ON Oct 24, Indonesia began cutting pipeline gas exports to Singapore by 31 billion British thermal units a day, drawn from fields in Natuna and Sumatra. Singapore's Energy Market Authority put the reduction at under 2% of the republic's daily gas demand. 

The volume was marginal; the political signal was not.

Days earlier, Indonesia's energy minister Bahlil Lahadalia had warned that Jakarta would review export contracts with countries that do not "respect" Indonesia, amid open friction over transboundary haze. The cut fell on a country that generates nearly all of its electricity from imported gas. 

Singapore’s Prime Minister Lawrence Wong said Singapore expects all parties to honour their commitments, and argued that nuclear power should not be ruled out simply because it is difficult or controversial.

The episode exposes a tension at the heart of Asean's energy transition. Decarbonisation pushes the region towards cross-border power trade; energy security pushes each country to limit its exposure to neighbours; geopolitics determines which neighbours can be relied upon.

Geography makes sharing unavoidable

Asean's clean energy resources are abundant and varied, but they are not spread in proportion to need. Laos and Sarawak have hydropower; Vietnam and the Philippines have strong wind and solar; Indonesia has geothermal power and vast solar potential in Sumatra and the Riau Islands. 

Demand, by contrast, is concentrated where clean resources are scarcest. Singapore sits in the equatorial low-wind belt, has no hydropower and lacks land for utility-scale solar, which is why it aims to import around 6 GW of low-carbon power by 2035, about a third of its expected supply. 

That imbalance is an opportunity. Countries with surplus resources can turn them into export revenue; countries short of land or resources can decarbonise faster than they could alone. 

Sarawak shows the exporter's side. It already exports power to West Kalimantan and Sabah, plans up to 1,000 MW for Singapore and at least 1,000 MW for Peninsular Malaysia, and targets 15,000 MW of capacity by 2035, at least 60% of it renewable.

This complementarity is the economic case for the Asean Power Grid (APG), and delay hurts exporters and importers alike. Ember estimates that a one-year delay would cost the region US$2.6 billion, rising to US$14 billion for a five-year delay.

The question, then, is not whether Asean should trade power across borders. Geography has already answered that. The question is whether the region's politics can sustain it.

Cross-border power faces hard questions of cost and financing, but the harder one is trust between governments. In 2022, Germany halted the newly built Nord Stream 2 pipeline as Russia moved against Ukraine, and Russia then throttled gas through the original line, leaving Europe scrambling for LNG. Energy infrastructure is only as secure as the relationship it runs through.

ASEAN currently faces a milder version of the same problem. Indonesia’s October cut is nowhere near Nord Stream in scale or severity, but it follows the same logic. Jakarta has framed it as securing domestic supply, and it has long planned to reduce exports as its own demand grows. The timing, however, coincided with the haze dispute and the minister’s remarks. For an importer, the motive matters less than the exposure. Indonesia also accounts for roughly 37% of Singapore’s approved low-carbon electricity import pipeline, under export permits that can be revoked if its domestic supply falls short.

Nor is the problem confined to one country. Malaysia banned renewable energy exports in October 2021 to keep green power at home for investors, lifting the ban only in May 2023. 

Both decisions had domestic rationales, but both show how quickly a neighbour’s priorities can change the terms of trade.

Part of what let Europe absorb its shock is something Asean lacks: binding regional institutions. Asean coordinates through the Asean Centre for Energy and the Heads of Asean Power Utilities/Authorities (HAPUA), but it has no regional regulator or system operator with binding authority, and decisions rest on consensus.

ASEAN will not become the EU, and any strategy for regional energy cooperation has to start from that fact.

A common assumption is that the APG will advance once trust between governments improves. The region's own experience suggests the reverse. The Laos–Thailand–Malaysia–Singapore Power Integration Project (LTMS-PIP) began in June 2022 with up to 100 MW of trade over existing lines. Only after it had performed was a second phase agreed, doubling capacity to 200 MW with Malaysia as an additional seller. Confidence followed delivery.

The aim, then, is dependable interdependence: arrangements under which relying on a neighbour remains a sound choice even when relations turn sour. That requires three conditions.

First, interdependence should be symmetrical. Singapore depended on Indonesian gas, but Indonesia did not depend on Singapore in any comparable way, so the cut cost Jakarta little. 

Co-investment, in which buyers and sellers hold stakes in each other's assets, changes that calculation. Saudi Aramco owns 10% of China's Rongsheng Petrochemical and supplies its refinery under a 20-year contract; closer to home, Thailand's EGCO owns 35% of Laos's Nam Theun 2 dam, which sells most of its output to Thailand's state utility. 

Second, commitments need insulation from political cycles. Singapore has said it has said it is prepared to grant import licences of up to 30 years because these projects take decades to recover their costs, so each will outlast several governments. Export rights that rest on ministerial discretion cannot match that horizon; they need to sit in statute, long-tenor contracts and dispute-settlement mechanisms that neither side can override alone. Singapore's 2027 Asean chairmanship is a chance to put these protections on the leaders' agenda.

Third, importers need resilience at home. Singapore's nuclear assessment is better understood as a complement to regional integration than an alternative: domestic firm capacity limits the damage any single disruption can cause, which makes greater reliance on imports politically acceptable. Its "Four National Taps" water strategy followed the same logic, expanding domestic supply while imports from Johor continued.

These conditions apply across Asean, but Malaysia is better placed than most members to act on them. It borders Thailand, is interconnected with Singapore, spans the peninsula and Borneo, and faces Sumatra across the Strait of Malacca; from 2022, under LTMS-PIP, Lao hydropower has reached Singapore through its grid. Geography gives Malaysia the option of becoming the region's power hub. Whether it takes that role depends on two policy choices: making its export commitments credible, and building the transit capacity to carry regional flows.

The first choice is credibility, and its most durable form is commercial. Energy Exchange Malaysia (ENEGEM) first sold green electricity to Singapore in 2024 but remains a pilot run on one-off auctions. Converting it into a regular, longer-tenor market open to generators, retailers and data centres on both sides of the border would change the politics: once enough firms depend on a market, closing it costs more than reversing a policy.

The second choice is transit capacity, which starts with the domestic grid. Under Budget 2027, Tenaga Nasional Bhd (TNB) will invest RM15 billion in the national grid, part of an RM43 billion programme for 2025–2027. The spending is driven by domestic demand, but the same upgrades determine whether Malaysia can carry regional flows.

In return, the payoff to Malaysia extends beyond wheeling fees and export revenue. Data-centre operators increasingly want round-the-clock clean power, and regional supply routed through Malaysian grids could serve that demand as well as Singapore's.

Indonesia’s cut was a reminder that in Asean, energy flows only as far as trust allows. Asean will not become the EU, and its power grid does not need it to. It needs neighbours whose commitments outlast their politics, and a hub that others can build around. Malaysia should aim to be both.

Wong Qi En co-leads the Social Security and Care Economy branch at HEYA Inc, a Malaysian civil society think tank, and works in the renewable energy industry.