Japan’s recent offer of US$10 billion in loans to Southeast Asian countries to secure oil supplies comes at a moment of heightened market anxiety. Oil prices have spiked to multi-year highs amid Middle East tensions and lingering concerns over shipping routes, including the Strait of Hormuz. Global oil benchmark Brent crude prices have increased since the late February start of the US-Iran war, jumping from around US$70/bbl pre-war to peaks near US$120 (again of some +70 percent). Prices are still up about 15–25 percent, hovering around the US$90–95/bbl price point as of April 20–21.

Japan’s move can be read as part of a broader effort to maintain influence in Southeast Asia at a time when competition for economic and strategic alignment is intensifying. Energy financing has become a key lever in that competition. China has used it extensively in infrastructure and resource projects. Western institutions are pushing climate finance, albeit often misaligned, pouring money into renewable projects instead of the energy infrastructure needed to sustain that development. Japan’s approach sits somewhere in between, combining financial support with strategic positioning.

Tokyo’s proposal, framed as financial assistance, is intended to help countries secure supply and stabilize domestic markets. On the surface, it appears to be a pragmatic move. Fair enough. Notably, Japan has long played a crucial role as a regional stabilizer, while it has both the financial capacity and strategic interest to ensure that Southeast Asia avoids acute energy shortages. For import-dependent Southeast Asian economies, the pressure is real: higher fuel costs ripple quickly through power generation, transport, and inflation. But the logic of the response deserves scrutiny.

Yet the structure of this support raises deeper concerns. Loans, even concessional ones, aren’t neutral instruments. They shift risk onto the borrower. In this case, governments facing temporary price volatility may find themselves carrying longer-term financial obligations tied to a problem that could ease within months, not years. In other words, it’s the all too familiar debt trap that has plagued developing nations for decades.

Notably, oil markets are inherently cyclical. Prices spike during geopolitical disruptions and fall when supply routes stabilise or demand softens. The recent price spike will be no different. It’s being driven less by structural scarcity than by uncertainty: conflict risk, shipping insurance costs, and precautionary stockpiling. If those pressures ease, as they often do, today’s emergency borrowing could look excessive in hindsight.

This is the first imbalance: a short-term problem being addressed with long-term debt. The second is more structural. By focusing on securing additional oil supplies, the financing risks reinforcing the very dependency that leaves these economies vulnerable in the first place. Southeast Asia’s energy systems are still heavily exposed to imported fuels, particularly oil and liquefied natural gas (LNG). Price shocks translate quickly into fiscal stress, subsidy burdens, and inflation.

In that context, directing capital toward more imports is a holding action, not a solution. The alternative uses of that same capital are well understood, but persistently underfunded. Strategic petroleum reserves remain limited across much of the region, leaving countries exposed to sudden supply disruptions. Energy efficiency measures, often the cheapest way to reduce exposure to price volatility, continue to lag due to policy fragmentation and limited financing. Grid infrastructure, critical for integrating alternative energy sources and reducing reliance on oil-fired generation, remains a bottleneck in several markets. These aren’t new challenges; they are recurring ones. What is new is the scale of financial resources now being mobilized to address them, resources that, in this case, are being directed toward immediate supply rather than long-term resilience.

For recipient countries, this creates both opportunity and risk. The region remains one of the fastest-growing energy markets in the world, and its stability matters for broader Asian and even global economic performance. Southeast Asia had a population of about 700 million people in 2025, making it one of the world’s most populous regions. ASEAN has been one of the world’s faster-growing regions, with GDP increasing around 4.1 percent in 2023 and 4.7 percent in 2024. It’s expected to sustain growth of roughly 4.5–5 percent through 2026.

Access to financing can provide short-term relief, but it also comes with alignment considerations and, potentially, policy constraints. More importantly, it can shape investment decisions in ways that prioritize immediate stability over long-term system reform. That trade-off is not always explicit, but it’s real. None of this is to suggest that governments should ignore immediate energy pressures. In periods of volatility, securing supply is essential. The question is one of balance. How much capital should be deployed to manage short-term shocks, and how much should be reserved for structural fixes that reduce vulnerability over time? At present, that balance appears skewed.

Taking on debt to secure oil at elevated prices may ease near-term pressure, but it does little to change the underlying exposure. If anything, it risks delaying the investments needed to diversify energy systems and build resilience against future shocks. The next disruption, whether geopolitical, economic, or climate-driven, will then find the region in a similar position, facing the same choices.

There’s a broader lesson to learn about how financial assistance is structured and deployed. Not all capital is equal in its impact. Funding directed toward consumption, even in the form of emergency supply, has a very different effect from funding directed toward infrastructure, efficiency, or system upgrades. The former stabilizes. The latter transforms.

Southeast Asia needs both, but not in equal measure. Japan’s US$10 billion offer highlights the tension between urgency and strategy in energy policy. It provides a timely reminder that the way capital is used matters as much as the amount. For countries already navigating tight fiscal conditions, the decision to borrow should be tied not just to immediate needs, but to longer-term outcomes. Otherwise, the region risks solving today’s problem in a way that compounds tomorrow’s challenges.

Tim Daiss is an energy markets analyst in the Asia-Pacific region and a partner at APAC Energy Consultancy. He is a regular contributor to Asia Sentinel

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Hui Ka Yan faces time in a Chinese prison, after pleading guilty to fraud, embezzlement and bribery in relation to his company China Evergrande Group, which has descended from being China’s biggest property developer to the world’s most indebted real estate firm. He is also the biggest example of Beijing’s refusal, as it has in past crises, to launch a massive, central-government-funded bailout, instead pursuing a market-oriented redesign aimed at shifting the economy away from its decades-long reliance on property.

On April 14 at the Intermediate People’s Court of Shenzhen, Hui, also called Xu Jiayin, pleaded guilty to charges of embezzling public funds, fraudulently raising funds, fraudulently issuing bonds and securities, illegally using funds, failure to disclose material information, abuse of position and bribery, reported state news agency Xinhua. Hui and Evergrande faced similar charges in this Chinese court on April 13 and 14. The court will render judgement at a later date.

