For decades, nuclear power has occupied an uneasy place in Southeast Asia’s energy future. Governments periodically embraced it whenever electricity demand surged or fossil fuel prices spiked, only to retreat as construction costs mounted, financing evaporated, or public opposition resurfaced. Today, however, the conversation has returned with renewed momentum, driven not by conventional gigawatt-scale nuclear plants but by a new generation of small modular reactors (SMRs), championed by Microsoft founder Bill Gates, Rolls Royce, NuScale and a growing list of governments eager to commercialize the technology.

The question is no longer whether Southeast Asia is interested in nuclear power. It clearly is. The more important question is whether enthusiasm is beginning to outrun commercial reality. That matters. Unlike traditional nuclear reactors, SMRs generally produce up to about 300 megawatts (MW) of electricity and are designed to be factory-built before being transported to project sites for assembly. However, a 300 MW nuclear power project is considered small by industry standards. Average-sized nuclear plants generate about 1,000 MW or more. A 300 MW plant is only about one-third the size of a standard reactor and can power around 300,000 homes.

Supporters continue to argue that their smaller footprint, modular construction, and passive safety systems could dramatically reduce both construction risks and upfront capital costs while making nuclear power accessible to countries with smaller electricity grids. The technology also offers greater flexibility, allowing utilities to add generating capacity incrementally rather than committing billions of dollars to a single massive project.

For Southeast Asia, where electricity demand continues to rise alongside industrialization, urbanization, and rapidly expanding middle-class economic expansion and consumption, that proposition is understandably attractive. Coal still dominates much of the region’s electricity generation, while natural gas remains vulnerable to volatile international prices and geopolitical disruptions. Renewable energy is expanding rapidly, but governments continue to wrestle with intermittency, transmission constraints and storage limitations. Against that backdrop, SMRs increasingly appear to offer an enticing middle ground: carbon-free baseload electricity without the enormous financial commitment associated with conventional nuclear plants.

Several governments in the region have already begun exploring precisely that possibility. The Philippines has perhaps moved furthest politically. After decades of debate surrounding the dormant Bataan Nuclear Power Plant, Manila has revived its nuclear ambitions, strengthened its regulatory framework and signed multiple civil nuclear cooperation agreements with international partners. While no SMR project has yet broken ground, policymakers increasingly view smaller reactors as a more practical entry point than conventional nuclear stations, particularly given the country’s archipelagic geography.

Indonesia, Southeast Asia’s largest economy, has pursued nuclear options for years, but interest has intensified as the country seeks reliable low-carbon electricity for its rapidly expanding economy. Officials have openly discussed SMRs as a better fit for remote islands and industrial clusters where massive conventional reactors would be difficult to justify economically. Meanwhile, Vietnam, after shelving its earlier nuclear program nearly a decade ago, has reopened discussions as electricity demand accelerates and long-term energy security climbs the political agenda. Thailand has also begun studying SMRs as part of its long-term power planning while continuing to evaluate the technology’s commercial viability.

Yet despite the growing excitement, the region should resist assuming that smaller reactors automatically translate into easier deployment because that assumption remains largely untested. Although SMRs have attracted enormous political attention and billions of dollars in research and development, commercial deployment remains limited. Russia and China currently operate the world’s most advanced examples, while several Western designs, including TerraPower’s Natrium reactor backed by Bill Gates, remain under construction or in various stages of regulatory review rather than full commercial operation.

The obstacles facing Southeast Asia extend well beyond reactor design. Every country considering nuclear power must first establish an independent regulator capable of overseeing licensing, operations, inspections and emergency preparedness, while simultaneously building a highly trained workforce of engineers, operators and safety specialists. If they can’t develop the necessary expertise in time, most can’t, then more foreign assistance will be needed. Even more critically, nuclear waste management also remains politically sensitive, while financing continues to present perhaps the greatest hurdle of all. Even if SMRs eventually prove cheaper than conventional reactors, they still require substantial upfront investment, long planning horizons, and strong government commitment before producing a single kilowatt-hour of electricity.

Public confidence also represents another challenge that can’t be overlooked. Although SMR advocates emphasize passive safety features and simplified designs, public opinion throughout Asia continues to be shaped by problematic memories of the Fukushima, Chernobyl and Three Mile Island nuclear disasters. Convincing local communities that smaller reactors are fundamentally different from their larger predecessors will likely require years of regulatory transparency and sustained public engagement rather than engineering improvements alone.

Yet, none of this suggests that SMRs lack promise. Quite the opposite. For many Southeast Asian countries, they may ultimately prove far better suited than traditional nuclear plants. Smaller electricity grids, island geography and steadily rising demand make modular deployment conceptually attractive, particularly in archipelago nations like the Philippines and Indonesia. If construction costs decline through standardized manufacturing, as advocates predict, SMRs could eventually become another important tool alongside renewables, natural gas and energy storage in helping governments balance energy security with decarbonization goals.

However, that future hasn’t arrived yet, while the numbers are telling. Governments across Southeast Asia are increasingly discussing SMRs, signing cooperation agreements and commissioning feasibility studies, but very few projects have advanced beyond planning, regulatory preparation or preliminary site evaluation. Interest is real, political momentum is building, and technological progress continues. Commercial deployment, however, remains several steps behind.

