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Business Times
10 hours ago
- Business
- Business Times
China's AI play is rewiring Asean's manufacturing game
[SINGAPORE] As the US and China race to dominate artificial intelligence (AI), Beijing's industrial-first approach is quietly redrawing Asia's tech landscape, opening doors for Asean manufacturers and shifting the region's centre of gravity. At Insead's AI Forum Asia last week, economists said China's focus on applying AI to real-world sectors like precision engineering and healthcare, rather than chasing software dominance, could accelerate tech transfer to South-east Asia, especially as geopolitical rifts deepen. Since launching its 'Made in China 2025' strategy, Beijing has used AI to push its manufacturing sector up the value chain, lifting industries like electric vehicles and solar energy in the process, said Dr Pushan Dutt, professor of economics and political science at Insead. Dr Dutt explained that China's approach stands in contrast to US tech companies, who have prioritised a push towards software supremacy through a strong talent pool and widespread implementation across business needs. For instance, Dr Dutt noted that 40 notable AI models in the last ten years had been developed in the United States, more than double of the 15 models developed in China. In addition, AI infrastructure in the US remains far stronger than in China, with ten times more data centres and four times more spending on AI servers. 'Yet 70 per cent of patents in the AI sector are coming from China,' Dr Dutt noted. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up 'China is much more pragmatic in solving social problems such as manufacturing and healthcare, whereas the Americans have spent more time on knowledge diffusion,' he said. The Asian giant's acceleration of its AI ecosystem is as much a response to external pressure as it is an internal strategy, Dr Dutt explained. He noted that rising US export controls on semiconductors and advanced computing tools have only pushed China to innovate more aggressively. Natural partners In addition, US trade policies under Trump could change the way AI technology spreads geographically. 'Trump's policies could also trigger China to build its own alliances within its sphere of influence, which might mean exporting more of its technologies to Asia and the Middle East,' said Dr Lily Fang, professor of finance and dean of research and innovation at Insead. One of the regions that stands to benefit directly from this realignment is Asean, Dr Fang told The Business Times. South-east Asia's strong manufacturing base makes it a natural partner for Chinese AI solutions, particularly in areas such as precision engineering and industrial robotics. While leading US models such as Open AI's GPT-4 and Anthropic's Claude remain closed source, Chinese AI developers have lowered barriers toward more widespread cross-border adoption, Dr Fang noted. DeepSeek, for instance, has released its model weights, source code and documented its training methodologies. 'These countries will be competitive because they have both the hardware and software capabilities,' Dr Fang added. Evolving infrastructure South-east Asia's infrastructural capabilities for AI, such as energy and data centres, have also made the region increasingly attractive to Chinese firms as domestic supply reaches bottlenecks. Still, the region's AI capabilities have not developed on equal footings, said Kevin Pereira, managing director at the AI consulting firm BluAI. 'There are big differences in infrastructure across South-east Asia,' he noted. 'If you don't have good infrastructure, no matter how good the individual products are, using AI becomes really difficult.' For Asean countries to capitalise on their strengths, these economies will need to evolve with the times, Dr Fang noted. 'For South-east Asia, perhaps the most important step is to upskill the workforce beyond lower-end manufacturing,' she said. Such upgrading does not necessarily mean widespread loss of jobs in manufacturing, Dr Fang noted. 'For example, tasks that rely on the dexterity of human fingers will not be replaced by robotics,' she said. 'But certain tasks that may be dangerous, tiring or repetitive can be done by robots instead, allowing humans to focus on more meaningful tasks.' The need to upskill was echoed by the forum's keynote speaker Andrea Phua, senior director at the Ministry of Digital Development and Information's digital economy office and lead author of Singapore's AI strategy that was launched in 2023. While Asean's lower-end manufacturing jobs are likely to witness meaningful development, Phua noted that white collar jobs across several sectors would likely experience significant disruption. 'AI is transforming the newsroom, the courtroom, the factory floor and laboratories,' said Phua. 'The shifting of value chains will be a painful conversation that requires a hard look,' cautioned Phua. 'On top of technological innovation, business leaders will have to introduce organisational and bureaucratic innovation to keep moving forward,' she added. She noted that while optimism towards AI technology is not misplaced, the speed of change demands a mindset shift across the labour force. 'When AI development moves at the pace that it does, our learning needs to happen in weeks, not even months,' she said.