This is a steep comedown for Hui, ranked by Forbes as China’s richest person with a net worth of US$42.5 billion in 2017 and who once employed a cast of nubile young Chinese women, the Evergrande Song and Dance Troupe, to entertain rich and powerful men and to win business and corrupt Chinese officials. Born into a humble family in a Henan village in 1958, Hui founded Evergrande in 1997, which grew to be China’s largest property firm by sales, with annual sales at one time exceeding US$100 billion. The company, which at its peak had a market capitalization of more than US$50 billion, delisted from the Hong Kong Stock Exchange last August.

Hui, a Hong Kong resident, was arrested in mainland China in September 2023. The company defaulted in December with more than US$300 billion in debt, leaving an estimated 20 million units across China and rendering it the world’s most indebted property firm. That was substantially more than Argentina’s entire external debt, tweeted Michael Pettis, a senior fellow of the Carnegie Endowment for International Peace, a US think tank, on October 9, 2023.

A lawsuit by Evergrande’s liquidators, Alvarez & Marsal, to claw back funds from the property developer’s auditor, PwC, is scheduled for its first public hearing at the Hong Kong High Court on May 18.

Last November, a Hong Kong court expanded an asset freeze against Hui’s ex-wife Ding Yumei, including more than US$300 million of her assets in Canada, Gibraltar, Jersey and Singapore in the injunction, to give liquidators greater space to recover US$6 billion owed to creditors, according to media reports. Ding obtained Canadian citizenship in August 2023.

In May 2024, the China Securities Regulatory Commission (CSRC) fined Evergrande and Hui RMB4.2 billion (US$615 million) and RMB47 million respectively, for fraud in issuing bonds and violating Chinese rules on disclosure. The CSRC also permanently banned Hui from involvement in China’s securities markets. On May 21, 2024, the CSRC accused Evergrande of inflating revenue by RMB214 billion (US$31 billion) and profit by RMB173 billion in 2019, and inflating revenue by RMB350 billion and its profit by RMB299 billion in 2020.

On September 13, 2024, China’s Ministry of Finance and the CSRC fined PwC Zhong Tian, the mainland Chinese subsidiary of the Big Four accounting firm, RMB444 million for its audit of Hengda Real Estate Group Company Limited, Evergrande’s main subsidiary, from 2018 to 2019, and suspended PwC Zhong Tian’s operations for six months. This is the biggest fine imposed on a Chinese subsidiary of a Big Four accounting firm. In 2024, the Hong Kong Accounting and Financial Reporting Council launched an investigation of PwC’s audit of Evergrande.

Friends in high places

“Xi Jinping could also have decided to detain Hui Ka Yan now as part of a broader effort to root out his remaining factional enemies,” said a report of SinoInsider, a China-focused risk consultancy based in New York, on October 13, 2023.

Hui has long been known to have close associations with Zeng Qinghong, the de facto head of the Jiang Zemin faction after the passing of the former Chinese president in late 2022, explained the SinoInsider report. “Hui is also likely to have connections with former Politburo Standing Committee member, ex-Guangdong Party Secretary, and Jiang faction member Zhang Dejiang. Without the powerful political backing of Zhang, Zeng, and the Jiang faction, it seems unlikely that Evergrande would have been able to expand nationally in the 2000s and eventually make the Fortune 500 list in 2016.”

In November 2014, Hui paid more than US$30 million for a mansion in the exclusive Point Piper district of Sydney, Australia using a string of shell companies to conceal his involvement, according to media reports. His mansion was a stone’s throw away from one once inhabited by Zeng Wei, a son of former Chinese Vice President Zeng Qinghong, and his wife. The Australian government in March 2015 ordered Hui to sell the mansion after finding the purchase violated Australian foreign investment rules.

Hui was close to a fallen Politburo member, Ma Xingrui. Earlier in April, the Chinese government announced Ma was placed under investigation for corruption, the third Chinese Politburo member investigated for graft. In Shenzhen on November 4, 2015, Ma, then Deputy Secretary of Guangdong Provincial Party Committee and Party Secretary of Shenzhen, met Hui and his delegation, where Ma expressed the hope that Evergrande would increase its investment in Shenzhen, according to Evergrande’s website.

While Ma was party secretary of Shenzhen from 2015 to 2016, Ma reportedly had close interactions with Hui, said a report on April 6 of SinoInsider. After a meeting between Ma and Hui, Evergrande relocated its headquarters from Guangzhou, the provincial capital of Guangdong, to Shenzhen during Ma’s tenure in Shenzhen, said the SinoInsider report. “There were also allegations that Ma strongly backed Evergrande’s acquisition of key land development rights in Shenzhen, as well as its involvement in urban redevelopment projects.”

Desmond Shum, a Hong Kong businessman living in the UK, in his book Red Roulette recounted that he went shopping with Hui for a yacht off France’s southern coast. Hui envisioned a “floating palace to wine and dine officials off China’s coast, away from the prying eyes of China’s anti-corruption cops and its nascent paparazzi,” Shum wrote.

When Evergrande’s debt difficulties surfaced in late 2021, there were fears that the developer’s woes would precipitate a global financial crisis. In October 2021, then US Secretary of State Antony Blinken urged the Chinese government to behave responsibly in handling the Evergrande crisis. But with the shrinking importance of China’s property sector, Evergrande’s collapse hasn’t sparked a financial crisis in China, let alone the world.

In recent years, senior Chinese policymakers reduced the importance of rapid GDP growth as a policy objective, putting more emphasis on the quality of growth, which has reduced use of property-oriented stimulus, said an S&P Global report on February 8. “In addition, policymakers have viewed China’s economic growth in recent years as sufficient, we believe. Strong exports have supported GDP growth despite subdued domestic demand amid the property market stress.”

