UAE’s Green Energy Push in the ASEAN: Bold Investments Drive Renewables and Infrastructures

The United Arab Emirates (UAE) has embarked on a visionary journey to accelerate green energy adoption in the Association of Southeast Asian Nations (ASEAN). Through strategic investments and sustainable initiatives, the UAE aims to reshape the region’s energy landscape. Let’s explore the key drivers behind this bold push.

UAE’s Commitment to Sustainability

In line with its commitment to sustainability, six major UAE banks have invested up to Dh190 billion (approximately $51.8 billion) into green financing by the end of 2022. These investments span various sectors, including:

1. Renewable Energy: The UAE is channeling significant funds into renewable energy projects. Solar, wind, and other clean energy sources are at the forefront of this transformation.
2. Waste-to-Energy: Innovative waste-to-energy technologies are gaining traction. The UAE’s investments aim to convert waste into valuable energy resources.
3. Green Technology: The UAE supports research and development in green technologies. From smart grids to energy-efficient solutions, these advancements drive sustainability.

The ASEAN Context

The ASEAN region, comprising ten member states, faces unique challenges and opportunities:

• Energy Transition: To achieve ASEAN’s target of 23% renewables in the primary energy supply by 2025, an annual investment of USD 27 billion in renewable energy is necessary. However, from 2016 to 2021, the ASEAN countries attracted no more than USD 8 billion annually for renewables.
• Obstacles: Carbon lock-in, regulatory practices, and limited institutional capacity hinder investment. While some countries have adopted advanced measures like auctions and feed-in tariffs, implementation remains a challenge.

Countries in Collaboration

1. Brunei: The Brunei Investment Agency (BIA) acquired a 29.73% stake in BIBD from Dubai-based investment firm Fajr Capital. This acquisition made BIBD wholly Bruneian-owned, with remaining shareholders including the Brunei government, the Sultan Haji Hassanal Bolkiah Foundation (YSHHB), and individual Bruneian investors. BIBD has achieved record profitability in recent years, posting its biggest net profit of $147 million in 2018. Fajr Capital’s initial investment in BIBD in 2010 contributed to the bank’s transformation into an award-winning institution.

These investments strengthen economic ties between the UAE and Brunei, contributing to local business growth and job creation in the country

2. Cambodia: The UAE and Cambodia have established a Comprehensive Economic Partnership Agreement (CEPA) to enhance their economic relations. Here are the key points:

• Market Expansion: The UAE-Cambodia CEPA covers over 92% of tariff lines, providing privileged access to Cambodia’s diverse consumer base for UAE businesses.
• Investment Opportunities: The agreement encourages bilateral investments, fostering economic growth, job creation, and technological advancements.
• SME Support: Provisions in the CEPA benefit Small and Medium-sized Enterprises (SMEs), allowing them to expand their reach.
• Service Sector Boost: The agreement enhances market access for UAE service providers in Cambodia, facilitating collaboration in finance, healthcare, education, and other service-oriented industries.
• Customs Procedures: Streamlined and expedited customs procedures benefit businesses.

The UAE is Cambodia’s top trade partner in the Arab world, accounting for 77% of its trade with the region. Additionally, UAE investments in Cambodia have reached USD 3 million by the end of H1 2022¹². The CEPA aims to further strengthen economic ties and create new opportunities for both nations. 

3. Indonesia: The UAE has made substantial investments in Indonesia, spanning various sectors. Here are the key details:

• Investment Amount: The UAE committed to investing a staggering $32.7 billion in Indonesia. This significant investment reflects the trust and confidence UAE investors have in Indonesia’s potential.
• Sectors: The investment will be allocated to several sectors, including:
  • Health
  • New and renewable energy
  • Port infrastructure
  • Food sector (to improve seedling quality and enhance production value).
• Strategic Cooperation: The UAE’s investments promote further cooperation between UAE investors and Indonesian entrepreneurs, including micro, small, and medium enterprises.
• Recent Developments: In November 2021, Abu Dhabi-based artificial intelligence company Group 42 announced investments in smart city initiatives, telecommunications, and genomics laboratories in Indonesia.
• Infrastructure Focus: The UAE also unveiled a $10 billion investment plan in Indonesia, targeting infrastructure projects such as roads, ports, tourism, agriculture, and other key industries.

