Endgame with Gita Wirjawan - Satvinder Singh: Is Southeast Asia Worth Investing?

Episode Date: October 18, 2024

Deputy Secretary General of the ASEAN Economic Community, Satvinder Singh, talks about ASEAN from a macroeconomic perspective. Touching the region’s economic initiatives and breakthroughs—from digital economy, carbon neutrality, to inter- and intra-region trade. #Endgame #GitaWirjawan #SatvinderSingh ---------------------- About the Guest: Satvinder Singh is the Deputy Secretary-General of ASEAN for the ASEAN Economic Community (2021—2027) where he leads and advises the implementation of the AEC Blueprint 2025 and oversees the AEC Department at the ASEAN Secretariat. He has over 27 years of experience in local, regional, and global management positions across SEA. About the Host: Gita Wirjawan is an Indonesian entrepreneur, educator, and Honorary Professor of Politics and International Relations at the School of Politics and International Relations, University of Nottingham. He is also a visiting scholar at The Shorenstein Asia-Pacific Research Center (APARC) at Stanford University (2022—2024) and a fellow at Harvard Kennedy School's Belfer Center for Science and International Affairs. ---------------------- To discuss and explore more of this episode, visit: https://endgame.id/ ---------------------- Episode notes: https://sgpp.me/EGepsnotes

I think the strengths we have in ASEAN, there's one common factor that binds us together. We all believe that we all need to grow economically and bring growth and prosperity to our people, period. In ASEAN, everyone is equal. We are going on the basis of consensus. Solidarity is amazing, but we just got to get our productivity. There is a lot to learn from the China perspective,

but at the same time, we are a different makeup. We can't emulate what China has done. What we do and what we put are going to be critical. I think we have a chance. The world is noticing that we are different. It's happening right now already. Hello, friends, not-ter-asasas, it's been up here before we've made mission our mission our

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Jakarta, check, detail of the acara and ticketed-negame Town Hall. Hi, friends, today we're visited by Sett Finder Singh, who is the Deputy Secretary General of ASEAN, and he's particularly in charge of, the ASEAN economic community. Finder, thank you very much for visiting our show. Thank you, Pankita.

It's a pleasure to be here. You know, as always, I'm curious about one's background. Tell us about your story, how you grew up. I come from a significantly small family, five of us, and my parents' typical immigration story is from Singapore. My parents came from India. Dad and mom migrated in the 50s, and they came in Singapore and all of us grew up in Singapore.

A humble beginning and I guess we are the products of what I call the most successful outcome of what Singapore society is all about, where you are nobody, you are a working class family, the ability in one generation for your children to grow up and be successful without having the need to bribe anyone, without the need for you to do anything to get special access i think we are the product of that so all of us are professionals and successful in our own ways in my family and i've worked for the last 30 years 35 years before coming here in the singapore government right from university i started work with the government uh interestingly i'm glad i started with trade i started with the organization called the trade development board

and very quick into my career it was actually less than two years and i was I can't imagine a biggest opportunity rendered to a young kid. I was at the age of 28 and I was given the chance to be posted in New York City as the center director for North America for Singapore. Crazy. And when I went to New York, it was a wonderful four years. And in that process, I matured. You know, like when you go from Singapore, is a real environment and you're out there into New York City. I think you're I learned a lot.

That was my foundation of more of what I became and how I contributed. And I think cutting it short, I've spent close to 30 years, three decades in serving in the space of economy and trade. And I think I've, I've what in me, the biggest lessons I've learned in what I've been doing is that because I operated into trade and investments and economy,

I had the very rare opportunity of a bureaucrat to be very close to the private sector. So a lot of what I know, a lot of what I've been sort of like harness to be able to bring into my new role in ASEAN actually comes from the foundation of learning and being coaching and mentoring from the private sector. And I think to me that's my greatest wound that I've learned. And that's what made me who I am and given me the ability to take on probably one of the most complex jobs. jobs in ASEAN, the Deputy Secretary General of the AEC, where I'm touching everything from economic agreements to digitalization, to agriculture sector, to transport sector, to the financial sector, to talking about competition or IP. All of this actually requires your ability

to then think of the biggest stakeholder for all of us. And in the case, I'm very clear in the AEC, my biggest stakeholder is our private sector. there. We'll get back to ASEAN. But Singapore puts a lot of premium on education. To what extent did your family put premium on education for you and your siblings? Extremely. I mean, that's precisely the only courting. My mom and dad were uneducated. They all have primary education, informal education. So the biggest premium they put from day one when we were growing up was education. And, you know, I'm in a family of four boys, including my and one girl. So I think my dad was very, very clear about, I'll give you what you want,

but I want to see the results. So we, even though we were not a wealthy family from very young, we had the first VCR when VCR came out. The first color TV sets, even our relatives didn't have them, the wealthy relatives, because they were afraid the children wouldn't study enough. But my dad believed always in, okay, you guys give me the results. I'll give you what you want. And I think that education bid was always the core, the very top of priority for the parents. And that's true of not just my family.

I think majority of what Singapore is all about, at the core of Singapore working class, middle class families that grew with nothing in the 60s and 70s, where they are today is because the ability for them to be able to access good quality education, which was provided for, and the ability for them to have equal opportunities. I think that was so important.