Ultimately, the debate is becoming less about whether small modular reactors can generate electricity and more about whether they can generate investor confidence. Southeast Asia certainly needs additional low-carbon power sources, and SMRs may eventually earn a meaningful place in the region’s energy mix. SMRs may eventually become part of Southeast Asia’s energy future. But for now, governments should view the technology as a promising opportunity rather than an immediate solution.

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Southeast Asia’s state-owned power utilities are being asked to perform an impossible balancing act. Governments want them to keep electricity cheap for households and industry, maintain reliable supply, absorb rising fuel costs, invest in new electrical grids, buy more renewable power, and prepare for liquefied natural gas (LNG) imports.

That may be politically convenient, but it’s becoming financially unsustainable. The region’s power sector is entering a dangerous phase: electricity demand is rising rapidly as Southeast Asia industrializes, urbanizes, and electrifies, while millions enter middle-class economic status. Concurrently, governments are promising cleaner power systems, more renewable energy, stronger grids, and lower emissions. None of that comes cheaply. The International Energy Agency (IEA) estimates that Southeast Asia will need clean-energy investment to rise to about $190 billion annually by 2035 to meet climate goals, while power-grid investment alone must roughly double.

Many of the state utilities expected to deliver this transition are already financially stretched. In Vietnam, Electricity of Vietnam (EVN) has repeatedly struggled with losses linked to high input costs and politically sensitive electricity prices. Although electricity tariffs were raised twice in 2023, EVN still reported a massive after-tax loss that year. It has since returned to profit, but accumulated losses remain a warning sign.

EVN’s difficulties point to a wider regional problem with the utility expected to support Vietnam’s industrial growth, prevent blackouts, buy power from generators, expand transmission, and integrate renewable energy. Yet it operates in a political environment where electricity prices can’t simply rise whenever costs increase, leaving EVN squeezed between economic reality and political caution.

Vietnam’s electricity system has already shown what happens when policy ambition runs ahead of grid capacity. The country’s earlier unprecedented solar boom made it one of Southeast Asia’s most dynamic renewable markets, but grid bottlenecks soon followed. Developers built projects faster than the transmission system could absorb them. That forced curtailment, payment disputes, and a slowdown in new renewable deployment. The lesson is clear: building renewable capacity is only half the job, but somebody must also pay for the grid that makes it usable.

Indonesia faces a similar dilemma, but on a much larger scale. State-owned PLN remains central to the country’s power sector, serving a vast archipelago and acting as the main buyer, generator, and distributor of electricity. Like EVN, PLN doesn’t act like a normal functioning utility. Far from it. It’s a political instrument, development agency, and utility rolled into one.

Notably, PLN’s finances depend heavily on the Indonesian government. Subsidies and compensation payments are not incidental; they are central to how the system functions. Analysts have noted that PLN’s subsidies and compensation from the government rose from $7.5 trillion in 2022 to $8.7 trillion in 2023. That dependence allows Indonesia to keep electricity affordable, but it also hides the real cost of power from consumers.

This creates a shell game as governments suppress tariffs to protect the middle class and industry. Utilities absorb or defer the costs, while finance ministries later step in through subsidies, compensation, or balance-sheet support. The consumer avoids the full bill today, but the taxpayer pays tomorrow.

The energy transition makes this problem even more acute. Renewable energy is often cheaper over the long term, but integrating it into the system requires upfront spending on transmission, storage, grid management, and backup capacity. LNG adds another layer of risk since Southeast Asian governments still see gas as a transition fuel. However, imported LNG exposes utilities to volatile global prices and foreign-exchange risk. If utilities can’t pass those costs through to consumers, losses reappear somewhere else in the system.

The Philippines offers a different, albeit powerful, warning. Its power sector is more liberalized than Vietnam’s or Indonesia’s, and costs are more visibly passed through to consumers and end users. But there’s a trade-off since the country has one of the highest electricity prices in Southeast Asia, with some of that attributed to decades-old monopolies with immense political power. The result is more financial pain for consumers. This also shows the trade-off facing the region: either consumers pay through higher tariffs, or governments and state utilities absorb the burden through subsidies and debt.

For Southeast Asian governments, cheap electricity has long been part of the social contract. Affordable power supports manufacturing, cushions households, and helps attract foreign investment. Unfortunately, that model becomes harder to sustain as electricity systems become more capital-intensive. Coal plants, however polluting, are relatively straightforward to dispatch. Modern power systems built around renewables, batteries, flexible gas, smarter grids, and cross-border transmission require deeper capital markets, better regulation, and more transparent pricing.

The danger is not that EVN, PLN, or similar utilities will go bankrupt in the conventional sense. Governments will not allow national power companies to collapse or leave factories and households without electricity. The real danger is slower and more damaging: chronic underinvestment, delayed projects, hidden liabilities, sudden tariff shocks, and repeated taxpayer bailouts.

