Organisation:
Bain, Temasek, Microsoft
Resource Link:
Published in 2022, Link
My Key Takeaways
Southeast Asia (SEA) makes up around 9% of the world’s population, but contributes more than double or 20% of the world’s biodiversity.
It’s in a pretty unique position to expand the global green economy.
Some of my takeaways from a 2022 report by Bain & Company, Temasek and Microsoft on how best to invest and accelerate the growth of SEA’s Green Economy:
State of SEA’s Green Economy
COP26 raised the region’s climate ambitions with 8 of 10 countries now having a net-zero target, with Singapore and Indonesia piloting carbon taxes.
Pg 17, 18 – progress overview of SEA countries’ climate change commitments and initiatives (carbon tax, renewables capacities, nature reserves)
For example, Singapore will add 130ha of new parks and plant 1M more trees by 2030. It will also increase its carbon tax by 10-15x by 2030!
Which 5 Green Economy Sectors Offer The Highest Investment Returns?
The following sectors would also contribute 60% of SEA’s carbon abatement potential (Pg 40):
1) Electric Mobility (US$50B market by 2030)
The promising two-wheeler EV market is taking off in Indonesia, Thailand, and Vietnam. Battery manufacturing opportunities in SEA.
2) Renewables (Solar & Wind, US$30B)
Solar opportunities in Philippines & Malaysia, onshore & offshore wind project development in Vietnam & Philippines (attractive annual returns of 8-15%)
3) Forest Conservation (US$20B)
This sector is the largest carbon abatement lever in SEA and there are clear gaps in project consulting competences.
“There is nobody out here, people are looking for consultants as simple as mapping out their footprint, enabling training or certifiers”.
The carbon credit sales and trading sector shines with a $15-17B market, and estimated profit margins of 3-5% for reseller & up to 50% for exchanges.
4) Built Environment ($40B)
Bright prospects for efficient cooling (e.g. district cooling, HVAC) with $7-10B market and 15-20% EBIT.
5) Sustainable Farming ($30B)
5 deep dive sections map out each sector’s market size, indicative profit margins, headwinds, country-level targets and assessment of growth potential (Pg 41 – 71).
For example, promising sub sectors for sustainable farming are farmer service platforms (US$3-4B market), and precision agriculture (10% profit margins, supportive govt incentives and farmers).
Who’s Investing In What?
See pages 32-36 for a breakdown of the largest green economy investments by Corporates, PE/VC, Infrastructure Funds, Sovereign Wealth Funds and Pure Play Green Funds in SEA.
From 2020 – Feb 2022, corporates were the largest investors, deploying $11B (75% of total green capital) into mainly renewables and built environment sectors.
Examples of SEA corporates’ decarbonisation efforts?
See page 20 for examples from adaro, Petronas, Ayala, SP Group, ptt, and Vinfast.
Country-level insights for your market entry strategy?
Check out pages 88 – 107 for each market’s green transition roadmaps, investment breakdown by themes/types, most active investors, and attractive sectors to invest in.
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While the progress in SEA is heartening, both public and private players need to play a part as the region still needs US$3T in green investments to close the massive emission gap of 2.6 to 3.2 gigatons to meet 2030 targets.
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About Zhilin SIM
Having worked and lived in Singapore, the Nordics, China, Spain, UK, I’m now based in Paris.
I’m fluent in English, French and Mandarin, and I’m learning Arabic because it’s a beautiful and fascinating language.
My team creates and supports one-many initiatives connecting corporate and startup ecosystems in Europe to business and innovation opportunities in Singapore and Southeast Asia.
I’m passionate about horticulture, watercolour, startups/tech as well as French cuisine, Peranakan kueh techniques and other global cuisines.
Feel free to connect with me if you think my network in Europe and Asia could be of benefit to your business and innovation activities.