What did you study? I'm basically, I'm a graduate in humanities. I enjoy humanities from very young of my life. I know that when I was growing up, I had big fights with my elder brothers who insisted I should be doing engineering and science. For very young, I knew I enjoyed humanities more. And I remember that there was a case where you need to choose

which faculty you have to go to. And there was a big fight in the house where my elder brothers want me to do science. engineering. And then I went to my dad. I told my dad, I said, Dad, you know, I can't do this. I prefer humanities. And he actually listened to me. I was so shocked. He actually allowed me to pursue humanities. And I think that's what's important. It doesn't matter what you do to be successful in life. You should do what you like and what you're good at. And once you're good into something, it's not even work. It's not even studying. You will just progress in life. And I think that's

the spirit that has helped me to do well. I always kind of been quite lucky lending into things that happen to be working well for me. Same thing like when I first started work, I have no idea because back then nobody's going to guide you what career you're going to have. Your uncles and your parents have no idea anyway. And then it just so happened that I just followed my friends who actually applied to join the Trade Development Board. But when I got into Trade Development Board, It was an organization that was very, even though it was bureaucracy, it was ministry, but he had, it's a statutory board. It had very close affinity to the private sector. So that fit.

I was just lucky to have landed into that and that became my preference and he fit into my personality so well. So I've been quite lucky in my life. So in hindsight, you think that would have been better compared to if you had majored maybe in finance or whatever for you to fit into the trade development. work. Definitely, I'd be much richer if I had finance, right? So today I'm working for the government. But it worked out okay. It worked out okay. And I think in life, in life as you grow older, you realize that it's not all about how much you earn. It's really what you do and the kind of impact you can make to communities around you, to people around you, to the organizations you work for. I think those things matter more. I think as long as you are comfortably paid enough,

that's sufficiently good, but the impact part, I think, is becoming even more important. And I'm sure that's true for you too, but yeah. The ASEAN economic community, it's a vision that I think is out of the ordinary, right, for close to 700 million people in Southeast Asia. Now, I want to paint the picture as a draw, as a backdrop of what I want to ask you. If we take a look at the last 30 years, Southeast Asia's GDP per capita, grew by a factor of 2.7 times compared to that of China at about 10 times. It's highly identifiable as to why we underperformed. Number one, we underinvested in education.

Number two, we underinvested in infrastructure. Third, would have been a lack of governance. fourth would have been lack of competitiveness. And I say this with full cognizance of the fact that Singapore has been an exception in Southeast Asia. How does ASEAN economic community fit into this picture and a picture going forward? I guess, you know, when we look at ASEAN today, people still look at us as a successful region, right? We have done well. I mean, despite we have challenges in some of our...

out of the 10 countries, we have LDCs with us. And they are the ones that are probably have a greater amount of challenges than the six other founding nations who are a lot more advanced where they are today for their people. I think that there is a lot to learn from the China perspective,

but at the same time, we are a different makeup. We can't emulate what China has done. And I think where we have learned to come together is that there is a sense of camaraderie in the region that we all can grow together and there's a huge benefit for us to come together to bring everyone up together on the growth trajectory. I think the strengths we have in ASEAN, which are unique to other regions, there's one common factor that binds us together, especially on the economic side, is that we all believe that we all need to grow economically and bring growth and prosperity to our people, period.

We don't have debates domestically in our societies where we have the extreme left and extreme right and then everybody deciding and then everybody deciding how much they're going to move economically or not to move. I think what we have is most of our societies are in the middle of balance. And I think that has been our strength and that will continue to be our very unique strength of our region to be able to then make. decisions which are cohesive, not only at the national level, but cohesive at the regional level. I dare to say at the Asian economic community level, probably we are the pillar that you can actually see tangible impact that has come across. Today, the integration, especially at the economic level, is real. You actually see our intra-Asian trade. It's become the biggest

component. It's become the biggest component. And same goes for foreign direct investments. The biggest component, of course, today is still United States, but when you look at the second largest component of FDI, it's actually FDI from intra-ASEAN. It's the second largest FDI. And then when you look at the breakdown of the FDI, a lot of it is actually tangible FDI that brings value in jobs, active, multiply effect to the economy. So I think in that way, if you ask me, there is success that we have brought about in the integration process. And value and the spirit of the original founding leaders of ASEAN in wanting to develop a unified market of ASEAN to be relevant and to be competitive. I think all those things are so relevant

today and they are going to be also what I call the foundations of our success for the future. I'll pick up on a few points you raise. The first is this general notion that Southeast Asia is just a highly undernarrated narrative when you go beyond Southeast Asia, right? You go anywhere around the world, people tend to want to talk just about India and China. And they get more excited about talking about Taiwan and South Korea and Japan. When the population size of Southeast Asia nearing seven and a million is just far greater than some of those countries mentioned, how do we fix that? I'm with you, but I think you were so perspective in exactly perspective in terms of where we are today.

I think even though we are one of the fastest growing regions in the world, we are talking about growth rate of as a collective block 5% from now to probably the next two decades, if everything goes well. Even though our blueprint clearly states that by 2045, all of the 10 economies of Assyan are going to be upper middle income economies. And here we are talking about a size of 750 million, but yet we do not get the attention. As much as the large economies, I agree with you.

I think partially, I think why is like this is because ultimately we are talking about a region with 10 different countries, right? we are not homogeneous. We are also different economies. It's not easy for anyone looking at ASEAN to understand ASEAN, how ASEAN comes together. And we are not like a common block like you see in the EU, where they are custom union, financial union, right?

