Comprehensive Economic Partnership Agreement (CEPA) signed by Canada and Indonesia to take place in 2026 aims to deepen economic ties between the two countries for the increased growth in the sectors of green energy and critical minerals11. Canada’s Indo-Pacific Strategy aims to increase FDI into South-East Asia as well. While these initiatives are good first steps forwards, vast opportunity remains for Canada’s public and private sectors to increase involvement into the region. Canada’s expertise in unconventional energy recovery, renewable energy, and carbon neutral solutions could be invaluable to ASEAN's energy future.

Ultimately, Canada and the ASEAN member states are strategically positioned to enhance foreign direct investment and deepen collaboration in response to the region’s evolving energy demands. As global momentum accelerates toward a low-carbon future, the establishment of CABC Sustainable Energy Working Group marks a timely and strategic step forward. By connecting Canadian innovation with ASEAN’s growing demand for clean and resilient energy systems, we can unlock transformative opportunities for both regions. The CABC invites public and private sector stakeholders to engage with the Sustainable Energy Working Group as we continue to lay the groundwork for this important initiative, with further details and the official launch to be announced in due course.