Business Times
a day ago
- Business
- Business Times
Asean power grid could unlock 25 GW of renewable capacity, lowering Singapore's electricity costs: Rystad Energy
[SINGAPORE] A regional power grid that allows for electricity trade between Asean nations, if fully realised, could unlock up to 25 gigawatts (GW) of renewable and energy storage projects, based on research by Rystad Energy. The projects, spanning hydropower, solar and offshore wind, would be worth more than US$40 billion in investment across the region, and benefit Singapore the most, said the energy research firm on Tuesday (Jun 3). However, realising the regional power grid blueprint, which was first brought up in the late 1990s, will not be smooth sailing. 'Singapore stands to benefit the most from South-east Asia's emerging regional grid, but realising these gains will require coordinated, win-win cooperation with supplier countries, many of which may see limited direct advantage in linking up with another market,' said Raksit Pattanapitoon, lead renewables and power analyst of Asia Pacific at Rystad Energy. For neighbouring countries, where land is more abundant but power demand is less concentrated, Raksit noted that Singapore can leverage its financial strength and partnerships to unlock the infrastructure capital needed. He added that grid resilience, with strong interconnections and sufficient grid-connected storage, must be a key priority, as highlighted by recent blackouts in the Iberian Peninsula. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up 'Cost-effective alternative' Singapore relies heavily on natural gas for power generation, with gas currently accounting for 96 per cent of its power mix, according to Rystad Energy's report. The Republic has been using combined-cycle gas turbine (CCGT) plants that burn natural gas to generate electricity, and use the resulting hot exhaust to produce steam that drives a secondary turbine. Rystad Energy's analysis shows that electricity imports via the power grid would offer a 'more cost-effective alternative to building new domestic CCGT capacity'. While these projects are already more affordable than building a new gas CCGT, they are even lowering the cost of electricity with higher efficiency of energy usage, as proxied by load factor, said Raksit. The Energy Market Authority (EMA) requires projects to achieve an annual load factor of at least 60 per cent within five years of commercial operation, ensuring a steady and dependable power supply for the nation, noted Rystad Energy, highlighting the projects developers' 'strong economic incentive' to exceed the 60 per cent benchmark for the load factor. 'Developers of these import projects are sizing the installed capacity to exceed EMA's minimum 60 per cent load factor and seem to be aiming for near 100 per cent load factor,' Raksit shared with The Business Times. The analysis shows that raising the load factor target from 60 per cent to 100 per cent can substantially lower the average cost of electricity generation over the lifetime of a power plant, or the overall levelised cost of electricity (LCOE), by spreading transmission costs more effectively and unlocking capital expenditure efficiencies through economies of scale. 'This impact is particularly significant (for renewable energy imports) in countries such as Malaysia (Sarawak), Cambodia and Vietnam, where long transmission distances amplify cost-optimisation benefits. Hydropower projects, in particular, benefit from these scaling effects, resulting in even-greater cost reductions,' stated the report. Solar-plus-storage hybrid systems can already achieve load factors above 90 per cent, both technically and economically. Rystad Energy noted that such systems, with both a battery-energy storage system (Bess) and necessary backups, can reach the level of reliability required by Singapore's EMA and could be comparable to other dispatchable energy sources. Nevi Cahya Winofa, analyst of renewables and power research at Rystad Energy, said: 'Current cost analyses indicate these hybrid systems could deliver lower LCOEs than many in the industry currently anticipate.' She added that Singapore must proactively identify and secure unique advantages to maximise shared value in the emerging regional power grid. EMA, on Friday, granted the sixth conditional licence to a low-carbon electricity import project, after raising the import target to around 6 GW by 2035, up from the initial target of 4 GW announced in 2021. The Singapore government would be open to more electricity imports beyond the current 6 GW target as the country's energy needs grow, EMA's director of energy connections office Faith Gan told BT.