27 countries are together. In ASEAN, it's different. 10 countries together, but we are not a customs union. We are not a financial union. But economically, yes, we are negotiating. negotiating economic agreements together, you know, and with the rest of the world. So in that way, there is integration, but there is also differentiation. It's a balance.

I personally think the concussion that what we have in ASEAN under the ASEAN economic community, time will tell, but I think we'll probably be a formula that will be of envy to most regions in the world who want to emulate a regional grouping, you know. But in ASEAN we're different, right? ASEAN, everyone is equal. A Laos is paying an equal amount to what Singapore or Indonesia is paying. We do not move

on any agenda economically if all the nine countries or ten countries are not agreeable to it. So I think that formula, even though we might take a little bit longer, because the driver is, there's no strong driver. We are going on the basis of

consensus. But the decisions we make to go forward on a collective and on the centrality of of the benefit of all, I think in the long term, they are going to actually going to create outcomes that are going to be better for everyone. And there'll be less dissension, there'll be more unity and more relevance for each other under this Asian umbrella. So I'm confident that that story is so important. It needs to be tell. It needs to be told. But at the same time, there's a big challenge. You know, we do reporting on how the organization does in our academic

journals, in our reporting of statistics. But I think the men on the street, the stake stakeholders, the private sector. They probably have not sufficient amount of understanding on what goes on in policymaking at the regional level actually impacts them on a day-to-day basis. But a lot is happening actually at the regional level in terms of market access, in terms of connectivity, in terms of rulemaking. Simple thing like visas, right? Today, Asian population travels visa-free, right, throughout Asian, you know, that convenience, right? To what extent lingual proficiency

will reshape the storytelling capabilities of Southeast Asia? I mean, Singapore is blessed with everybody's being able to speak an international language. Call that English. Many Malaysians are.

Many Filipinos are. But if you go to Laos, Cambodia, Myanmar, Thailand, Indonesia, Vietnam, Indonesia doesn't have more than 10 million people out of 280 million people that can speak English the way you do, right? I've been sort of like testing a hypothesis where if we have 300 million people in Southeast Asia that can speak good English the way you do, as opposed to maybe 60 to 70 million, I think the storytelling capabilities of Southeast Asia or Southeast Asians are going to be much more robust.

we're not going to be as under-narrated as we might have been. What's your take on us? I don't know, Pari, I may not agree with you entirely on this, because sometimes when I walked into the least developed economies, and that's why these are the examples where English is not the lingua funka, Cambodia, Laos and Myanmar, the appreciation of ASEAN is a lot higher. Oh, if you go to Cambodia, but if you go to Nebraska, yeah. That's a different story, right?

I think it's beyond language. I think it's about what's in your face. And clearly what ASEAN do at the regional level, it happens at policymaking. But it's not easy to, it's not tangible. It's not easy to be described in terms of the impact to the stakeholders on the ground. It's tough. It's tough. But I also believe that we need to do more in terms of reaching out.

I think the leaders, the people who are driving ASEAN institutions, and we have many institutions, not just a secretary itself who are connected to ASEAN. They all can do a lot more in terms of outreach and sharing of information and sharing. I think there's a lot more needs to be done. I guess the fact that I'm sitting here with you, Pagita, is part of my effort to do my part, you know, sitting here talking about ASEAN. There are people in Africa, Europe, Japan, the United States, Central America, that are listening to this platform. beyond Southeast Asia. But I think the idea is to move the needle, right, to a much greater level so that people

become aware of what you're thinking about, what the Laosians are thinking about, what the Vietnamese are thinking about, Indonesians are thinking about. That, I think, requires some sort of proficiency in an international language. And it goes back to, I think, the investment you made a long time ago. As for everybody to be able to speak their respective dialects at home, but when they go to school, when they go to the office, they speak English because that's the medium with which they communicate with the rest of the world. That, I think, is something that perhaps the AEC needs to infuse, you know, as part of the storytelling capabilities. Now, a second point that I've picked up on what you've alluded to is foreign direct investment. Right.

And only Southeast Asia gets about $200 billion, give and take, but half of that, or slightly more than that, goes to Singapore. And I'm just amazed with two things. number one, the abundant liquidity that's out there all over the world that needs to be deployed, but it's not being deployed to Southeast Asia. And number two, how Singapore just continues to be the LeBron James in getting FDI as compared to its, you know, neighbors. What's your take on this? No, so you're absolutely right. When you look at the figures on FDI, a big chunk,

close to about 50% or 60% goes to Singapore, and a lot of it actually goes into the money market segment of FDI classifications. Again, that kind of FDI is also very liquid. It comes in, it goes up. It's very sensitive. That kind of FDI is sitting in Singapore because it's looking to be deployed regionally. I naturally feel that it's going to be a matter of time,

You're going to see a lot more comfort by the funds and by the investors to want to make that plunge. And I think we are already beginning to see that. If you walk out and you look out the window, you look at the amount of tall, spanking, modern buildings in Jakarta, and you see all the modern names of some of the largest companies in the world, financial investment companies. Clearly, the movement is come. And you will see there's going to be a greater spread of that interest, not. not only from the West, that I dare to say, even from Northeast Asia, you'll see a lot more of that interest coming to our region. I think that balancing is going to happen a lot quicker than

we think, right? In fact, I was just talking to the Australians and I was talking to Hong Kong China recently. I'm actually encouraging those two hubs that they need to do more because our region need a lot of capital for our transition for our growth. Southeast Asia is deemed as growth and opportunity. And there's a greater opportunity for us. to be able as a region to tap those markets. I think time has come for us to enlarge our hinterland pie of dependence on much larger pools of money that sits beyond even our immediate region. Because we need it. We need that in order to fund the huge amount of transition we are talking about. No, no, I'm with you, but I'm just questioning how Singapore has been able to get