Toh Han Shih is a Singaporean writer in Hong Kong and a regular contributor to Asia Sentinel.

China is in a tightening bind. A fragile two-week ceasefire has kept the Strait of Hormuz partially open, but flows remain constrained and increasingly shaped by political tolerance rather than market forces. For Beijing, which continues to rely on Iranian oil, this exposes a strategic vulnerability it can no longer ignore: its energy security rests on sea lanes it doesn’t control, a dilemma exacerbated by US President Donald Trump’s precipitate complete shutdown of the Hormuz Strait.

The global oil market is a creature of high volatility and supply anxiety with traders weighing geopolitical risk against potential peace talks. In fact, the Strait is no longer functioning as a purely commercial artery. It has become a politically managed corridor, where access depends as much on geopolitical alignment as on market demand and it is a mystery when that will change. That distinction matters.

China has long relied on Middle Eastern crude, including sanctioned Iranian oil, to fuel its economy. While official data often obscures the scale of those imports, few doubt that Chinese refiners continue to take in discounted Iranian barrels, often routed through opaque trading networks. This arrangement has suited both sides. Tehran secures a steady buyer, while Beijing secures a discounted supply. The transaction, however, depends on one critical assumption: that oil can move freely enough through Hormuz to reach Asian markets.

That assumption is now under pressure. Even partial disruption of the Strait alters the equation. Shipping delays, higher insurance costs, and the growing risk of interdiction all raise the effective price of oil, regardless of official benchmarks. More importantly, they introduce uncertainty into supply chains that depend on predictability. For China, which prizes stability in energy procurement, that uncertainty is itself a form of risk.

The current ceasefire between the US and Iran does little to resolve that. If anything, it underscores the fragility of the situation. A two-week window of relative calm is not a structural solution. It’s a pause, and pauses, in geopolitics, tend to be temporary.

Beijing’s limitations

What makes this particularly uncomfortable for Beijing is its limited ability to shape events on the ground. Unlike the US, which maintains a significant naval presence in the Gulf and has long positioned itself as the guarantor of maritime security, China lacks both the infrastructure and the alliances to exert comparable influence. Sure, its navy has expanded rapidly in recent years, but projecting sustained power into the Gulf remains a complex undertaking. In other words, it’s still not yet a blue-ocean navy, no matter how hard Beijing tries to claim otherwise. This, in effect, creates a troubling mismatch between dependence and control.

Notably, China depends on energy flows that pass through one of the world’s most contested chokepoints, yet it has minimal direct control over the security of that route. During stable times, that gap is manageable. However, during periods of tension, it becomes more pronounced. There’s also a broader strategic dimension to consider. China’s energy security strategy has traditionally focused on diversification, sourcing crude from multiple regions, investing in upstream assets abroad, and building strategic petroleum reserves at home. Good moves. These measures have indeed improved resilience, but they don’t eliminate exposure to chokepoints like the Strait of Hormuz. As long as a significant share of imports flows through the Strait, vulnerability remains.

That raises uncomfortable questions: can China continue to rely on others to secure a route so central to its economic stability? And perhaps more poignantly, should it?

For decades, Beijing has been content to benefit from a system largely underwritten by the US. The US Navy has patrolled key sea lanes, deterred disruptions, and responded to crises when they arise, benefiting the rest of the world at no cost. China, meanwhile, has focused on economic expansion, avoiding deep entanglement in Middle Eastern security affairs. Finally, that division of labor is now being tested.

External security guarantees

The current situation suggests that relying on external security guarantees may no longer be sufficient. As geopolitical competition intensifies and regional conflicts become more frequent, the risks to critical supply routes increase. In such an environment, passive reliance carries its own costs. Stepping in, however, is anything but straightforward. Any visible Chinese role in securing Hormuz would carry political implications: it could draw Beijing deeper into Middle Eastern rivalries, complicate its relations with Iran, and potentially put it at odds with US interests in the region. It would also require a level of military and diplomatic coordination that Beijing has historically been cautious to undertake. Even more problematic for Xi Jinping, it would involve actual coordination efforts with Washington. Currently, neither side is ready for that contingency.

Yet doing nothing is also a choice, with concrete consequences. If Hormuz remains only partially open, governed by shifting political calculations, China may find itself repeatedly exposed to price spikes, supply disruptions, and strategic uncertainty. Over time, that could erode one of the key pillars of its economic model: reliable access to affordable energy. There are, of course, other options. China could accelerate efforts to secure alternative supply routes, including overland pipelines from Russia and Central Asia. It could expand its strategic petroleum reserves further, providing a buffer against short-term disruptions. It could also increase investments in renewable energy and domestic production to reduce overall import dependence. The last option, however, is expensive, while also harming the country’s already fragile decarbonization efforts.

All of these steps, however, are already underway to varying degrees, but they take time. Moreover, none of them fully replaces the scale and flexibility of seaborne oil imports from the Middle East. In the near term, Hormuz remains indispensable.

That reality leaves Beijing in an awkward position. It must navigate a situation where its energy lifeline is exposed to forces beyond its control, while avoiding actions that could entangle it in conflicts it would prefer to sidestep.

The two-week ceasefire offers a temporary reprieve, but it doesn’t resolve the underlying tension. If anything, it highlights the extent to which global energy flows can be influenced by political decisions rather than market dynamics. For China, the lesson is clear. Energy security isn’t only about securing supply, it’s also about securing the routes through which that supply travels. The question now is whether Beijing is prepared to act on that lesson, or whether it will continue to rely on a system that’s becoming increasingly uncertain.

Tim Daiss is an energy markets analyst in the Asia-Pacific region and a partner at APAC Energy Consultancy. He is a regular Asia Sentinel contributor.