Business Times
2 days ago
- Business
- Business Times
Asean increasingly pulled in opposite directions
ALL eyes are on US trade talks, but for the Asean countries, visibility on progress remains poor. This partly reflects the US administration's priority to strike deals with other larger economies including India, Japan, and China. For Asean, only preliminary talks have taken place and formal discussions are yet to happen. In the case of Thailand, it is yet to get a schedule for its first-round talks with high-level officials. Big ask from the US There are other fundamental factors at play. Where some preliminary talks have already occurred, it is unclear what the US wants exactly and officials have been trying to figure out the specific demands. Once they have a sense, a framework to pursue formal negotiations will be put together along with possible proposals. The US has made it unequivocally clear to its trading partners to clamp down on transshipments from China aiming to circumvent US tariffs. This demand is most relevant for Asean countries, but compliance will also likely be challenging. A few of them, especially Vietnam and Thailand, have benefited from these trade diversion effects since the first round of the US-China trade war and these will be difficult to reverse in the short run. Even in Singapore, where we did not see much re-routing in Trump 1.0, a surge in re-exports boosted its trade surplus to a record high in April. The concern is that this demand seems to be a hard constraint from the US. In Thailand's case, ahead of talks with the US, Prime Minister Paetongtarn Shinawatra reportedly ordered a tightening of the issuance of certificates of origin. But by her own admission, it will take time to resolve, likely longer than the 90-day reprieve period for tariffs which expires in early July. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The US administration is likely bent on using negotiations with other countries to keep the pressure on China by preventing a re-routing of exports to the US via these third countries. China's calculated charm offensive At the same time, China is making its move to strengthen ties with the region, indicated by no less than President Xi Jinping's visit to Vietnam, Malaysia and Cambodia in April. Greater cooperation is the big buzzword from official statements. Key proposals from China include building an economic community and deepening supply chains with the region via the creation of industrial parks, special economic zones and technological corridors. Under China's Belt and Road Initiative, it also proposes fast-tracking the construction of infrastructure projects, particularly railways and an 'Air Silk Road' to improve regional connectivity. While the timeline for implementation of these initiatives remains unclear, the consistent theme across Asean to enhance trade and investment relations with China suggests these have likely been shaped by the desire for a common response to rising US protectionism. Follow-up action from China has also been swift, sending an even clearer signal to Asean leaders that its larger northern neighbour is serious in its intent. Before the Asean Summit in Kuala Lumpur last week, negotiations had already been completed to implement version 3.0 of the Asean-China Free Trade Area, an initiative that President Xi was encouraging as recently as his visit. This upgrade covers new sectors such as the green and digital economy and puts greater emphasis on developing regional supply chains. The inaugural Asean-China-GCC Summit also took place last week, attended by Premier Li Qiang. Malaysia can claim the unique distinction of hosting President Xi and Premier Li back-to-back within a month. In contrast, progress among Asean countries on trade talks with the US have been slow. A pivot adds to the uncertainty In addition to the complex nature of these trade negotiations with the US and the difficulties that Asean countries face in removing non-tariff barriers and reducing transshipments, being caught in the crossfire between the US and China will likely present more challenges for the region. The difficulty in coming up with a deal with the US could encourage a pivot by these countries to trade more with China and try to substitute exports to the US. China's share in Asean's total trade is already nearly twice that of the US, so this is not inconceivable, especially with China's initiatives that could bring benefits such as more investment inflows and assistance in infrastructure roll-out. On the flip side, signs of greater economic cooperation with China could prompt the Trump administration to keep US tariffs high against the Asean countries. The upshot is that uncertainty will likely remain elevated and tariffs may go back up after July, posing more downside risks for the region's growth outlook. The writer is chief Asean economist at Nomura
Business Times
6 days ago
- Politics
- Business Times
Thailand drops royal insult case against American academic