disproportionately much more capital formation. from overseas than each of the other large countries. I mean, Indonesia, Thailand, Philippines, Malaysia, and Vietnam, each would be getting about $10 to $30 billion, where Singapore has been getting about $100 to $110 billion worth of FDI. I think Singapore is going to play a very meaningful role in serving as a conduit for capital formation because Singapore is best position to understand a risk return profile of each one of the region, right? But number two, I think the onus is upon each one of the other countries to basically try

to move the needle from 10, 20, 30 billion to a much higher figure because of that abundance of liquidity that's sitting in many places around the world. And I think it requires a collective wisdom. And to some extent, the leaders of ASEAN also realize that. And that's why we have just ASEAN-wide Acha Treaty, which is for investments. And in there, you will see a greater commitment on the 10 countries in order to spend a lot more resources to make their investment policies and regulations a lot more transparent and investor-friendly. I think it's actions like that if we keep building and improving on them.

But I don't think we should sit on a lot of us to think that we have done with it. I think we need to continue improving on our investment regimes in the region to make it more open. After all, we are not just competing with ourselves, we're competing with the world. Everybody else wants to have our lunch, right? I think we need to do more in

further liberalizing and further opening up our economies. And for the fact that after all, the game that we are after, where we want to move our economy and our people towards upper middle class by 2045, will require us to move in that direction. There's no way we can keep

holding on to the older policies of protectionism and closing our markets down and then hope that we get there. I think that's not going to bring us to that journey. So enough of FDI, on intratrate, we had a chat earlier. How do you compare the intra trade of Southeast Asia, which is less than a third of our collective GDP with that of the Europeans and that of other groupings. I mean, I'm in a camp that believes that it could be more and it needs to be more it just underlines the ability or our collective ability to integrate ourselves

a little bit better You know, we are quite unique Pargita so in our Asian region and I was actually looking at data comparing the most successfully integrated regions in the world and I was looking at obviously the top of the class is the European Union

where their integration is very high their intra-European trade is sitting around maybe 55, 60%, the component of their total trade. And the next best of class is actually NAFTA. That's basically Mexico, US, Canada. That is something around 33%. Even though we will say that it's 20%. But I think the what I call the genesis of our composite ASEAN, It's very different from NAFTA as a group, the economies of the countries, and with Europe or even NAFTA,

what we realize is that actually when you look at our total trade, it sits around today. Last year was around 3.5 trillion US dollars, total trade. Interestingly, we are among all the grouping in the multilateral, I'm talking about the three big sets. We are the only ones where our GDP and our total trade is the same amount. Our GDP today stands around 3.8 trillion. Total trade. Total trade is 3.5 trillion. So meaning to say we export, we are really large exporting nations, all of us, the 10 countries.

Now, and when we export uniquely, it's not just to we export to our region. We export to many of our trading partners outside. And then because of that, this is something that's not going to change. we're going to, as the global economy demand grow, the component with trade with outside of ASEAN will keep growing. And that component, in most of the case, actually grows sometimes faster than the growth within ASEAN, even though there's good growth in ASEAN. So to me, I think we will always have this challenge.

You know, we are quite different from the other ecosystems. I would say in the best of class, the top three integrated regions in the world, we actually have a very unique position. we also do trade a lot within the region, a big composite, is the highest, biggest composite, but at the same time, we do a lot of trade with the rest of the world.

So Southeast Asia economies behave more like them, you know? So we trade a lot with the rest of the world, and we trade not in a concentrated way, we trade with many countries in the world. On top of that, there's an interesting observation, right? If every country in Southeast Asia has China as its largest trading partner as of today, if you take a look at particularly the last 20 years, the pivot to China as a trading partner for all Southeast Asian countries has been to a greater extent than the increase of trade of each

one of these countries to the U.S. Trade with each one of the two has increased, but increased more with China. With the exception of Vietnam, Vietnam's trade increase with the U.S. is slightly higher than that of Vietnam with China. Now, just to make the discussion a bit more interesting, in a world where things are getting a little bit more complex, would call it decoupling, call it de-risking, polarization and all that good stuff. What do you think ASEAN could do to make sure that there's sustainability of

this internationalization of trading of goods and services? So, Pankita, that's a very interesting insight you've shared and I think it's happening right now already, what you are describing. We have seen our numbers

from last year onwards already. We are beginning to see that ASEAN as a region is actually beginning to go back to what we used to be. I think bifurcation is truly challenging that. And we all know bifurcation is not going to go away. It's something that's going to be here. We are beginning to see even some of the largest conglomerates,

state-owned or even private companies of China, actively moving into our region. No longer are they just talking about buying resources, what they used to do. They are now thinking of actually coming into deeper active joint ventures with local partners and in fact bringing in greater part of the value chain of the activities in Southeast Asia

so that they can serve globally. And I think this phenomena is just beginning to grow and you will see an exponential growth in the next five years. The FDI number that you're talking about. I think it's today at $2.30 billion. Believe me, I think we are going to have far greater growth in the next five years. And you will see they are all looking at China Plus One strategies or China Plus Two strategies.