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Malaysia, having suffered through the global financial scandal involving Malaysia’s sovereign investment fund 1Malaysia Development Bhd (IMDB) that brought down one of the world’s longest ruling parties, United Malays National Organization (UMNO), and sent its former Prime Minister Najib Razak to jail, is now embroiled in another affair, allegedly involving rival “corporate mafias” in which predatory rogue businessmen have used the threat of two different elite law enforcement institutions’ investigations to assist their acquisition attempts.

The affair has snowballed and looks likely to cause further cracks in Prime Minister Anwar Ibrahim’s political base. At the center is a lucrative IT company named NexG Bhd, formerly Datasonic Group Bhd, a major security-based solutions provider specializing in national projects like passports and the MyKad, Malaysia’s mandatory smart national identity card. There are reports swirling that both the Malaysia Anti-Corruption Commission and the Royal Malaysian Police’s Anti-Money Laundering (AMLA) unit are being used to benefit different factions of the corporate mafia via blackmail to force divestiture of shares in billion-dollar businesses, involving national security, biometric technology and foreign labor trade.

The man in the eye of the storm – or one eye – is Azam Baki, the chief of the Malaysian Anti-Corruption Commission (MACC), accused in a Bloomberg News 6,000-word investigation of assisting a cabal of businessmen in seizing control of local companies under threat of violence and protecting them from prosecution. Azam has been instrumental to Anwar Ibrahim’s anti-corruption drive, which some have criticized for targeting the premier’s enemies, including the children of former Prime Minister Mohamad Mahathir, and letting off his allies.

So far, Azam has escaped any retribution stemming from the minutely detailed Bloomberg report, with most observers saying he is too valuable to Anwar to face real scrutiny. Bloomberg reported that Anwar is blocking the release of a report of an investigation into Azam’s shareholdings amid speculation that the probe may have uncovered ownership of at least RM14 million worth of shares he is said to hold. Bloomberg also speculated that Azam, whose tenure at MACC is unlikely to be extended amid pressure for his immediate dismissal, is now seeking appointment as a senator, a position that would require Anwar to recommend him to Malaysia’s king, the Agong.

Earlier this month, Victor Chin Boon Long, the rogue businessman exposed in the February Bloomberg report as allegedly selecting vulnerable companies, then having the MACC carry out investigations to force them into takeovers, himself claimed to be a victim of the corporate mafia. His allegations have dragged in politicians directly linked to Anwar and the AMLA unit.

Chin, who by all accounts is no angel, allegedly having used the MACC to inflict fear and intimidation on takeover targets, asserted that 500 bank accounts held by his associates were frozen by the AMLA unit to force them to surrender shares for free, and more explosively, that last October 18 an MP in Anwar’s People’s Justice Party (PKR) requested RM10 million (US$2.287 million), of which he paid RM9.5 million to resolve his legal problems. Chin threatened to name the MP if he didn’t return the RM9.5 million the MP allegedly took without resolving his troubles. Chin described a “Mr R” as the culprit, leading to a brief guessing game as to who among PKR’s 31 MPs fit the initials.

Rafizi Ramli, Anwar’s former deputy who has now turned fierce critic and is pursuing the allegations surrounding Azam Baki and the MACC, insinuated that the MP is likely R. Ramanan, Anwar’s favourite minister and a PKR vice president and alleged that “Mr R” is a lawyer named Sandraruben Neelamagham, better known as Ruben, who formerly served Farhash Wafa Salvador, a former Anwar’s senior aide believed by many to be Anwar’s money man. Farhash has gone on to found the company Swag Technologies and is an independent non-executive director of the Singapore-listed Bluemont Group Ltd, now known as Southern Archipelago Ltd.

Whatever the veracity of that allegation, there has been a months-long fight over NexG Bhd, which has served as a political football for more than a decade as rival political interests, including the UMNO and PKR, have fought over control of its lucrative government contracts. In mid-March, according to Channel News Asia, Anwar was forced to step in to put a stop to a struggle for control of NexG between Farhash and businessman Ishak Ismail, another long-time Anwar associate, ultimately deciding in favor of Ishak Ismail to lead the company.

NexG secured RM 1.73 billion to supply Malaysian passports in August 2025 and won another six-year contract worth RM732.72 million to supply MYCAD smart national identity cards in early October, with an 18-month extension for continued supply of foreign worker cards, all from the PKR-helmed Ministry of Home Affairs. Together they totaled RM2.6 billion. A bewilderingly complex series of corporate moves occurred as varying sides fought for control.

The company’s then co-founding chairman, Hanifah Noordin, a Chin ally, alleged that the new directors that came to control NextG in October wanted to subcontract the RM2.6 billion deal to other companies including NexG’s competitor HeiTech Padu. At Anwar’s order, six NexG board directors aligned with Farhash resigned on March 11. Records show Farhash was a substantial shareholder of HeiTech Padu in March 2024. In October the same year, the company was awarded a contract for the National Integrated Immigration System (NIISe), Malaysia’s proposed AI-powered immigration system designed to modernize border control, improve security, and enhance service delivery, whose value was later raised to RM 1.05 billion.

Chin, in a closely-detailed 40-page document, alleged that through much of late 2025, members of the Corporate Mafia Gang, who have remained unidentified by everybody, he and his partners and shareholders were subjected to threats, intimidation and repeated demands to “deliver shares,” with instructions from the Corporate Mafia Gang and “Mr. R” dictating how, when, and where shares were to be transferred “under coercion, reflected by repeated expressions of fear and forced compliance.”

“The Corporate Mafia Gang deliberately misled AMLA,” he charged, framing him “as the central “Corporate Mafia” figure, to abuse AMLA’s authority and create leverage for the takeover of NexG shares,” by way of “remand, freezing of bank and CDS accounts, blocking share movements, threats of enforcement and arrest, and subsequent raids and asset seizures.”

Chin was one of 10 people detained between October 15 and January 1 for alleged involvement in money laundering activities. “I do not suggest that PDRM (the Royal Malaysia Police) or any enforcement agency is complicit,” he said. “Rather, there are serious concerns that certain individuals may have leveraged their positions and influence to affect actions taken by enforcement and regulatory bodies.”