[BANGKOK] A royal insult prosecution against an American scholar in Thailand that raised concerns in the US government has been dropped, his lawyer said on Thursday(May 29), as authorities confirmed the academic had left the country. Paul Chambers, 58, a political science lecturer, had been in legal limbo since his arrest last month on a lese-majeste charge, which led to the loss of his job, his work visa and the seizure of his passport. Thailand has one of the world's harshest lese-majeste laws, setting jail terms of up to 15 years for anyone convicted of defaming, insulting or threatening King Maha Vajiralongkorn and his close family. The prosecutor earlier this month dropped the case against Chambers but police appealed that decision. The attorney-general overruled the appeal earlier this week, said Chambers' lawyer, Wannaphat Jenroumjit. 'The case is now concluded,' she said, adding the legal team was appealing the revocation of his work visa. The US State Department had expressed alarm at the arrest of Chambers, saying the case 'reinforces our longstanding concerns about the use of lese-majeste laws in Thailand'. The charges against him, which came after a complaint by the royalist army, had stemmed from a blurb for an online academic seminar at which he was a speaker, according to his lawyers. The blurb was posted last year on the website of a research institute based outside of Thailand. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Chambers could not be contacted for comment on Thursday. Thailand's constitution enshrines the king in a position of 'revered worship' and royalists regard the palace as sacrosanct. A party that won the 2023 election was dissolved last year over its campaign to amend the lese-majeste law, under which more than 280 people have been charged since 2020, according to the Thai Lawyers for Human Rights legal aid group, which also represented Chambers. Thai immigration police confirmed Chambers' passport had been returned to him and that he had left the country earlier on Thursday. 'The case is closed as the attorney-general decided to drop it,' said Police Major General Sarawut Khonyai, a commander of immigration police in northern Thailand. Reuters
Business Times
6 days ago
- Business
- Business Times
China's selective BRI comeback in Cambodia, Laos and Myanmar
[SINGAPORE] Beijing is selectively reviving big-ticket infrastructure projects in South-east Asia's most aid-dependent nations, restarting Cambodia's stalled China-backed canal while treading more cautiously in debt-laden Laos and conflict-ridden Myanmar. Dr Jayant Menon, visiting senior fellow at the Iseas-Yusof Ishak Institute, said: 'While there was a clear trend away from large-scale projects before the pandemic, these have made a return, driven by concerns over China's economic slowdown.' This shift underscores the increasingly fraught trajectory of China's Belt and Road Initiative (BRI) in South-east Asia's least-developed economies, as it continues to weigh strategic gains in Cambodia, Laos and Myanmar against rising debt, political risk and global scrutiny. This could also explain why the deeply ambitious BRI goals contrast with the slowing inflows into China's immediate mainland neighbours in the region – particularly Myanmar and Laos – in recent years. Mounting reputational and environmental concerns have played no small part in this shift. 'Concerns had been raised internationally, including environmental degradation and accusations of 'debt-trap diplomacy',' Dr Menon told The Business Times. For instance, Chinese hydropower projects in Laos and numerous dams in the Mekong River have sparked fears among Asean countries of ecosystem damage to the river and its surroundings in previous years. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up In response, Beijing appeared to recalibrate its strategy. 'Through its Global Development Initiative, China focused more on smaller-scale, social sector-oriented projects – particularly in health and education – which were seen as less risky from a reputational standpoint,' said Dr Menon. But with two of these three countries steeped in crisis, the future of China's economic role in the region's inner corners remains uncertain. 'It's difficult to read the tea leaves,' he added, describing the conflicting signals of China's emphasis on both large-scale strategic projects and its softer social development efforts. Such efforts include the China-Asean Digital Education Alliance launched in 2023 to foster regional cooperation in digital infrastructure for education. US President Donald Trump's tariffs may provide impetus that attracts more private Chinese investment into the region beyond state-backed infrastructure projects. 'There is a role for China's burgeoning private sector to be involved, but it all depends on how the trade war unfolds,' said Dr Menon. 