And that flow out of the plus one plus two is falling very nicely into the economies of Southeast Asia. And it's not just bifurcation that's actually causing it. The second most important element that I think everybody is underestimating is the impact of sustainability, what I call the responsibility that most of the OEMs in the world are facing today. many of them have to start looking at decarbonized global supply chains many of them have to now ensure that 40% of their whole entire global supply chain doesn't land into landfills

and they have to account for it they have to bring it back into their whole manufacturing cycle these are huge stresses that today a CEO of an OEM faces today and I think in ASEAN this is an opportunity of a lifetime for us to make ourselves stronger, like we said today. Let's make our ecosystems, our investment regimes, open and stronger, transparent and consistent on one end.

But on the other end, I think we should also be strongly pushing towards ensuring that our ecosystem will support circularity, sustainability. And the good news, for Agita, I want to say that our leaders, in fact, last year when Indonesia was the chair, They actually supported the ASEAN carbon neutral strategy. In there, we had 16 no-regret moves that we are going to take as a region. And in order to help at the regional level policies that are going to complement the decarbonization actions of each of the 10 countries, because all of them are committed towards their NDC targets under the Paris Agreement for 2050, what are some of the regional things we need to do in order to support them? And under that Asian Carbon Neutral Strategy Plan, I'm happy to say one of the 16 initiative was,

there was a commitment by the leaders that we need to modernize our trade agreements to make them more circular. We need to start allowing the free movement of circular products through our borders in the region first and with our FTAs, with our partners. The good news is that as we speak today, Artiga is our FTA that binds the most important FTA, Assyan. We are renewing it, we are upgrading it. One of the best new components that we are negotiating now is adding of the circularity element into our agreement that's going to allow re-manufacturing activities to have transparency, consistency and commitment across the 10 countries. To me, that's one of the biggest pluses that you will see that will help strengthen our relevancy in this journey of being able to attract global supply chains. Because companies,

Companies today wanting to look for locations where they have open markets, open access, in order to be able to do business with the rest of the world by operating in those jurisdictions, but they also need open access in circularity. Otherwise, they cannot put their global supply chain and value at activities in those places. I've got a number of questions on sustainability, but I want to just complete the circle on the earlier part of the discussion, where, you know, there are signs that, well, I mean, Southeast Asia and I was already getting more FDI than China, right? And I don't want to jinx it. I want that to continue.

Not at the expense of China, because there's a lot of liquidity out there that needs to be allocated properly, judiciously. And I do believe that a region of peace and stability or tremendous peace and stability, such as Southeast Asia, deserves capital allocation, not just economically, but technologically, right? I'm in a camp that sort of believes that I think Southeast Asia is going to be able to outpace its past growth trajectory, right, which would have been 2.7 times in terms of GDP per capita in 30 years. I think it's going to be different in a good way in the next 10, 20, 30 years. and I think it might have a chance to outpace China's growth trajectory, which is shown a bit of a deceleration compared to what China has been able to enjoy in the last 20, 30 years. What's your take on that?

What would it take for Southeast Asia to actually firmly anchor itself in that sort of a thesis? I think we have what it takes to be there. And let me explain that. I think demographically, in terms of growth and relevance, you know, we are not just looking at ourselves as export-driven economies. Today, our populations are consuming. We are becoming attractive to even exporters around the world.

We are consuming societies also. If you look at the South Seasian capitals, right? You look at the standard of living and how we live. We have the makings of the trappings of the upper middle class where we're emulating to. You know, it's coming. It's there. You can see, you can feel it.

Walk into the streets of Jakarta, SCBD, where we are speaking here. When you walk into Manila, Makati, new areas. When you walk into Bangkok, the spanking new parts, you feel it. It's there. I think, but more importantly, besides the consumption, the demography,

I think more importantly, like I said earlier, I think the consistency and the solidarity that is amongst the leaders, of ASEAN, and wanting to push on the bucket of economic growth, it's real. And I actually will factually now prove it with you. I think I just want to tell you also another important thing that's happening in the region. And that only came also when we were, Indonesia was the chair last year. It was also the first time we went out to tell the world

that the region as a whole is going to come together and we're going to start the not a goods agreement, but a digital economic agreement. Ten countries coming together, not a voluntary agreement. We want to move forward towards a legally binding digital agreement. Big fact. There's nothing like that in the world. There's nothing like that. And to me, when we actually put out the roadmap of the guiding principles and the scope that the agreement is going to cover, everybody was shocked. Because we were not just looking at data centers and data movements or even digital payments. cross-border. We went beyond that. We put on the table digital identity, trade digitalization,

e-commerce. And when it comes to e-commerce, tax issues, how do we actually treat low-valley goods in a better way, how do we make it more efficient? And we even put in into our agreements, things like how do we allow the free flow of skillful tech personnel in the region, unheard of in many of our economic agreements. We never have the braveness to look at that. So can you imagine 10 countries' leaders coming together to say, let's move forward because we believe that our growth that we are aiming for, the transformation we want,

we can see digital transformation integration being a call that's going to put us ahead of the game. It is thinking like that and things like what I described to you earlier about how we are moving quicker than other regions on secularity. This is truly going to make us more relevant. In order for us to be growing, like what you said, the trajectory of growth, we need to make ourselves different and more relevant, more competitive. And I think the leaders that we have today, like I said today, it doesn't matter which party you come from and which part of ASEAN. Somehow in ASEAN, they all have this.