This matters for industrial policy. Southeast Asia wants to attract manufacturers shifting supply chains out of China; however, factories need reliable and competitively priced electricity. If utilities can’t invest fast enough in generation and grids, power shortages could become a constraint on growth. Vietnam has already experienced episodes of electricity stress during periods of high demand and weak hydropower output. Indonesia also faces the challenge of matching power supply to industrial expansion across a geographically complex system.

Ultimately, there’s no easy answer. Raising tariffs too fast risks public anger along with inflation, while holding tariffs too low weakens utilities and discourages investment. Subsidies protect consumers but strain government budgets, renewable energy can reduce fuel import dependence, but only if the grid is strong enough to handle it.

Southeast Asia’s power utilities are therefore becoming a test of whether the region can reconcile three goals at once: affordable electricity, reliable supply, and cleaner energy. Politicians have long pretended that all three can be achieved without forcing consumers or taxpayers to pay the full cost. That illusion is starting to crack.

The coming crisis isn’t bankruptcy per se. It’s financial stress dressed up as public policy. Unless governments allow more realistic electricity pricing, stronger utility balance sheets, and faster grid investment, Southeast Asia’s energy transition may be slowed not by a lack of ambition, but by the fragile finances of the very utilities expected to deliver it.

For years, Asia’s renewable energy transition has been defined by familiar players. China dominates clean-energy manufacturing, India has become a solar powerhouse, and countries such as Vietnam and Indonesia have pursued ambitious energy-transition plans.

Now the Philippines, which relies almost entirely on imported crude oil and refined petroleum – recently exacerbated by skyrocketing fuel prices driven by the Gulf War – is emerging as one of the region’s fastest-growing renewable energy markets. To combat the economic strain, the government recently declared a state of national energy emergency.

Recent data from global energy think tank Ember shows the Philippines has overtaken Pakistan as China’s second-largest export market for solar panels, next to the Netherlands, a key import hub for much of northwest Europe. More than 4,000 megawatts (MW) of Chinese solar panels entered the country during the first four months of 2026 alone, including over 3,000 MW in March and April.

In an analysis released in late May, Ember noted that China has also begun exporting solar cells – the basic building blocks of solar panels – to the Philippines, with imports reaching US$292 million (about P18 billion) from October 2025 to March 2026, up sharply from almost zero in previous periods, based on the latest China trade data cited.

At the same time, the government is pushing one of Asia’s most ambitious offshore wind programs, attracting billions of dollars in prospective investments from international developers.

The surge reflects a combination of economic necessity, energy security concerns, policy reforms, and rapidly declining renewable energy costs.

High power prices drive solar demand

The Philippines has long struggled with some of the highest electricity prices in Southeast Asia. Residential consumers pay roughly ₱12 to ₱15 (US$0.20 – US$0.24) per kilowatt-hour, while businesses face electricity costs that are among the highest in the region. Rising generation charges and dependence on imported fuels have further increased pressure on households and industries. As a result, solar power has become an increasingly attractive investment.

Payback periods for rooftop solar systems have fallen sharply. Commercial establishments can recover their investments in just over two years, while industrial users typically achieve payback within three years, down from about four years previously. The economics are compelling for factories, shopping malls, office buildings, warehouses, schools, and hospitals seeking to reduce operating costs. Under the government’s net metering program, consumers with solar panels can even export excess electricity to the grid in exchange for credits on their power bills.

“The economics of rooftop solar are more attractive than ever, and its rapid rise is inevitable,” Ember chief analyst Dave Jones said in a recent assessment.

Citing the United Nations’ commodity trade statistics database, the Ember report found that solar panel imports into the Philippines grew to $483 million in 2025 from the previous year’s $365 million. Notably, 98 percent of last year’s imports came from China.

“The government has an opportunity to carve its own path on rooftop solar, to bring the Philippines out of fossil dependency, and onto a path of cheap, abundant electricity,” Jones said.

Beyond lower electricity bills, solar power also reduces dependence on imported coal and natural gas, which still account for much of the country’s electricity generation. For policymakers, renewable energy is increasingly viewed not only as a climate solution but also as a means of strengthening energy security.

Economic growth fuels demand

The renewable energy expansion is occurring against the backdrop of robust economic growth, with the Philippines one of Southeast Asia’s fastest-growing economies, supported by a young population, rapid urbanization, and expanding industrial activity. Rising incomes and business investments continue to push electricity demand higher.

Historically, much of that demand would have been met through new coal-fired power plants. Today, government policy is steering investment toward renewable energy instead. Recent reforms have relaxed foreign ownership restrictions on renewable energy projects, introduced competitive auctions, and streamlined permitting processes. These measures have encouraged domestic and foreign investors to commit billions of pesos to new projects. Major developers, including subsidiaries of ACEN, Aboitiz Power, and Meralco PowerGen, are expanding utility-scale solar projects across Luzon, Visayas, and Mindanao.

Offshore wind offers bigger opportunity

While solar installations are expanding rapidly, offshore wind could prove even more transformative, with extensive coastline and favorable wind conditions creating some of Asia’s most attractive energy prospects. Government agencies have awarded dozens of offshore wind service contracts covering projects that could eventually generate tens of gigawatts of capacity.