'If it leads to decoupling, we might see duplicate supply chains – one for the US, one for the rest of the world.' Fragile states Since its launch in 2013, BRI has channelled at least US$679 billion in infrastructure financing globally – nearly 10 times the US total over the same period. About 31 per cent of that has gone to Asia. Countries such as Indonesia and Malaysia have absorbed the lion's share of China's regional lending, with Beijing providing US$18.4 billion and US$7.5 billion, respectively, from 2015 to 2022, based on research by the Lowy Institute. For the region's three less-developed countries, these investments over the same period display deep financial reliance. While most Asean member states receive between 1 and 3 per cent of their gross domestic product in Chinese development finance, the figure exceeds 8 per cent in Laos and Cambodia. That dependence is compounded by a lack of alternatives. 'South-east Asian states with acute development needs and constrained access to development financing – Cambodia, Laos and Myanmar – are the most reliant on China,' wrote Alexandre Dayant, deputy director of the Indo-Pacific Development Centre at the Lowy Institute in a report on the subject in April. 'The engagement of these states with other development options is minimal,' the report found. These countries are important to Beijing as some of its strongest economic and strategic allies – offering overland access to South-east Asia, regional clout and strategic connectivity. China has focused heavily on rail connectivity, including the Laos-China railway linking Kunming to Vientiane, which cuts travel time to the Chinese border by up to 11 hours. It was completed in 2021. Uneven returns Yet the heavy debt undertaken by the Lao government to finance the project, under a joint venture with China, has brought few economic benefits, said Dr Menon. Since BRI's inception, Laos has accumulated a heavy debt load from Chinese lending, largely in hydropower and electric grid projects. In 2020 Vientiane ceded control of its national power grid to a Chinese state firm in exchange for debt relief. The Lowy Institute estimated Laos' liabilities at some US$17 billion, or 112 per cent of its 2023 GDP, with at least US$5 billion owed to China. This clouds the future of China's continued investments in the country, said Lowy Institute researcher Riley Duke in a report on Tuesday (May 27). 'Beijing faces a dilemma – pushing too hard for repayment could damage bilateral ties and undermine its diplomatic goals,' he said. In Myanmar, China's dealings have largely been hosted through the China-Myanmar Economic Corridor, but civil conflict has put much of Beijing's projects on hold. The corridor boasts among various projects the Kyaukphyu Special Economic Zone (SEZ) and the deep sea port located within the coastal town, designed to offer Beijing strategic access to Myanmar's oil and gas pipelines away from a potential chokepoint in the strait of Malacca. Meanwhile, Cambodia's dealings with China have been more successful. During China President Xi Jinping's visit to Cambodia in April, contracts were signed to continue construction of the Funan Techo Canal, which would provide access to the gulf of Thailand from the Cambodian capital of Phnom Penh. With such access, goods from the capital city would no longer have to transit through Vietnamese ports such as Ho Chi Minh City through the Mekong River. The canal's construction was previously believed to have stalled over China's lack of financial commitment to the project. An expressway from Phnom Penh to Sihanoukville has been a major success, reducing travel time to the SEZ, Dr Menon noted. Once reputed as a hotspot for illegal Chinese casinos, an online gambling ban and a post-pandemic inflow of investments in the hospitality and manufacturing sectors are set to boost the coastal town's economy. Chinese automaker BYD, for instance, plans to launch its second assembly plant in South-east Asia in Sihanoukville this year. Trade over tensions As geopolitical rivalries intensify, Beijing is doubling down on economic diplomacy in South-east Asia. China's commerce ministry announced on May 21 that an upgraded 3.0 version of the Asean-China free trade area deal, first signed in 2002, would be signed by year-end, aiming to deepen cooperation in digital trade, green growth and supply chain links. Such integration could soften the blow on industries such as solar projects, after sweeping US tariffs rattled Asean exporters in April. 'This shift can strengthen China-South-east Asia ties in clean energy partnerships, potentially increasing emerging markets' access to more affordable clean energy technologies that can accelerate the region's low-carbon transition,' said OCBC environmental, social and governance analyst Ong Shu Yi, following the development. Laos, who escaped the levies, has continued to pursue its ambitions in the sector through deals with China and other Asean countries. This is made possible, Dr Menon noted, as the Asean region and China are far more willing to put aside geopolitical differences in pursuit of mutual economic benefit compared to the US. 'The US prefers to trade and invest with its allies only, but Asean countries continue to trade with China even when they have disputes over issues like the South China Sea,' he remarked.