NIISe raised a red flag because it would overlap for 2028-2031 with the Foreign Workers Centralized Management System (FWCMS) run by another company, Bestinet, run by Aminul Islam Abdul Nur, a naturalized Bangladeshi-Malaysian with close ties to Deputy Prime Minister Ahmad Zahid Hamidi from UMNO, and who has been identified by Rafizi as part of the AMLA’s “corporate mafia,” along with lawyer “Ruben.” Bestinet is a big player in importing Bangladeshi workers. Aminul was wanted for extradition by Bangladesh but cleared by MACC in 2024.

It appears that, at least for now, Anwar has spiked the takeover by interests connected to Farhash. Ishak Ismail has emerged as the controlling shareholder and executive chairman of NexG, holding 20.4 percent through Raya Aviation Holdings Sdn Bhd, a company controlled by his sons. Hanifah Noordin, the founder and former executive chairman, holds 9.579 percent and has been redesignated as deputy executive chairman and group chief executive officer after the corporate mafia attempted to drive him out.

That leaves the question of who is going to deal with substantial allegations that two of Malaysia’s most important law enforcement institutions were being used by rival corrupt business interests in the corporate battle for a desirable and profitable IT company with integral ties to the government. The snowballing scandal targeting listed companies can scare away foreign investors. Notwithstanding some institutional reforms underway like separating the Prosecution’s role from the PM-appointed Attorney General, Anwar’s reformasi movement has suffered another body blow.

Wong Chin Huat is a political science professor at Sunway University, Malaysia

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On March 3, the Malaysian government was forced to slow the development of data server farms, the facilities housing networked computer servers that act as the backbone of digital services, cloud computing and websites. By 2030, they are expected to account for 39 percent to 60 percent of Peninsular Malaysia’s peak power demand, according to Fulcrum, published by the ISEAS – Yusof Ishak Institute think tank in Singapore, straining both electricity grids and water supplies needed for cooling in key areas like the southernmost state of Johor.

It is a story being written across Southeast Asia, with Singapore already having placed a moratorium and strict constraints on land and power, pushing expansion demand to Johor in Malaysia and Batam in Indonesia, a country already facing AI-driven expansion which has created significant stress on the power grid, particularly in the Java-Madura-Bali region. Vietnam has experienced power shortages during peak months, which could pose challenges for its growing data center industry. Thailand’s Board of Investment reportedly approved 36 data center projects worth about US$23 billion in 2025 alone, followed by at least seven more valued at US$3.1 billion in January this year.

Cambodian cyber scam operations, many of which continue to operate despite police raids earlier this year, rely on industrial-scale digital infrastructure housed within heavily guarded compounds. Server power is believed to be at the very top in Asia, involving thousands of forced workers using, at a minimum, thousands of computers, high-speed internet gateways, and large-scale data storage for managing personal data, phishing sites, and cryptocurrency laundering. Scam server farms are believed to soak up well over half of Cambodia’s power supply.

That has played a role in making energy security a common priority for the region, with coal-fired power remaining a significant component of Southeast Asia’s energy mix according to the International Energy Agency, which reports that investment in coal “has risen steadily throughout the past 20 years, reaching 121 GW of installed capacity in 2025,” and universally disrupting plans to meet 2030 climate goals agreed by the United Nations sustainable development goals. The UN warning that a climate cataclysm is looming, with rising temperatures escalating hazards further, is largely being overlooked across the region.

“In the last few years, the Malaysian government rushed into data center approvals, with no detailed study done on the effects on environment, power and resource consumption, etc.,” emailed a Malaysian businessman who asked not to be named. “The government wanted to show investors had confidence in the new Anwar-led government and were willing to invest billions of dollars. With the Middle East war started by the Americans and Israelis, the truth has sunk in. Going forward, it is likely that Malaysia is going to slow down on data centers and AI-related investments. But how much or how little? As of today, they are grappling to formulate a policy.

Nonetheless, Southeast Asian countries appear to be in a race to see which can build fastest to capture a market estimated by the Sydney-based Lowy think tank to grow by 150 percent to reach US$30.47 billion by 2030, growing at a compound annual rate of 14.24 percent.

“ Artificial intelligence is fueling an unprecedented surge in data demand – and Southeast Asia is not yet ready to meet this challenge,” according to an October 25, 2024 report by the Big Four accounting firm Deloitte Touche Tohmatsu Ltd. “Across industries such as manufacturing, mobility, and logistics, next-generation AI applications are starting to replace traditional sensors with high-resolution images, videos, and other data-intensive inputs. These visual applications require immense computing power and low latency networks to work in real time. As a result, the region is seeing a massive spike in data capacity requirements, far beyond what its existing infrastructure can support.”

How much energy these server farms require is astonishing. In the US, OpenAI has announced plans for facilities requiring more than 30 gigawatts of power in total – more than the largest recorded demand for all of New England. ChatGPT alone, which revolutionized the world of artificial intelligence and made it accessible to anyone with a smartphone, is expected to reach 1.2-1.5 billion monthly users this month.

The research team at BestBrokers, which features detailed guides on key financial instruments, recently looked at what that would cost at the average US commercial electricity rate of $0.136 per kWh as of last December. Slovenia, Kenya, Costa Rica, Estonia, and Luxembourg separately consume less energy annually than the amount ChatGPT uses solely to process user queries, according to BestBrokers. ChatGPT’s yearly energy usage to handle prompts could power Brazil, which consumed 760.83 terra-watt-hours in 2024, for more than 10 days.

That is enough to satisfy the electricity demands of South Korea or Canada for almost 13 days, or even those of the United States for 44 hours. For China, the world’s largest electricity consumer, it would mean that the power drained by ChatGPT for prompts alone could keep the lights on for 19 hours straight.

