Singapore-Indonesia green deals must deliver real gains for lasting success: Analysts

Straits Times

5 hours ago

Observers warned that the cooperation must go beyond short-term deals. PHOTO: AFP
– The recently concluded Leaders' Retreat has opened a fresh chapter in bilateral ties between Singapore and Indonesia, with climate action and the green economy at the heart of their future cooperation.
Singapore Prime Minister Lawrence Wong and Indonesian President Prabowo Subianto hailed new initiatives focused on sustainable industrial zones, cross-border electricity trade, and carbon capture and storage as a milestone in sustainable energy cooperation.
However, analysts cautioned that lasting success would depend on the both nations moving beyond transactional arrangements to deliver equitable and long-term benefits.
The first agreement centres on developing industrial zones, likely in Batam, Bintan or Karimun islands near Singapore, that will host green manufacturing powered by renewable energy and regulated by environmental standards aligned with international norms.
The second formalises cross-border electricity trade, supporting Singapore's goal of importing up to six gigawatts of low-carbon electricity – about 30 per cent of its power needs – by 2035. The energy, expected to come from solar or wind farms in Sumatra or Kalimantan, will be transmitted via undersea cables.
The third initiative enables carbon capture and storage (CCS), allowing emissions from Singapore's refineries and industrial facilities to be transported and stored in depleted oil and gas fields in Indonesia. This could position Indonesia as a regional hub for carbon storage.
Analysts described the green partnership as a natural fit. Singapore, though limited in land and natural resources, brings capital and technological know-how. Indonesia, by contrast, is rich in ecological assets – from rainforests and minerals to solar and hydropower potential – that are key to the global energy transition.
They noted the agreements would help Singapore secure low-carbon energy and cut domestic emissions, while offering Indonesia the chance to attract green investment, create jobs and grow foreign exchange earnings through new industries.
Still, observers warned that the cooperation must go beyond short-term deals, where Singapore provides capital and Indonesia contributes land or emissions storage.
Mr Surta Wijaya, chairman of the All-Indonesia Village Administration Association, which oversees community welfare including in the energy sector, stressed the importance of ensuring local workers are directly involved.
'The cooperation between Singapore and Indonesia is good for both countries, as long as it does not disadvantage either party. What Indonesia needs to do is ensure it does not merely become a provider of land and resources without receiving proportional benefits,' he told The Straits Times.
Indonesia has to be cautious. Previous foreign-backed resource projects have often failed to deliver lasting benefits to its communities. Some carbon offset schemes have drawn criticism for displacing residents and locking up land without generating meaningful jobs or infrastructure. However, other carbon offset projects have provided jobs as well as community benefits such as education, access to health care and forest restoration.
Associate Professor Fahmy Radhi, an energy economist at Gadjah Mada University, said the entire green energy value chain – from production to processing – should take place in Indonesia, rather than replicating past models where foreign investors brought their own equipment and workers.
Singapore, too, faces scrutiny. As it positions itself as a hub for green finance and climate innovation, it must guard against perceptions that it is paying to outsource emissions or relying on questionable offsetting practices, analysts said.
Mr Tata Mustasya, Greenpeace South-east Asia's regional climate and energy campaign strategist, warned that the CCS initiative could become a form of greenwashing if applied to oil and gas facilities. He said it might 'discourage the shift from fossil fuels to renewable energy'.
Ms Melissa Low, research fellow at the National University of Singapore's Centre for Nature-based Climate Solutions, said international cooperation is vital under the Paris Agreement. Cross-border deals allow countries like Singapore to pursue mitigation options not feasible domestically.
However, she cautioned against over-reliance on imports or offsets, suggesting Singapore consider capping energy imports instead of targeting six gigawatts by 2035.
'It would be helpful to understand what the percentage of energy imports is that we can still ensure safe, reliable and affordable electricity, and whether the imports from various countries such as Indonesia, Cambodia and Vietnam will have any long-term impact on our own ability to be energy self-sufficient,' she said.
So what would a true win-win look like?
For Singapore, it means showing that green finance can also be fair finance – by investing not only capital, but also in technology transfers and building facilities in Indonesia to generate local jobs and skills.
For Indonesia, it means using its ecological wealth without compromising sovereignty, livelihoods or environmental integrity.
Mr Tata called for strict environmental, social and labour standards to protect communities and ecosystems, especially as demand for minerals surges during the green transition.
He noted that current practices – such as nickel mining in eastern Indonesia and quartz sand extraction on Rempang island near Batam – have led to significant environmental damage and social consequences, including labour issues.
'Strict standards on environmental protection, labour, social safeguards and human rights must be applied, so that the Indonesia-Singapore partnership can become a best practice for the green transition, both in Indonesia and in South-east Asia more broadly,' he told ST.
Indonesia must also establish robust governance, independent certification and land safeguards. Prof Fahmy said high-level political backing, particularly from President Prabowo, would be crucial to ensure policy continuity.
'There must be transparency, openness in how the projects are managed. There must be principles of good governance to prevent issues such as corruption. I believe Singapore already has strong and good corporate governance. The question is how to apply those practices in Indonesian companies. If this is done, neither country will be disadvantaged,' he added.
For now, political will appears firm. Both leaders have publicly reaffirmed their commitment to climate action and green economic transformation.
The real test will be implementation. Translating political goodwill into transparent, inclusive and effective action will be critical if Singapore and Indonesia are to set the tone for green diplomacy across Asean.
Arlina Arshad is The Straits Times' Indonesia bureau chief. She is a Singaporean who has been living and working in Indonesia as a journalist for more than 15 years.
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