You know, I'm actually sometimes surprised how even in meetings, especially on the economic side, the solidarity is so strong. It's amazing. Solidarity is amazing, but we just got to get our productivity way much higher. I mean, there's no way we can compete. If you take a look at the marginal productivity of most countries in Southeast Asia, again, with the absolute exception of Singapore, it's still well below. And number two, I think the non-tertiary education manifested in PISA. There's only two countries that are about the global average in Southeast Asia.

That's Singapore and Vietnam. Singapore has just become number one. China is number one. Singapore has dislodged China as the number one holder of Pisa ranking. Indonesia, Philippines, Malaysia, Thailand, and all the rest are still well below global average. So even at the vocational level, you know, we got our work cut time. A long way to go, yeah. Right?

So if we want to outpace ourselves, you know, I think we have a chance. I think we can grow better than 2.7 times than the next 30 years, as we did in the last 30 years. But if we want to grow as fast as China, I think we got our work cut out. I think we got to take a view on the non-tertiary education and also the tertiary education. Now, I want to pick up on a few points you raised on the topic of carbon neutrality. I've had the privilege and honor of attending some of these conferences, starting with Copenhagen, I've discovered that the discussions there are just not of realism. And put this in the context of Southeast Asia, I'm not trying to belittle, circularity,

but I think power generation needs to be looked at much more meticulously. And if we take a look at power generation, we're talking about about 400,000 megawatts worth of power generation in Southeast Asia. But if we take a look at electrification on a per capita basis, Singapore and Brunei are up here at 10,000 kilowatt. The rest are 1,300 or below. We're not modern. If we want to be modern, we've got to be at least at 6,000 kilowatt.

So my calculation is if we all want to be modern and sustainable, we're going to have to build about a terawatt worth of power generation. That's about four times or five times. That's a lot of donuts. Four times are what we have. That's a lot of donuts. And at the rate that we're not attracting FDI fast enough, at the rate that we're not building fast enough power generation capabilities,

Indonesia will require more than 100 years to become modern. And if it's so choose to be, so chooses to be sustainable, they'll take longer. And where is the money going to come from? how do you reframe the narrative so that we can get the money and we can get the technology and we can make sure everybody's a happy camper? I was going to add another issue that when you look at what we have today, our countries like Southeast Asia, where democracy is the size where it is growing and the growth of the

economies are there. I think there's a huge deficit, a huge deficit in terms of capacity. And clearly, no matter how much we are going to start investing into renewal, and because of mother nature, solar is not going to be that intensive in our part of the world. Neither would win energy. The fact is the size of the demand that we have in this region that we need already without taking into account the advance of the fresh demand that people are talking about now the last two years with AI and emerging technologies. Nobody even has the pulse exactly now yet. But I think we're going to see lending in the next one, two years of a greater,

realization of the kind of power we need. Already we are talking about we need to be having three acts of what we have today by 2050. But in ASEAN, under the Yassian Carbon Neutral Plan, we are quite clear. We are saying we are not like how most of the developed world is looking at fossils. We are looking at fossils as a major supplier of our power needs. But we are also looking at wanting to push for decarbonization

of the fossils network. We want to push for carbon capture not just for storage, but even we're going to push harder on reutilization. If we are able to decarbonize and capture the emissions from the carbon coming from fossils, and we can capture it and we can reutilize it and make it into circular outputs, whether it's ammonia or cement that goes into the building of cities, we should continue looking at the intensity and the value of fossils, and then at the same time decarbonization through carbon capture. And I'm glad that under our Assyan carbon neutral plan,

we have put that as one of the key initiatives of ASEAN alongside renewables. We are going to push very hard on CCUS adoption. But at the same time, we are hoping that the cost and new innovations in CCUS will come out from that. And a lot more of those solutions will come running into our region where the demand is going to be. I think we are in the process trying to coordinate what this policy measures could look like and then bring some of these best practices on a voluntary basis to be adopted by the 10th We are working with that, with inputs coming from the private sector.

Our financial sector today, if you look at some of the behavior from the capital markets, not looking at the needs of what the region is undergoing and what we need. And I think this is where I think we need to be a little bit more realistic like what you mentioned and practical. And we need to look at decarbonization in a much more scientific way, not in a perception way. And I think we need to be a lot more accurate in determining this whole issue of decarbonization. carbonization and making sure that we are not alienating what this region needs in order to grow based on perceptions out there and what is good and what is not good. I think it's important for us to be careful in terms of the taxonomies that we are embracing

in the region and we need to make sure that we are empowering some of the needs that we're going to need in terms of especially power. If we can't figure out our power needs, then what growth are we talking about? How are we going to reach there? And I think this is where I think sometimes the financial, sector could do a lot more in embracing and understanding the needs of the entire ecosystem and needs of Assyan's growth here. Well, one of the primary task of a financial intermediary is to figure out how to bridge the gap between where the technological wherewithal can be

availed. At the moment, all the renewables can be availed at a cost of about 50, 15 cents per kilowatt. But the purchasing power for 85% of the population of the planet is only at 3 to 5 cents. So that gap between 5 and 15 is where I think the financial intermediation needs to focus on. And I'm not seeing enough, right? And a couple of additional observations that I want to infuse for purposes of bringing about realism into the discussion. I read somewhere that China, in addition to all the sustainable power generation capabilities they built last year,

they built 40,000 megawatts worth of coal-fired power generation. That's more than 13 times of what Indonesia built last year, which would have been around 3,000 megawatts. The second observation is if you listen to the Jensen Huangs of the world, The latest GPU for AIing anybody, any institution, any nation, we're talking about 10x to 30x capability. So when the capacity goes up by 10x to 30x, you got to start thinking about the energy requirement being 10x to 30x. And at the rate that China and the U.S. are bogged down in this AI race, I just don't see how. how sustainability is going to be answered as quickly as, you know, people might say it is going to be. I think the realism is such that I think fossil could be around for a much longer time.