That is just one LLM company. Among the thousands of companies that have exploded into existence, there are eight to 10 major LLM developers—defined by those with the computational resources, capital, and talent to build foundational models – chewing up equivalent to ChatGPT. Data server farms operated by each swallow the equivalent energy used by “Slovenia, Kenya, Costa Rica, Estonia, and Luxembourg separately.”

In Southeast Asia over the past 10 years, energy demand has increased by more than 35 percent according to the International Energy Agency’s World Investment Report 2025, with electricity demand alone rising by more than 60 percent.

“Historically, this rising energy demand has been met by fossil fuels, making up 60 percent of total energy investment in the past decade,” the IEA reports. “Coal was the main beneficiary, growing from 20 percent to 30 percent of the region’s energy mix, with US$110 billion invested since 2015, concentrated in Indonesia and Vietnam. However, fossil fuel investment decreased from US$70 billion in 2015 to US$50 billion in 2025 while clean energy investment reached US$47 billion, up from 30 billion in 2015.”

It appears a Hobson’s choice. “National governments, local telecommunications and energy players, and investors must recognize data centers and other AI infrastructure as critical assets of tomorrow – and move now, and move quickly, to build these assets on their shores,” the Deloitte report notes.

The region’s digitization push requires infrastructure to support local services and data storage. Governments recognize that hosting data centers drives development, creates jobs and boosts GDP despite the strain on resource and the environment. As data becomes a strategic asset, Indonesia has led the push to onshore data, with nearly 200 centers of varying sizes already operating across the country. Microsoft is building a new 48-megawatt center at the Karawang International Industrial City in West Java, part of the company’s US$1.7 billion investment in Indonesia. Microsoft plans three more facilities at the Karawang site housing five data centers and forming a major regional cluster.

For the major nations that make up ASEAN, Southeast Asia is a prime regional hub positioned to serve not only local markets but also nearby economies like Australia, China, and India. Data from the Deloitte report notes that the ability to store, process, and secure data onshore is critical. While environmental groups fear the danger from increased energy and water usage, the sector is regarded as a key driver of economic growth. Better to build and reckon the environmental costs later.

US President Donald Trump’s war of choice against Iran may leave the US economy, with the country’s substantial energy reserves, less battered than those of most of the world. As a net oil exporter, the US’s massive trade deficit may even shrink as a consequence of this advantage and of a probable inflation-driven weakness in domestic demand.

But the war, combined with the Supreme Court’s ruling outlawing most of Trump’s tariffs since the launch of his April 2025 trade campaign against the world in general and China in particular, makes a solution to US trade problems ever more difficult. Data analyzed by the Washington, DC-based Peterson Institute for International Economics suggests that cooperation with allies and trade partners is essential if the US is to reduce dependence on imports, and end China’s grip on production of key items. The latter includes rare-earth based magnets and some types of semi-conductors needed by local industry, notably automobiles.

Trade data for 2025 shows that despite the President’s announced massive tariff hikes, particularly on China, real US imports for the year rose by 4 percent even as China’s share of imports fell to 9 percent, less than half what it had been in 2018. The average tariff on Chinese goods rose from 21 percent in January 2025 to about 50 percent at the end of the year. Volume imports from China fell but the slack was more than taken up by other suppliers. Although average US tariffs on the rest of the world rose from 3 percent to 18 percent, non-China imports rose by 9 percent.

Two factors ensured that imports continued to grow even as importers and consumers had to absorb some increased costs. The first was the ability to switch supply chains away from China to other countries, most notably Vietnam and Mexico, but including Bangladesh and Indonesia. This process is still ongoing. In some cases, such as clothing, there was an overall fall, but many categories saw little change or even growth. In automobiles, tariffs kept China’s market share to a minimum even as Chinese cars made huge headway in global markets. But Mexico’s share of the US market continued to rise as well, partly at the expense of Canada and Europe.

Meanwhile, the AI boom ensured that imports of semi-conductors soared, making Taiwan the source of half the overall increase in US imports. Countries at the lower-value end of the semiconductor industry, such as Mexico, also benefited.

China demonstrates ability to cope

The year was notable for China’s demonstration that it had trade tools of its own and was prepared to weaponize them. The most significant was around rare earths and magnets, without which whole industries, notably automobiles, could come to a halt. After his April 2025 “Liberation Day” tariff grandstanding, Trump was effectively trumped by the use of rare earth and semi-conductor weapons by Chinese Supreme Leader Xi Jinping. Trump’s now-postponed meeting with Xi, supposed to have been at the end of March but delayed by the Iran invasion fiasco, leaves many issues up in the air while China’s image as a source of stability as well as a trade colossus has probably been enhanced by Trump’s Iran war.

China’s strategic foresight in dominating the rare earths industry, even though it has no monopoly on the ore sources, puts it in a powerful position which can only be reduced by cooperation between other ore sources and end-user countries. That not only takes time and money but a degree of cooperation which cannot be enhanced by Trump’s insults to partners unwilling to join his “crusade’ against Iran. With the future of US tariffs now uncertain, it remains to be seen if Washington can readily cooperate sufficiently with others to reduce China’s trade leverage.

Indeed, the US seems to be going out of its way to alienate as many as possible unnecessarily. The US Trade Representative is using existing legislation to investigate 16 countries for alleged overcapacity, though China is the only obvious target. And no fewer than 60 countries are to be investigated for alleged use of forced labor. This list includes the EU and Japan. Flailing around in this manner merely raises foreign sense of contempt for the administration.

Meanwhile, no country is going to believe that a deal with Trump is anything but ever-negotiable according to his whims or the mood of the Supreme Court. Malaysia has already renounced the lopsided deal it made with Trump last October. Is the word of the US worth anything?

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A wide range of media sources in Jakarta are reporting that President Prabowo Subianto is growing frustrated with the massive sovereign investment fund he established a year ago on the expectation it could transform an agglomeration of corruption-riddled state-owned enterprises into a global wealth fund similar to Singapore’s Temasek. He is demanding to see results and warning government officials not to submit reports that misrepresent facts simply to please him.