Among the most closely watched proposals are developments in Northern Luzon, Mindoro, and the Guimaras Strait, where international companies are studying multi-billion-dollar investments. European, Middle Eastern, and Asian firms have formed partnerships with Philippine companies to develop these projects, reflecting growing confidence in the country’s renewable energy prospects.

Growing opposition

The renewable energy boom, however, is not without challenges. Several large-scale solar and wind projects have encountered opposition from environmental groups, local communities, church organizations, and indigenous peoples concerned about ecological and social impacts.

In Quezon Province, renewable energy developments near environmentally sensitive areas around Mount Banahaw have raised concerns among conservation advocates over potential impacts on biodiversity and protected ecosystems. Elsewhere, fishing communities have questioned proposed offshore wind projects, citing possible effects on marine habitats and livelihoods.

Large solar farms have also drawn scrutiny over the conversion of agricultural land and concerns about food security. Critics argue that some projects could alter rural landscapes and place additional pressure on farming communities.

The disputes highlight a challenge increasingly faced by governments around the world, balancing the urgent need for clean energy with environmental protection and community interests.

Balancing growth and sustainability

Industry observers say public acceptance may become one of the most important factors determining the pace of the country’s energy transition. Insufficient consultation with affected communities could delay projects and increase costs. At the same time, prolonged regulatory disputes risk slowing efforts to reduce dependence on imported fossil fuels.

The challenge for policymakers is to maintain investor confidence while ensuring that environmental safeguards and community concerns are adequately addressed. How successfully the government manages these competing interests could determine whether the Philippines achieves its renewable energy targets over the next decade.

A regional energy story

Despite these hurdles, the broader trend remains clear. The Philippines’ rise as China’s second-largest solar-panel market reflects a fundamental shift in its energy landscape. High electricity prices, strong economic growth, supportive policies, and energy-security concerns have combined to create one of Asia’s most dynamic renewable energy markets.

The development also underscores a wider lesson for the region. Energy transitions are often driven as much by economics and energy security as by climate policy. If current investment momentum continues and major projects overcome environmental and permitting challenges, the country could emerge as one of Asia’s leading examples of how clean energy, economic growth, and energy security can converge to transform a national power system.

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The international rating service Moody’s has joined a substantial chorus warning of China’s growing influence in Latin America, an indication that US President Donald Trump’s “Donroe Doctrine” seeking to wall the US’s backyard off from outside influence is having little effect. Chinese overseas direct investment (ODI) in Latin America totaled US$116 billion between 2015 and 2025, making the region the third largest destination for Chinese capital outside Asia and Europe, according to Moody’s.

“China’s huge and soaring exports to Latin America are eroding the region’s manufacturing sector and increasing its dependency on China, said Moody’s in a June 8 report. “Imbalances in China’s industrial production pose direct competitive risks to Latin America’s domestic manufacturing base, particularly in sectors such as steel, vehicles, electronics and chemicals.”

For more than a decade, warnings have been echoing about Beijing’s expanding regional footprint, focusing on economic dependency, critical infrastructure control, and technological vulnerabilities. Policymakers and security experts have highlighted primary risks including Chinese ownership of as many as a dozen port projects across South America and the Caribbean, including the Chancay megaport in Peru. Experts warn these dual-use facilities could serve strategic or defense purposes for Beijing. In addition, widespread adoption of 5G and smart city infrastructure from Chinese telecom and technology firms like Huawei raises fears of significant cybersecurity and espionage risks. Moodys is now warning that those investments are being joined by Beijing’s huge and growing exports to the region.

“Auto, electronics and machinery, as well as basic metals manufacturing (including steel) are vulnerable, driven by high displacement risk and increasing Chinese value added in exports,” said the Moody’s report. “Latin America’s export profile to China is becoming more concentrated in raw materials. The shift from refined to unrefined exports means the region captures less value added per dollar of trade, increasing its vulnerability to price and demand shocks, as well as protectionist policies.”

While Latin America exported about US$174 billion to China — close to 80 percent of which was raw materials — it imported US$252 billion in manufactured goods, the Moody’s report pointed out. “These facts represent a deeply asymmetric trade relationship: Latin America is dependent on China’s demand for commodities while China supplies manufactured products.”

Trade between China and Latin America jumped to a record exceeding US$500 billion in 2025, an increase of more than 2.5 times from $200 billion in 2010 and solidifying China as the region’s second most important trading partner behind the US and the top trading partner for Brazil, Chile and Peru, the Moody’s report noted.

“The 304 percent growth in Chinese transportation equipment and vehicles imports since 2018 for Mexico and an eighteenfold surge of Chinese EVs (electric vehicles) imported to Brazil in 2023 are signs of intensifying reliance on imports from China, displacing domestic production,” said the Moody’s report. “The accelerating competition from Chinese imports is adding to the risks of Latin America’s deepening dependence on commodities and geopolitical reorientation because of ongoing shifts in the trade landscape.”

Some Latin American countries have enacted policies to protect domestic industries. In January, for example, the Mexican Congress approved tariffs targeting countries that lack free trade agreements with it, including China, the Moody’s report cited.