But fossils can be around, but again, in our... The capture. The capture is critical. I think once we can capture the carbon. And anyway, carbon is the one that contributes to the heat, right? Heating of motherland. I'm with you. And if we can do more and actually incentivize.

more technologies and bring about policy that supports the private sector to decarbonize and then move into carbon capture more actively on their own, I think we were on our way to decarbonizing in ASEAN. And I think those are some of the efforts at the ASEAN level we are pushing very hard. But what we need is the cooperation of the financial sector. I think the taxonomies that today we are building today must be a lot more inclusive to this transition. And the transition and taxonomies must be able to allow.

all these deserving projects to be able to help themselves, go out there in the financial market to get transition financing they need to help themselves. I think that's the critical part. I think that that's why the power sector alone cannot do this alone. They need the help of the financial sector. And the financial sector here, I'm talking not just from the regional financial sector point of view, but the global financial sector that's coming to want to work with us. Look, I still think that we got to do as much as possible on a renewable basis.

In addition to figuring out a better way to capture what's dirty out there, right? But I'm with you in the sense that the financial intermediation needs to figure out how to bridge that gap between 15 cents and 5 cents. Not enough. To the extent that gets remedied, right? We still have to resolve the concern about how not fast enough we're modernizing, right? Because in order for us to go up from 1,300 kilowatt hour per capita in Indonesia to 6,000, Singapore and Brunei are at 10,000. You don't need to worry about it.

But Indonesia, Philippines, Thailand, Vietnam, and all the rest have to worry about modernizing. Indonesia will need more than 100 years. How do we modernize by 2050, which is only 26 years? years away. How do you answer that? So I would say, you know, this discussion on decarbonizing and working together to sort the problems of ASEAN, I must say, Pagita, that we are a lot closer today to finding solutions. We've been talking about the ASEAN power grid for the last 10 years. It's not like we haven't done anything. We have started trading electricity across from Laos, across the mainland Southeast Asia to Singapore.

And you've seen the protocols being developed within the Assyan working committees on how to do that. How do we do intra-trading between the member states on excess power? And to me, one of the greatest low-hanging decarbonization efforts is really, there are nations in ASEAN who are producing more than they need, and there are nations who are producing less than and they need to buy more. if we can optimize the supply of total electricity production in our region, that itself will help us to reach and meet up.

Move the needle. Move the needle. Take care of not enough to the scale of 6,000. But at least you will help us in minimizing the kind of the amount of investment and costs that we're going to bear in our transition. And I think this is where I have good news to say that the multilaterals like ADB are doing a lot more today. In fact, they are going to come back. They are coming up with proposals in order to further.

facilitate member states to optimize and to prioritize the connector projects we are talking about. You know, there are 18 connector projects for the ASEAN power grid. To connect, 16 of them actually need feasibilities and need financing for execution. And the problem is, it's not that they are not important. I think member states have always seen this as important projects, but you know, always domestic prioritization will come forward. And you can't run away from that. I think in this case, the multilaterals like ADB and World Bank, they are coming to us and talking to the Secretariat and we are trying to work programs that can optimize behavior and prioritization of connected projects.

And this is where it's not just about providing more loans or more feasibility technical financing that can support those projects, but it's also about ensuring that they can actually make the loan repayment in a way which is more attractive to members. States, like giving monotoriums to them or giving very, very low or no interest rates on some of these critical projects. To me, this is a big success also going to happen. And hopefully, with the momentum we are going to gain this year and some of this momentum happens. I think there's a lot of interest. It's not just the multilaterals. I think even the private capital market is ready. They find us bankable. They want to work with us. They like the story of ASEAN. What they are waiting for is momentum. And once the momentum begins with a couple of such projects, I'm actually an optimist. I think we are going to be able to turn around and get this, the Assyan power grid

and full momentum. You know, so that itself, you're right. That's not going to be the solver of all solutions. We still will need to start finding global capital to help us in investments into power capacities. And I think that's where it's not just multilateral, we need to depend on. We need to truly start looking at a much more sophisticated blended solutions out there to support some of these expansions. And I feel this is why I was saying earlier, you know, the capital markets, you know, we need to tap all capital markets around us, you know.

Be it for infrastructure development, traditional market where it supports development of infrastructure. I think we need to grow that pie. And I think this is where the challenge is. And we need to make our ecosystem in our region a lot more sophisticated. in being able to pull project development and execution. We need to be able to build those capacities in us because like you said, the demand of such projects is just going to be huge.

Huge. And a lot of the activity is going to happen here, you know, and we need to be ready for that. Last bit, you mentioned multilateral, right? As we've shifted from a very much unipolar kind of world to a much more multipolar, it's been very difficult to multilateralize. and we're sort of like shackled by this need to bilateralize a bit more,

plurilateralize, a bit more, but not multilateralize. It's just very difficult, right? And we're blessed with a frame called Arssep, regional comprehensive economic partnership. Why is it that India decided to opt out from Arsum? So first of all, for many of the view, in the world who are listening to this, there's always a very big misconception of RSEP that RSEP is a FTA that belongs to China. Well, I was going to say that.

