Industrial Transformation in ASEAN A Cluster-Driven Model for Regional and Global Collaboration 2026

COUNTRY SPOTLIGHT Singapore Singapore, home to the world’s second-busiest port, a top marine bunkering hub67 and a major exporter of high-tech goods68 and chemicals,69 is at the forefront of the ASEAN energy transition. Aiming to meet around one-third of its energy demand through low-carbon electricity imports by 2035,70 its heavy reliance on imports and scarce land makes this transition complex.71 In response, Singapore boosted solar deployment, becoming one of the world’s most solar-dense cities, and also launched financing initiatives such as Financing Asia’s Transition Partnership (FAST-P).72 It is decarbonizing its energy and chemical hub through the Jurong Island refreshed direction73, which focuses on new energies and low-carbon innovation in the energy and chemicals sector. In parallel, it is advancing maritime decarbonization via the Maritime Singapore Decarbonization Blueprint and Tuas mega-port development. It is also exploring low-carbon technologies such as CCUS and hydrogen.74 Our vision for Jurong Island goes beyond decarbonizing a chemical and energy hub – we are redesigning the industrial ecosystem itself. By embedding sustainability, circularity, carbon management and collaboration into its core, we are building a blueprint to power the future of low-carbon innovation. Jacqueline Poh, Chief Executive Officer, JTC Corporation Despite ASEAN’s strong policy intent and institutional coordination, significant challenges remain.75 ASEAN’s consensus-based approach ensures inclusivity, but can also slow momentum. Its rotating chairmanships can shift regional focus over time. Addressing energy challenges is critical to strengthening the region’s growing industrial base and sustaining its growth momentum.76 The key challenges can be broadly categorized into policy, infrastructure and financing. Policy barriers –Policy fragmentation: Fragmented national targets, incentives and standards hinder regional coordination; ASEAN must shift from isolated national goals to deeper regional integration via the ASEAN power grid (APG), renewable energy credits and shared funds. This is essential to scaling the energy transition.77 Inconsistent policies and frameworks (e.g. tariffs, wheeling charges) deter large-scale investment in the region,78 while lack of harmonized technical standards (e.g. grid codes) hampers the development of a cooperative grid.79 Absence of inter-ministerial working groups, unclear ministerial roles and weak inter-ministerial coordination leave companies in limbo on implementation decisions. –Fossil fuel subsidies and carbon pricing gaps: Fossil fuel subsidies remain prevalent in several ASEAN countries, discouraging renewable investment.80 Carbon pricing mechanisms are limited or inconsistent.81 Although each country drives its own approach, absence of interoperable carbon registries and common market rules would limit cross-border opportunities.82 –Human capital and workforce transition: As education systems lag behind industry needs, with limited curricula, instructor shortages and weak academia–industry– government coordination, fragmented funding continues to widen the region’s energy skills gap.83 Meanwhile, the shift towards low-carbon industrial technologies risks displacing workers in carbon-intensive sectors. Building a sustainable aviation fuels (SAF) plant is only half the journey. Without a clear policy mandate and government incentives, airlines remain reluctant to commit to long-term SAF offtake agreements. What would unlock real scale are binding blending targets, tax or subsidy support to bridge the price gap and recognition of certified feedstocks under global standards. With such a policy backbone in place, capacity expansion and airline adoption could progress much faster. Chaiwat Kovavisarach, Group Chief Executive Officer and President, Bangchak 2.3 Challenges to ASEAN’s energy transition Addressing energy challenges is critical to strengthening the region’s industrial base and sustaining its growth momentum. Industrial Transformation in ASEAN: A Cluster-Driven Model for Regional and Global Collaboration 12