However, China is localizing from export to local manufacturing in Latin America, for example, in the auto and auto parts sector, said Alice Sun, founder of OrcaMar Strategies, a Hong Kong consultancy which helps Chinese firms expand abroad, at a lunch talk at the Hong Kong Foreign Correspondents’ Club on April 27.

“We are helping Chinese companies find industrial parks in areas in Latin America where they can get electricity and water easily,” Sun disclosed.

Chinese manufacturers are investing in multiple regions like Latin America, Southeast Asia and Africa to avoid tariffs, Sun explained. “Chinese investments in Latin America in the past three years have been influenced by geopolitics.”

Sino-US rivalry over Latin America

Trump appears unconcerned.

“The Monroe Doctrine is a big deal, but we’ve superseded it by a real lot. They now call it the Donroe Doctrine…Under our new National Security Strategy, American dominance in the Western Hemisphere will never be questioned again,” Trump said at a press conference on January 3. The Monroe Doctrine, formulated by US President James Monroe in 1823, opposes the intervention in the political affairs of the Western Hemisphere by external powers.

For instance, the Panamanian government, likely backed by the US, seized two ports along the Panama Canal which were operated by CK Hutchison, a Hong Kong-listed conglomerate controlled by Hong Kong tycoon Li Ka-shing, in February. Trump’s raid on Venezuela in January is likely to strengthen the US petrodollar due to the US takeover of the nation’s abundant oil resources, Asia Sentinel reported on January 6.

“A core difference is how China and the US engage Latin America. China is very focused on the bigger markets in the region like Mexico, Brazil, Chile and Argentina. The US seeks to control strategic areas like Venezuela and Colombia. It’s very political, military and strategic. For China, it’s more economic. The US focuses on Guatemala, Guyana, Ecuador and the Caribbean because of strategic and military considerations,” Sun said.

US-China trade tensions are reshaping commodity flows (such as soybean purchases redirected from the US to Brazil), manufacturing supply chains (including Chinese factory investment in Mexico) and tariff structures, Moody’s said. “These shifts create both opportunities and risks for Latin American economies. Chinese investment is flowing into energy-transition sectors and critical minerals, contributing to regional economic growth, but the broader trend is a deepening dependence on China as a demand and supply hub, increasing the region’s exposure to Chinese industrial policy decisions and US trade actions,” the report added.

While Brazil and Argentina have benefited from US-China trade tensions and tariffs — exporting record levels of soybeans in 2025 — the US-China trade agreement completed by Trump and China President Xi Jinping in May includes soybean purchase provisions and could reverse that trend, the Moody’s report warned. “Slowing construction in China is reducing demand for traditional commodities like iron ore and steel even as activity remains high for now. The increasing role of raw materials in regional exports to China, with only minimal local transformation, suggests the region is moving down the value chain.”

The composition of Chinese ODI in the region has been undergoing a structural transformation since 2020, said Moody’s, quoting a Boston University Global Development Policy Center report that while overall Chinese ODI in Latin America slowed by approximately 9 percent from 2020 to 2024 compared to the previous five years, ODI in transition minerals more than doubled, solar and wind power generation surpassed hydropower as the leading energy ODI category and EV manufacturing now dominates Chinese automotive investment in the region.

“For Latin American economies, this recalibration carries dual implications. On one hand, Chinese capital is flowing into sectors critical for the energy transition, which is contributing to economic growth… On the other, the deepening dependence on Chinese demand and investment in a narrow band of raw materials and assembly-stage manufacturing raises structural vulnerabilities to shifts in Chinese industrial policy or US–China decoupling pressure,” the report added.

Previously, a lot of Chinese investment in Latin America was in mining and energy, but now there are smaller Chinese investments in fintech and auto parts in the region, Sun said. Formerly, Chinese state-owned enterprises led Chinese investment in Latin America, but now most of the investments come from private Chinese companies, she added. “Although private Chinese companies make smaller investments in Latin America, they are expanding in Latin America.”

“In the top part, there is a lot of tension between China and the US. Trump is doing lots of things, but in the lower part, there are positive things for Chinese companies and support from Latin American governments for Chinese companies,” Sun said.

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

Thailand is in the middle of its most ambitious aviation expansion in a generation, a five-year investment program of around Bt80 billion (US$2.43 billion), with the Suvarnabhumi East Expansion heading to tender and a revised master plan targeting 120 million passengers a year, roughly double current throughput. A new international passenger service charge rising to Bt1,126 is structured to fund it.

These numbers will make the headlines. They are also the least interesting part of the story. Capacity is necessary, but it is not what decides whether a country becomes an aviation hub. Those decisions are being taken elsewhere: in ministries, in boardrooms, and, as this is written, in Paris.

The visible contest is a capacity race in a converging field. By early this year, Singapore’s Changi, Kuala Lumpur, and Suvarnabhumi sat within a rounding error of one another in departing seats, each near 3.5 to 3.7 million in a peak month, while Vietnam’s Long Thanh adds a large new node and Indonesia grows on a vast domestic market. When every serious player is building toward similar numbers, capacity stops being an advantage and becomes the cost of entry.