I'm happy you say that because I was part of the initiators. And I would have liked this to be in ASEAN-Let. It is an ASEAN-Lat FTA. It has to be perceived. It is an ASEAN-LEN-FTA, and it was an FTA where the 10 countries of ASEAN then invited some of our core trading partners to come. and join into this agreement. It's a joint agreement today, and it consists of both countries like Japan, South Korea, China, Australia and New Zealand. As we speak today, there are multiple

countries. They are also wanting to accede into ASEP. So to me, this is already without this new countries coming in, the largest FTA in the world, is big deal. And the impact of AARSEP is huge, Bagheeta. Aft is not just a goods agreement. It's not about just tariff savings. It has huge elements in there of actually trade procedure commitments from each member state. I think you also have noticed all of the existing 15 members have also kept the door open for India. We'll debate on goes, but it's not off the table. But for now, for now India still have decided to stay out. So that to me is It's a wonderful gesture of how ASEAN with our partners, how we can even get our partners to agree to that. And our partners are actually with us.

Japan, Australia, Korea, New Zealand, they all are with us. And they all believe that having India in our grouping is a good thing. And I think we will continue to engage and we will continue to not give up our hope and hope that one day, one day India will still reconsider and come back and join ourselves. You know, India gets a lot more excited on jumping on a bandwagon of this geopolitical bandwagon of seeking greater relevance with respect to Southeast Asia. And when I get asked if that's going to be good or effective, my response instinctively would have been it's probably not going to be as much as desired at the rate that they're not jumping on the economic bandwagon to see great relevance with Southeast Asia.

Now, I think Southeast Asia could be a solid partner for them in supplying, right, all of the electronics, components and parts, including a great supplier partner in helping India, you know, in terms of reaching its goals, you know. And that's why when we are now negotiating our new Artiga, it's not just about tariff taking in, taking out. I think there's a much bigger vision of integration needed on both sides, where we want to be together.

We are going to become upper middle class very soon in the next 20 years. And we are going to be solid markets for your exporters. We're going to, we look at India in the same way. So to me, I totally agree with you. The complementarities are so large and it's on

the table for taking. You know, it's probably high time for me to reassert The optimism I have with respect to the future of Southeast Asia on the basis of some of the stuff we've talked about first one of which would have been of course this multilateralization that still prevails by way of our set second would be how we're embracing the energy transition narrative

third would have been the tech-enabled disruptors that have been quite prevalent in Southeast Asia and they're likely to linger on for quite a while Now, anything that you could have done or would have done differently for AEC, for Southeast Asia going forward? You know, the last three years I've actually finished my one term as a deputy secretary general for the AEC is a three-year contract and I've been re-elected for the final time. Congratulations or condolences? No, no, no. Congratulations.

Like I said, this is the most challenging job in the region. but highly satisfying, you know, impactful in terms of what we can do to support and serve the region together with the member states. If you ask me what I can do differently or more and where I think we may not have done enough, I think we have done very well in terms of the digital transformation side, what we have done and what we have achieved through the Bandas Tripagwan roadmap and how the way we are prioritizing into developing digital identities, getting member states to move to Unistral Modern Law, I think digital payments cross-border working. I think those are fantastic overtures in ASEAN. I think this is going to lay the foundation towards trade digitalization where we are going to be ahead of the curve.

And now we defa on top of that, making legally binding. I think we are in a very good place. I think on the sustainability side, not only we have braced circularity, decarbonization. Right now as we speak, we are going to start working on blue economy engagement in the region, coming out with full implementation plans. I think we are doing things in the more practical, effective way. that serves us better.

And I think we're going to do well in there. Any final messages on EEC, Cinder? This is a very important year for us. 2024 is the year where we are taking stock. Our blueprint, the 10-year blueprint, which began in 2015, is coming to an end in 2025. It's a final year. So this is quite a critical year

where we study what has gone right and what has gone wrong. Of course, there's a big chunk of our last 10 years where COVID came. There's a lot of challenges that COVID created for us. We are not where we should be, for example, in tourism. But then also there's a lot of benefits that we've also gotten from COVID, especially digitalization.

We would not be where we are if there was not COVID, the speed with which we embracing change and policy changes. But then we are also an important year because this year we are also thinking of the tax leg, the next part of our blueprint. And again, the leaders are saying, no more 10 years, let's start looking at 20-year plan of where we want to go as a region. So right now we are also building out the ASEAN 2045. And it's going to be an important year and it's going to be released next year when

Malaysia is the chair. Typically, Malaysia was also the chair when 2015 was released. So there's a lot of work that's now being done, a lot of engagement of stakeholders, sectoral bodies to think of the long term, the 20 years. It's tough, you know. But at the same time, from the AEC side, we are looking at five years strategic plans, which are practical and realistic.

And then, of course, have a longer-term vision of longer-term, mid-term initiatives. So we are open, and I think we are glad that we are getting a lot of inputs and guidance from the stakeholders. And I think, like I said, we are at the infliction point where what we do and what we put in terms of our strategies forward

are going to be critical. And I would say where we are today, we are also here because of the policies of the blueprint that the region has to embrace ourselves. And that's why we're in this comfortable position where the world is noticing that we are different. We are much more open. We are much more relevant to them.

And I think the next 20 years, if we can further strengthen the narrative and put real powerhouse of transformation into our plans, I think we will see much brighter future for our people. Amen. Siddhar, thank you so much. Thank you for praise the show. Thank you.

That was Sid Finder Singh, the Deputy Secretary General of ASEAN. Thank you. This is end game.