Prabowo originally projected that Daya Anagata Nusantara, or Danantara, as it is known, could eventually manage assets worth up to $1 trillion with a minimum annual return on investment of 7 percent, later raised to 10 percent in an economic climate in which the World Bank reported national GDP growth at 5.11 percent for 2025, moderating to a projected 5.0 percent for 2026.

“Do not play games with me by providing false reports just to make me happy. I give this as a serious warning,” the president said during a speech marking the fund’s first anniversary.

Prabowo’s warning came after both Moody’s and Fitch international rating agencies have recently expressed concerns over the governance, funding and investment priorities of the fund. Fitch noted that Danantara’s role could increase debt-financed investments, which might lead to higher budgetary risk amid declining fiscal transparency. It revised Indonesia’s sovereign outlook to negative from stable, while affirming its ‘BBB’ rating. Moody’s has also revised Indonesia’s credit rating outlook to negative from stable, largely over Danantara’s governance concerns.

Danantara is also raising concern that Prabowo’s economic policies center on a shift toward state-led, nationalistic strategies redolent of his onetime father-in-law Suharto, that threaten to strain public finances and reduce investor confidence as well as his proclivity, as a former general, to turn to the military in other areas to seek to accomplish national goals.

Local media reported last week that Prabowo set a target for Danantara to contribute at least US$50 billion annually to the state, based on an estimated minimum return on assets of 5 percent from the state assets it manages.

“We understand that in the first years we may not achieve the higher targets. If we only require a 5 percent return on assets, that means Danantara must return US$50 billion to the state each year,” Prabowo said, adding that Danantara must establish long-term targets for managing state assets and eventually aim for an annual ROA of between 10 percent and 15 percent.

It is too early for financial reports for the fund, which has been gobbling up not only SOEs but investing in a wide range of so-called National Strategic Projects, including in energy and mineral processing sectors that have long been fraught with controversy. It has taken over up to 2 million hectares of seized illegal oil palm forest, handing them over to a state-owned enterprise which specializes in palm oil management.

Danantara at the outset took over management of the affairs of 70-odd SOEs which hold assets equivalent to 52 percent of GDP. They include the country’s three biggest banks and the national energy, national electricity, national telecommunications and national mining companies, as well as dozens of others that are money-losing and riddled with inefficiency and corruption and have been a long-term drag on the economy. In 2018, the country’s audit board (BPK) noted that procurement issues accounted for 49 percent of total state losses. Between 2016 and 2021, 119 corruption cases were reported within SOEs involving 340 suspects. Notable cases include the 2024 PT Timah Tbk scandal, which led to an estimated Rp300 trillion in losses. Other high-profile corruption cases have involved Garuda Indonesia, Jiwasraya, and Krakatau Steel.

It is difficult to see how the SOEs can be reformed without a revolutionary housecleaning. That hasn’t occurred. From its inception, Danantara’s governance structure has drawn criticism. Prabowo’s constitutional role as chairman of the supervisory board, combined with a management lineup populated by figures with close political and business ties to him, has raised red flags. Indonesia Corruption Watch has identified at least 24 of the 31 individuals in its organizational structure as Politically Exposed Persons—current or former holders of public office or individuals with significant power or influence—considered more vulnerable to involvement in illicit activities such as bribery, corruption or money laundering. At least seven of those 31 are said to maintain active political affiliations.

Civil society groups also have pointed out that a number of projects promoted, ranging from coal downstreaming and energy development to natural-resource-based ventures, involve individuals or companies with close political ties to the president or to Danantara’s leadership itself. One project frequently cited is the Kayan Hydropower Plant in North Kalimantan, billed as one of Southeast Asia’s largest energy projects and a cornerstone of Indonesia’s green industrial ecosystem and mineral downstreaming agenda. Behind the narrative of energy transition and sustainable development, multiple sources suggest that companies linked to Hashim Djojohadikusumo, Prabowo’s brother, may be involved, whether as developers, strategic partners, or suppliers.

Coal downstreaming is under scrutiny, particularly the development of gasification technology to produce dimethyl ether, or DME. Planned for three sites across Sumatra and Kalimantan, the project has long been promoted as a substitute for imported liquefied petroleum gas. Civil society studies, however, have highlighted that the mining areas and supporting zones for the project are located on land associated with companies that have historical ties to Prabowo.

Yet in the renewable energy sector, several prominent business figures active in the field also maintain close political connections to Prabowo or to Danantara’s leadership. Among them is Aburizal Bakrie, a central figure in the Bakrie Group and a member of the Prabowo–Gibran campaign advisory board. There is also Boy Thohir, the chief executive of Adaro Energy, who has publicly declared his political support and is related to Erick Thohir, Indonesia’s minister of state-owned enterprises and a member of Danantara’s supervisory board. To many analysts, this web of positions and relationships signals the potential for conflicts of interest in the management and financing of renewable energy projects designated as nationally strategic.

From the beginning, critics have pointed to the limited transparency in institutional design, particularly the absence of adequate public disclosure regarding investment decision-making mechanisms, project selection criteria and conflict-of-interest mitigation. Civil society organizations including Yayasan Indonesia Cerah, Indonesia Corruption Watch, Trend Asia and Climate Rangers have launched an independent platform known as Danantara Monitor to track and report on the institution’s activities.

The consequences of this opacity are becoming increasingly apparent. A number of projects have sparked public controversy because they appeared abruptly, without clear explanations of how they were selected or why they were prioritized. In some cases, the names of companies and individuals involved became known only after projects were announced as part of the national strategic agenda, rather than during the planning stage. As a result, space for public and parliamentary oversight has narrowed, while perceptions of conflicts of interest have hardened in the absence of timely official clarification.