A hub is not a building that processes passengers. It is a system that concentrates connectivity: route density, transfer traffic, and the high-value services that anchor an aviation economy in place. That rests on two things a terminal cannot supply: a home carrier driving network density, and a regulatory architecture that lets the value settle locally rather than passing through. Both are now in motion in Thailand, and neither is getting the attention it deserves.

Thai Airways rebuilds as a network engine

A hub needs a home carrier with the reach and incentive to build transfer traffic. For most of the past decade, Thailand’s was a liability. That has changed.

Thai Airways is best understood against where it began. In early 2020, it was seeking a Bt58.1-billion (US$1.8 billion) state-guaranteed emergency loan to stay liquid; weeks later, a contentious bailout gave way to court-supervised restructuring. The airline won court approval of its rehabilitation plan in June 2021, addressing debt of around US$12.9 billion, then spent four years executing it: halving its workforce, cutting routes, simplifying the fleet and converting debt to equity. It exited rehabilitation in mid-2025 and relisted on the Stock Exchange of Thailand that August, returning to profit on revenue of roughly Bt190 billion for 2025 and operating margins that, by some measures, ranked among the stronger full-service carriers globally.

None of this was unforeseeable. When the airline first sought rescue in 2020, our own assessment, offered publicly at the time, was that its problems were institutional rather than cyclical: recovery would depend less on capital than on shedding state-enterprise constraints, professionalizing management and insulating the carrier from political influence. By the 2021 court approval, the diagnosis was unchanged, and the restructuring did, in substance, exactly that. We note it not to claim foresight but because it is the thesis in miniature: in this market, the decisive constraints are institutional, and they are visible well before they are resolved.

Rebuilt as a connecting carrier, Thai Airways is consolidating to fewer aircraft and engine types while growing from around 80 aircraft toward 150 by the early 2030s, anchored by 45 Boeing 787s and incoming A321neos. A founding Star Alliance member at the crossroads of South Asia, Northeast Asia and the West, it aims to lift domestic market share from 26 to 35 percent by 2029 and win far more international transit. Transfer traffic is the connective tissue of a hub, and a flag carrier rebuilt to generate it is a central input into Thailand’s ambitions.

Around it sits a layered ecosystem: Bangkok Airways in a profitable regional and premium-leisure niche built on routes such as Samui, and a low-cost segment, Thai AirAsia, Thai VietJet, Nok Air and Thai Lion Air, supplying the point-to-point volume that keeps Don Mueang among the region’s busiest low-cost hubs. Whether these layers are coordinated into a single network or left to compete is a question of policy, not fleet size. And connectivity is never the work of home carriers alone: it depends as much on the access, slots, and bilateral rights extended to international and partner airlines. How open Thailand chooses to be, and how it allocates scarce capacity, is itself among the decisions that matter most.

MRO, cargo, and the institutional layer

If carriers determine the network, the services ecosystem determines whether the value stays, and this is where the consequential decisions are being made now.

Asia’s large-scale MRO capacity sits in Singapore and China; Thailand has long exported its heavy maintenance and the skilled jobs with it. The planned Maintenance, Repair, and Overhaul complex at U-Tapao, in the Eastern Economic Corridor is meant to change that: a roughly 210-rai site on a 50-year lease, with Thai Airways committing about Bt10 billion to build hangars in phases, a Bangkok Airways sub-lease alongside, and early interest from Airbus, Boeing and Singapore’s ST Engineering, with construction timed to the airport’s second runway.

Ben Kiatkwankul is a cofounder and partner in Maverick Consulting of Bangkok, which advises governments, investors and international companies on regulatory positioning, market entry and stakeholder strategy across Thailand, Southeast Asia and the Gulf. This is taken from a study completed earlier by Maverick Consulting.

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The British empire left behind many issues at the heart of world troubles today. Among the least recognized but a key to ongoing problems in the Middle East and the Gulf regions in particular is one represented by just four figures. Three Gulf statelets with a citizen population totaling about 2.5 million produce – or would be producing but for the closure of Hormuz, about seven million barrels a day of oil, more than 5 percent of the global total plus enormous quantities of gas. Abu Dhabi and Kuwait have the world’s sixth and seventh oil reserves as well as low production costs, Qatar, a nation of 300,000 citizens, has the world’s third largest gas reserves.

The three: Abu Dhabi, Kuwait, and Qatar have already accumulated approximately $3.7 trillion in their sovereign wealth funds. They also just happen to host US military bases as do their lesser oil-endowed but still prosperous neighbors, Bahrain and Dubai, the latter a thriving port as well as a favorite of tax-avoiding residents from the UK, India, and elsewhere. All are dynast-run autocracies.

The wealth of these mini-states on the western edge of the Gulf is relatively huge even compared with Saudi Arabia (citizen population about 19 million), let alone the 30 million plus of impoverished Yemenis, and immediate neighbors to the north and east, Iraq, 47 million, and Iran, 90 million.

The contrast is self-evidently a source of instability even now, let alone in any future re-shuffling of local interests and of any backpedaling by a US looking to rethink its regional role in the aftermath of the current Iran conflict. This conflict has already shown strains between the local players with moneybags Abu Dhabi clashing with Saudi Arabia on many issues. Nor are local strains new. Qatar was ostracized, with Saudi Arabia, the UAE, and Egypt cutting off diplomatic relations from 2017 to 2021 and attempting an economic blockade. Although it hosts the largest US base, Qatar has been an intermediary with Iran and often pursues its own course.

