S-E Asia needs greater access to financing to move needle in green transformation: Asean official
[JAKARTA] South-east Asia needs greater access to financing – as much as US$200 billion a year from now till 2030 – if the region is to move the needle in its green transformation.
Making this point on Wednesday (Oct 11) was Satvinder Singh, the deputy secretary-general of the Asean Economic Community.
Speaking at the opening of UOB’s Gateway to Asean conference in Jakarta, Singh – a former assistant chief executive of Enterprise Singapore – noted how Asean member states have agreed on a carbon-neutral plan to help push the region towards achieving a low-carbon future.
“It involves eight important strategies and we have identified 16 important priorities for implementation over the next few years that will complement the member states’ efforts to reach their carbon neutrality targets,” he told the audience that included UOB deputy chairman and chief executive officer Wee Ee Cheong.
“If we get it right, this will bring another US$5.3 trillion in value to Asean’s economy,” said Singh, adding that carbon neutrality efforts can create as many as 66 million new jobs in the region.
According to latest data, green loans comprise about 22.5 per cent of total loans in the region. Proceeds from green bonds and loans can be used to finance environmental and sustainable infrastructure projects, such as renewable energy, energy-efficient buildings and low-carbon projects.
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Singh said that Asean’s current flows of green finance are estimated at US$63 billion per year, far less than the US$200 billion that is needed annually.
“We must intensify our efforts to promote sustainable financing, which will enable other regions to access global funds,” he said.
In an earlier speech, Indonesia’s Coordinating Minister for Economic Affairs Airlangga Hartarto said Asean as a whole has remained “relatively resilient” despite the challenging external conditions.
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The International Monetary Fund recently said Asean’s economic growth reached 5.6 per cent last year. The forecast is for growth to be 4.2 per cent in 2023 before advancing slightly to 4.5 per cent in 2024.
The total value of merchandise trade in Asean reached US$3.8 trillion last year, a 14.9 per cent increase from US$3.3 trillion in 2021.
Foreign direct investment inflows hit a high of US$224.2 billion last year, a 5.5 per cent rise from US$212.4 billion in 2021, led by new opportunities in the manufacturing and services sector, said Airlangga.
Also speaking at the conference was Indonesia’s Deputy Coordinating Minister of Maritime Resources Firman Hidayat. He said that in order to accelerate growth, Indonesia needs to step up efforts to address the climate challenges that come with economic growth, such as rapid urbanisation, environmental risks and a growing population.
As one of the world’s largest emitters, Indonesia – the largest economy in South-east Asia – needs to make a rapid transition to decarbonise while achieving economic resilience, which requires significant investment flows, he added.
“Several global and regional finance frameworks and taxonomies have begun to include the concept of ‘transition finance’, meaning there is greater financial support required to implement long-term changes on the path to net-zero and more sustainable practices.”
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