These investments strengthen economic ties and contribute to Indonesia’s growth and development.

4. Laos: The UAE has shown interest in investing in Laos, particularly in the following areas:

• Hydraulic Energy Production: The UAE has contributed to projects related to hydraulic energy production in Laos.
• Mining Resources: Investments have also been made in the exploitation of mining resources.
• Transportation Infrastructure: The UAE has explored opportunities in Laos’ transportation infrastructure.
• Tourism: The tourism sector has attracted investors from the UAE.
• Agroforestry: Large agroforestry projects have been another focus for investment.

Laos, with its strategic location and growth potential, remains an attractive destination for foreign investors. 

5. Malaysia: The UAE has made significant investments in Malaysia, strengthening economic ties and fostering cooperation. Here are the key details:

• Renewable Energy: The UAE and Malaysia have jointly established a renewable energy capacity worth US$8 billion (approximately RM 37.8 billion) with a capacity of 10 gigawatts in Malaysia by 2025. This partnership aims to promote sustainable energy development.
• Aviation Sector: The UAE’s national carriers operate about 20 flights to Malaysia per week, contributing to steady growth in tourist movement between the two countries.
• Investment Priority Sectors: Malaysia is a leader in the Global Islamic Economy, and the UAE views it as a crucial partner in the Middle East and West Asia region. Investment areas include innovation, modern technology, Fourth Industrial Revolution applications, digital economy, renewable energy, industry, and healthcare.
• Data Centers: Malaysia and the UAE have signed a Memorandum of Understanding (MoU) for the development of data centers in Malaysia, with potential projects anticipated to achieve a total capacity of 500 megawatts.

These investments reflect the depth of economic cooperation and the shared vision for a sustainable and prosperous future between the UAE and Malaysia.

6. Philippines: The Philippines and the United Arab Emirates (UAE) have been working towards unprecedented economic relations. Here are the key points regarding UAE investments in the Philippines:

• Investment Promotion and Protection Agreement (IPPA): The UAE and the Philippines concluded negotiations for the IPPA. This agreement aims to promote, facilitate, and protect investments between the two countries. It covers areas such as promotion, facilitation, and comprehensive protection of investments.
• Comprehensive Economic Partnership Agreement (CEPA): The UAE and the Philippines have also started official discussions on a CEPA. This agreement will further enhance economic cooperation and create opportunities for trade and investment.
• Investment Landscape: The Philippines has been developing a favorable investment landscape through significant economic and regulatory reforms. These include liberalization measures such as the Public Service Act, Retail Trade Law, Foreign Investments Act, the CREATE Act, and infrastructure projects under the “Build Build Build” program.
• Sectors of Interest: UAE investors can explore various sectors in the Philippines, including:
  • Agribusiness/Agriculture
  • Energy Efficiency Technologies/Renewable Energy
  • IT-BPM/Shared Services
  • Manufacturing
  • Oil and Gas
  • Processed and Specialty Food
  • Tourism and Hospitality
  • Real Estate Development

The IPPA provides a solid foundation for UAE investments, ensuring fair treatment, protection, and collaboration. Additionally, a Memorandum of Understanding (MOU) on Economic and Technical Cooperation is being finalized to complement these efforts.

Collaborations and Impact

The UAE Consensus is fostering collaborations across the region. Notably, Abu Dhabi energy company Masdar has forged investment deals with Indonesia and Malaysia, contributing to greener development. Additionally, the Asian Infrastructure Investment Bank (AIIB) and the COP28 Presidency are partnering to mobilize climate investment capital and accelerate clean energy projects in Asia and beyond.

As the UAE leads the charge, the ASEAN region stands at a critical juncture. Bold investments, regulatory reforms, and cross-border cooperation will shape a sustainable future—one where green energy thrives, powering economies and preserving our planet.