So how come these small and largely desert places populated mainly by foreigners sustain their existence despite being surrounded by vastly larger, poorer, and more populous states—Saudi Arabia, Iraq, and Iran? How come that Abu Dhabi, the head and moneybags of the United Arab Emirates (UAE), a statelet of about 300,000 citizens, can poke the Saudis in the eye by exiting OPEC at the same time as interfering in Yemen, Sudan, and elsewhere with agendas which seem variously made in countries ranging from Israel to Ethiopia and Washington?

The small Gulf states, originally built on pearl fishing and coastal trade, all owe their independence in large part to deals with the British in the 19th century by which family rulers had a free hand so long as rival interests, notably the Ottoman empire which controlled what is now Iraq, were kept at a distance, enabling the British to guard their route to India and suppress the piracy once endemic in the Gulf.

The three, plus the other emirates of the UAE, the Kingdom of Bahrain, and the Sultanate of Oman, had one thing in common. In the 19th century, Britain, to protect its trade and strategic links to its Indian empire, induced them to accept British oversight of their affairs and keep out Ottoman and other interference. There was nothing especially new about this. At various times, as small ports on the Gulf, they were under some imperial sway or other – Safavid, Portuguese, Ottoman, etc. Nor did British “protection” entirely shield them from local disputes, for example, between Qatar and Bahrain, or the ambition of the Saud family to extend its kingdom of Nejd throughout the peninsula.

But the British connection lasted long enough for oil to underwrite the independence achieved by Kuwait in 1961 and the emirates and Bahrain 10 years later. With oil came western commercial interests, particularly those of the US, and in turn the US bases meant to deter acquisitive neighbors, Iraq’s Saddam Hussein in 1990 and revolutionary Shiite Iran. The emirates’ interests are now also aligned with those of the Saudis.

The huge concentration of wealth in tiny countries with mostly imported, rights-less labor forces was especially beneficial to the US in another way. A wider spread of oil wealth to more populous countries would have benefited international trade at large, from which countries such as Japan, Germany, and later China would be the main beneficiaries. But concentration and accumulation of huge surpluses required that they be channeled into the deepest and most liquid markets – US dollars, Treasury securities, and US stocks. Vast incomes also enabled Gulf purchases of billions of dollars of US weaponry while the US itself invested heavily in local bases which assured the regional military dominance of the US-Israel alliance.

Oil wealth has enabled the building of impressive infrastructure and new industries using oil and gas. Stable currencies and minimal taxes have attracted the wealthy and the accompanying bankers and lawyers as well as the millions of mostly low-paid workers to run the show.

By any measure, it is a curious state of affairs of uncertain duration but, at least until the latest war, had enough beneficiaries – including the low-paid workers enabling transfer of at least a bit of the oil wealth to impoverished families in countries such as Egypt, Bangladesh, and the Philippines.

Five years on from the end of this war, any number of new scenarios are possible in the kaleidoscope formed by the Saudis, Iran, the US, oil prices, and the Gulf states. For the future, there is probably a bigger role for the region’s most broadly developed and permanent state, Turkey, and a Pakistan focusing more westward than before. Whatever happens, the era of the post-colonial dynastic mega-rich mini-states may be fading, and the (probably declining) spoils of oil re-distributed in ways yet to be determined.

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Twelve years after the US Treasury’s Financial Crimes Enforcement Network (FinCEN) designated the notorious FBME Bank Ltd as a “financial institution of primary money‑laundering concern” and the Central Bank of Cyprus put the Cyprus branch out of business, not a single prosecution for money laundering or any other crime has resulted, and creditors in the UK reportedly have taken their own lives out of frustration, jilted depositors say.

“More than 90 percent of FBME depositors were legitimate businesses, most of whom are still waiting for their money back,” said James Sutherland, chairman of Zetland Fiduciary Group, a Hong Kong-based global corporate services provider, which has US$100 million tied up out of the €1.3 billion still frozen in foreign banks abroad, with client funds tied up that could run up to US$300 million. “The Cyprus authorities have grossly mishandled the bank which was perfectly solvent and could have been sold. The depositors are now being milked by the liquidator and lawyers. In short, Cyprus, a member of the EU, is worse than a third world country.”

In a 2022 letter to the Sunday Mail, a group of UK-based depositors who said they wished to remain anonymous, urged the Cyprus central bank to take control of the funds in FBME, owned by Lebanese brothers Ayoub-Farid Saab and Fadi Saab, and return them to their rightful owners, blaming Cyprus for the deaths of several savers who committed suicide.

Instead, Sutherland charged, the Cyprus administrative court has appointed as liquidator Petros Ioannides of BDO Cyprus, a professional services firm, who allegedly has been throwing roadblocks in front of the creditors for the better part of four years, ignoring provisions of the agreement including deducting 1 percent of distributions as an additional fee despite remuneration totalling €1.35 million stipulated in the agreement for the first three years of the liquidation process, potentially producing as much as €13 million in additional fees, and delaying an initial dividend of 45 percent of claims with little allegedly disbursed to date.

