Malaysia and Singapore together drew over 60 per cent of the US$8 billion in green investments made in Southeast Asia in 2024, according to a study released on Tuesday by consultant Bain & Company and Singapore state investor Temasek.
The outlay was a 43 per cent increase from 2023’s US$5.6 billion, due to the rise in investments in solar projects as well as spend on renewables-powered data centres.
Malaysia and Singapore have seen sizeable increases in green investments and are on track to meet national targets, but progress has been uneven in other parts of the region, said researchers of the annual Southeast Asia’s Green Economy report.
According to the latest data, although the Philippines’ solar and wind financing expanded and Vietnam saw at least 95 per cent of all its green investments directed to renewable energy, both Southeast Asian nations are lagging in terms of how their national climate goals drive sustainable investment-friendly policies. Both countries, as well as Indonesia, also saw the total private green investments they attracted shrink in 2024.
The Philippines is the only country in the region which has yet to announce a net zero goal, although it has pledged to the United Nations that it will reduce harmful greenhouse gases by 75 per cent by 2030. Vietnam vowed to achieve net zero by 2050, through a conditional emission reduction target of 27 per cent by 2030.
Malaysia and Singapore make up most of the US$8 billion in private climate-friendly investments towards decarbonisation goals in 2024. Image: Southeast Asia Green Economy 2025 report
“Over the past decade, the region has demonstrated growing ambition toward sustainable development. Yet, progress has been uneven, and with only five years remaining to meet the critical 2030 climate targets, Southeast Asia s not yet on track to fulfill its climate pledges,” said Dale Hardcastle, partner for Asia Pacific, Bain & Company.
“The opportunity to alter this trajectory is narrowing rapidly, underscoring the urgency for bold, coordinated action at this moment of inflection.”
Malaysia secured financing of US$900 million last year for the initial operation of a 98-megawatt (MW) data centre in the southern state of Johor. Johor has come up with guidelines to encourage future data centres to use renewable energy; it has also rejected applications that do not meet green standards.
The country, which leads the bloc’s energy transformation agenda, also saw a fourfold increase in its solar power investments through solar energy systems. The scheme incentivises property owners to invest in rooftop photovoltaic systems and offset their electricity bills and potentially earn revenue from surplus energy generation.
Private deals in the country into green hydrogen also totalled US$400 million, up from zero in 2023. The particular project in Perak focuses on hydrogen production using solar power technology.
Singapore attracted new funding of about US$320 million for a solar panel manufacturer, along with fuel substitution, hydrogen and waste-to-energy plants investments.
The report authors observed that Indonesia experienced a slowdown in green investments due to a lack of investment in fuel substitution measures, which typically involve replacing a more dirty fuel like gasoline or diesel with a lower-emissions alternative such as natural gas.
Indonesia, one of the world’s biggest emitters, fell behind in meeting its climate targets last year as it was unable to receive favourable funding terms from foreign financiers to phase out coal power, and did not acquire any new clean energy investments, according to the report. But it rebounded before the close of 2024 by attracting funds for a 5GW wind power plant and another 5GW for rooftop solar to be completed by 2030.
The Phiippines was one of those that lead the region in attracting green investments in 2023 but last year, its standing took a plunge when waste management financing it pulled in dropped from US$600 million to none in 2024.
Last year, private green investments into solar doubled, while investment into improving waste management increased by 60 per cent from 2023.
Scaling up blended finance
While climate investments increased in 2024, Southeast Asia has an annual investment gap of US$50 billion by 2030 to reach its decarbonisation goals, noted the report.
Blended finance, which refers to investment funds that combine public or philanthropic capital with private, is emerging as one of the solutions to augment this gap, but it remains constrained by small deal sizes, red tape, and investor mismatch, found the study.
The report authors suggested that blended finance could be scaled through national policy development such as the sustainable aviation fuel (SAF) mandate in Indonesia or Singapore’s announcement of its intention to import 6GW of low carbon electricity by 2035. Indonesia had earlier said that SAF needs to be used for all international flights departing from the country from 2027.
Complex transactions and long negotiations due to the involvement of multiple stakeholders can be prevented if standards are harmonised, the authors added. For instance, the Asean Taxonomy for Sustainable Finance has been gaining ground as it serves as a framework for mobilising capital and prioritises high-impact projects that align with global standards.
The gap between investors and local realities must also be addressed. Commercial investors and lenders require regulatory certainty and bankability, while concessional lenders need additional reporting such as impact reporting, which adds to the expenses of projects, said the authors.