Perhaps most significantly, the situation has begun to erode confidence both domestically and internationally as the Moody’s and Fitch downgrades have shown. Governance experts warn that without strong transparency safeguards, Danantara risks being perceived not merely as a state investment instrument but as an extension of political power and particular business networks. Even if such perceptions do not culminate in legal violations, they could undermine its credibility as a long-term investment partner, ironically contradicting the very purpose for which the institution was created.

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In recent months, the number of Iranian-flagged oil tankers as well as “zombie” ships sailing under the name and flag state of long-scrapped vessels through the Singapore Strait has increased markedly. Low-laden with crude oil sailing east to China, riding high sailing empty west, the increased sailings are a clear sign of Tehran’s financial precarity as it faces economic ruin following decades of state mismanagement and stiffened western sanctions.

China is more than happy to buy up massively cut-priced Iranian crude oil to fill its national reserve tanks, accounting for 90 percent of Iranian oil exports over the past two years, carried on one fifth of global crude tanker volumes, sanctioned or otherwise.

These sanctioned Iranian and assortment of zombie tankers have passed unmolested by Singapore’s coast guard or naval patrol ships as they sail through the Strait, winding between the island-state and Indonesian territorial waters to the south. The Strait is fast becoming a focal point in efforts to police the global dark fleet, with the channel’s strategic location connecting Europe and the Middle East to East Asia raising questions over the island-state’s will in enforcing sanctions it signed up to either in line with US-led Western efforts or as part of UN-mandated global sanctions. Lloyd’s List Intelligence, the famed maritime data and intelligence company, identified 27 such vessels transiting the Strait in December, with another 130 in the nearby Riau Archipelago.

In a written parliamentary response earlier this month, Acting Transport Minister Jeffrey Siow stated that Singapore is fully applying UN Security Council resolutions and will not tolerate illegal or deceptive activities by shadow fleet vessels which may be denied entry or detained if caught within Singaporean territorial waters.

The answer to the lack of seizure lies within freedom of navigation rights enshrined within the UN Convention on the Law of the Sea (UNCLOS) of waterways used for international navigation such as the Malacca and Singapore Straits. Under UNCLOS, such Straits Used for International Navigation automatically establish the right of “transit passage” for ships and aircraft and explicitly forbids bordering states to such waterways from unilaterally hindering or suspending passage.

Transit passage rights through waterways used for international navigation are one of the most sensitive examples of the universal freedom of navigation enshrined within UNCLOS. Violation of transit passage rights through international navigation waterways is considered by many sovereign states to be a casus belli for war.

This extremely thin international waterway outside of the 22.2 nautical mile territorial waters definition set out within UNCLOS makes up the actual “Singapore Strait” used for international navigation. It includes the deepwater Philips Channel between Singapore’s southeast coast and Indonesia’s Riau Islands which at its narrowest is a mere 2.8 km. (1.5 nautical miles).

Ship spotting

Remy Osman, a British national, has turned an impromptu pastime of ship spotting from his quarantine hotel window during the Covid-19 pandemic into a full-blown Instagram page “SG Shipspotting” specializing in documenting the passage of these oil tankers and cargo ships that are a part of the global dark tanker fleet. Using nothing more than his smartphone camera and keeping an eye on open-source live marine traffic data online, Osman tracks and visually identifies them, carrying crude or natural gas from Russia and Iran eastwards to keep the Chinese economy fueled and running.

Osman’s early dark-fleet tanker-spotting primarily documented vessels sailing under flags of convenience but individually sanctioned for their known role in transporting sanctioned oil from Russia, Iran, and Venezuela. He can easily track dark fleet tankers easily on live marine traffic data websites before visually spotting and confirming them, which is entirely because the vessels must switch on their Automatic Identification Systems (AIS) as they sail through one of the world’s busiest and most congested international waterways.

The tankers and their cargo might be sanctioned, their voyage might be deemed illegal under international law, but their crews are not reckless to risk colliding with other ships in the Singapore Strait. This is as much for their own safety as well as denying Singapore or Indonesia any justification to hinder their passage or interdict them through boarding actions.

A perennial problem with global documentation and policing lies in the fleet’s ability to simply disappear off live tracking by turning off their AIS transponders, giving them a degree of stealth and windows of opportunity for evading non-visual tracking scrutiny. In this sense, Singapore is in an ideal position to monitor such large vessels which have no real alternative route to sail between the Indian Ocean and South China Sea. The government claims it is using every available tool within existing UNCLOS legal frameworks and constraints like providing navigational information and reporting detected environmental pollution caused by such vessels to their respective flag states, short of kinetic boarding actions, and is calling for greater global cooperation to help tackle the issue.

Yet this shrugging of shoulders, citing international legal constraints on how sovereign states can police anything on the high seas, is not entirely true. More than a few of the tankers Osman has documented should have long ago been scrapped. Not doing so is a violation of UNCLOS Article 92, which specifically states that flag changes can’t occur without a real transfer of ownership or change in registry.

Hanging a flag on the stern or painting a different name on the hull doesn’t automatically confer legitimate state-registered identity for a ship, which makes zombie tankers sailing under fraudulent identities liable under international law to detention by any country with the ability and political will to do so. Indeed, the unprecedented pursuit and capture of the Guyana-flagged oil tanker Bella 1 in mid-January by US maritime forces saw the ship try to change its name and national identity on the fly to become the Russian-flagged Marinera. Despite Russia’s claim of dispatching a naval warship and allegedly even a submarine to escort Bella 1, the US seized her nonetheless and highlighted the reality of credible legal power and presence on the high seas juxtaposed by the woolly principled ideals enshrined in international law.

The story of a private individual curating a social media page using nothing more than a smartphone camera and publicly available online vessel databases to document a constant stream of the global dark fleet sailing past Singapore is not just an illustration of how commoditized surveillance tools have become in the world today. It is also an illustration of the ineffectiveness of laws and sanctions regimes, as the extent of their practicable enforcement shows, or indeed the will to act.

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