Lawyer says charges are false

“Our client strongly denies these allegations,” said Maria Macridou, Ioannides’s lawyer in a broadly-based reply to Sutherland’s charges. “Our client was appointed at a time when the bank had been inactive for approximately 10 years. Upon assuming this role, he was required to undertake the complex task of re-establishing operational systems and gathering the necessary information and records. These were inherently time-consuming and technically demanding processes. At no point did our client delay the procedure, whether intentionally or otherwise. Any time taken was solely attributable to the complexity and circumstances of the matter. This was identified objectively by the court, and relevant extensions have been provided by the Nicosia District Court to the deadlines contained within the LFA, as this was not anticipated at the time of establishing the liquidation plan 10 years ago, when the bank ceased its operations.”

The liquidator hasn’t improperly deducted 1 percent on distributions, Macridou said, including in acceptance letters the specific provision of the 1 percent deduction to accommodate increased costs of the liquidation, “in light of the challenges faced that have not been foreseen in the original plan submitted 10 years ago. The subject provision has been approved by the Inspection Committee and is communicated to every single creditor who has the right to object within a period of 21 days directly to the Liquidator or via the Court, as per the applicable legislation.”

Although Sutherland said many banks have the same kind of dodgy depositors that FBME did, the bank was actually one of the world’s most corrupt. In the middle of the past decade, the Cyprus branch of the bank was the subject of a series of stories by Asia Sentinel that described the alleged laundering of hundreds of millions of US dollars out of the Indonesia-based Bank Mutiara, formerly known as Bank Century, which was looted by its owner, Robert Tantular, during the global financial crisis of 2009. The Cyprus unit of the Tanzania-based bank was described as one of the most infamous money-laundering operations in the world, with depositors allegedly including Russian Mafia suspects, central African satraps, pornographers, internet scam artists and a long list of other outlaws.

Hundreds of millions of dollars, alleged to have been siphoned out of Hermitage Capital, the Moscow-based investment concern headed by William Browder, were said to have been directed into FBME, making it a player in one of the world’s most infamous financial scandals. Sergei Magnitsky, an associate of Browder’s, was said to have been beaten to death in a Moscow jail when he tried to investigate the theft of Browder’s funds. Browder was forced to leave Russia. Eventually, the US Congress passed the Magnitsky Act banning a list of Russian individuals believed complicit in the killing from using the US financial system to move funds around the world, in effect freezing them.

FinCEN bar

In 2017, US district court granted a motion by FinCEN to bar FBME Bank from US operations, effectively barring it from access to the global financial system, sending the decision to the Central Bank of Cyprus and the Central Bank of Tanzania, which were supposed to begin disposing of US$2.6 billion in depositors’ funds. Depositors were given 90 days to file claims for the return of their money although sources told Asia Sentinel at the time that hundreds of millions were likely to go unclaimed because coming forward to do so would identify them.

However, Tanzania and Cyprus became embroiled in a contest for jurisdiction over the dissolution of the bank, with the Cyprus central bank refusing to talk to the authorities in Tanzania, where FBME was headquartered, until pressured by lawyers for depositors. In 2020 the deadline for claiming US$111 million in bonds issued by the International Bank of Azerbaijan was almost missed by the special administrator. Under pressure from depositors, an agreement was quickly reached and portrayed as a “triumph” in the Cyprus press.

In February 2022, the Cyprus administrative court ruled that the Central Bank had acted improperly in placing the branch into administration, which eventually led to the agreement of a Liquidation Framework Agreement appointing a liquidator in 2023. FBME Cyprus Branch was a solvent entity with a capital surplus of over US$130 million with mostly international depositors located outside Cyprus, Zetland’s Sutherland said, up to Ioannides’ appointment.

“Ioannides and the lawyers KKP were appointed without any competitive bidding having taken place and in obscure circumstances,” Sutherland said in an email. “Although Ioannides is qualified as a liquidator in Cyprus, he does not hold either a practicing certificate or insolvency license from the Institute of Chartered Accountants in England and Wales and therefore it is questionable as to whether he was sufficiently qualified to undertake liquidation of a sizeable financial institution. KKP is a small Cyprus law firm, lacking in international experience.”

Ioannides and BDO, he charged, “have possibly shown professional negligence in the execution of their duties and may be in breach of the bankruptcy laws of Cyprus and the LFA – notably the length of time taken so far at 33 months is excessive and unreasonable given the limited progress that has been achieved and the fact that FBME was solvent. The Inspection Committee elected in May 2025 has failed to date to make any communication with the creditors they are supposed to represent. The committee consists of five members, three of whom are closely associated with the firm of Hadjihannas & Co. It is clear they are not acting in the interests of the creditors, may be in collusion with PI and are ineffective in performing their responsibilities.

“The fact is that the majority of depositors in FBME are not criminals and have had their funds tied up for almost 12 years,” Sutherland said. “Cyprus – despite being a member of the EU – appears to behave like a third-world country. There was also a fiasco earlier in 2013 regarding the collapse of Laiki Bank and the Bank of Cyprus, but the authorities seem to have learned nothing from this.”

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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