Muara Laboh Geothermal Power Plant in Indonesia. (Photo: INPEX)
Resource nationalism can impede energy cooperation in Southeast Asia. ASEAN can use a mix of carrots and sticks to deal with it.
Resource nationalism is conventionally understood as the governance of natural resources by government and/ or government-linked companies to meet strategic goals. Drawing on research by regional scholars and the author’s interviews with experts, it is proposed that resource nationalism in Southeast Asia is as much an outcome of competing interests between domestic stakeholders and regional economic disparities as overt nationalistic perceptions towards natural resources.
Domestic politics is a deciding factor in the trajectory of regional energy cooperation in Southeast Asia. On one hand, strong support by national actors is critical for accelerating regional transition. On the other hand, these actors can potentially impede cooperation, particularly if their vision towards energy trade is obstructed by the myopia of resource nationalism.
There are two relevant examples of resource nationalism. The first is a renewable energy export ban imposed by Malaysia in 2021. There was a similar attempt by Indonesia’s Ministry of Investment (MOI) in 2022. Malaysia justified the ban as necessary for stimulating the country’s post-Covid economy, and for supporting the country’s climate commitments. In a March 2025 conversation, a Malaysian energy expert told the author that domestically generated solar energy needed to be used for local consumption first, as the grid in Peninsular Malaysia remains very carbon-intensive. As countries move to attract new industries such as data centres, domestic needs for low-carbon electricity will override the export imperative.
Such justifications resonate with common understandings of resource nationalism. However, Malaysian scholar Izham Shukor proposes that the ban was motivated by the inability of Malaysia’s grid to integrate renewable energy. According to one estimate, Malaysia will need to invest as much as RM22 billion (approximately US$5 billion) in its grid to enable a higher uptake of renewable energy.
In regard to Malaysia’s energy trade with Singapore and Indonesia, another layer of nuance to the resource nationalism discourse is the complexity of the domestic relationship between Peninsular Malaysia and the Borneo states of Sarawak and Sabah. Borneo’s substantial hydropower resources is a key driver of the Brunei Darussalam-Indonesia-Malaysia-Philippines Power Integration Project (BIMP-PIP) and a subsea cable project between Sarawak and Singapore. In a February 2025 conversation, another energy expert told the author that diverse perceptions between stakeholders at the federal and state levels regarding the implementation of these projects could potentially impede energy trade.
While addressing the interests of elites can resolve some impediments to energy integration, getting the grassroots to accept the development of new regional infrastructure is a bigger challenge.
Stakeholder competition was also a key feature of Indonesia’s political milieu that almost led to a ban on energy exports to Singapore. In January 2022, the two countries signed a Memorandum of Understanding (MOU) on Energy Cooperation that aimed to facilitate cross-border trade and technical cooperation. However, by July, the Indonesian MOI declared a suspension of renewable energy exports, citing the prioritisation of energy output for domestic use.
Indonesia’s backtracking on energy trade was seen as an expression of resource nationalism, and connected to Jakarta’s broader ambition of moving away from exporting commodities to becoming a hub for green industries. The Indonesian scholar Aji Fajri demonstrates that the suspension of energy trade was the result of complex interactions between multiple domestic stakeholders, rather than a unified response. The bureaucrats within the Ministry of Energy and Mineral Resources supported energy trade as it was aligned with their goal of increasing renewable capacity. However, MOI, which is politically more influential and represents business interests, was against energy trade unless it led to higher levels of domestic investment.
As a response to these differing stakeholder interests, Singapore and Indonesia signed a new MOU in 2023 that covers electricity trade as well as investments in renewable energy industries. This broader ambit has achieved some levels of success. As of 2025, the Energy Market Authority of Singapore has provided conditional approvals to import 3.4 GW of electricity from Indonesia.
While addressing the interests of elites can resolve some impediments to energy integration, getting the grassroots to accept the development of new regional infrastructure is a bigger challenge. This is particularly true when the state of domestic grids remains dilapidated and affects universal access to reliable electricity. Indonesia has yet to develop cross-island interconnections within its own territory, with grid investments of US$50 billion needed by 2040. Two internal Indonesian interconnection projects are included in the ASEAN Power Grid: Java-Kalimantan and Sumatra-Java. The sequencing of these projects along with planned subsea cables between Singapore and Riau Islands and Sumatra and Peninsular Malaysia may need to be carefully coordinated to balance local needs with regional integration.
ASEAN can use a combination of sticks and carrots to address resource nationalism. The so-called fear of missing out can be one stick. The geographic flexibility offered by subsea cables can be used to propose competing routes of interconnection projects. This will create some level of urgency and competition, which can sensitise state actors to the opportunity cost of missing out on key projects. Carrots can be in the form of linking energy trade to the development of local industries, infrastructure and upgrading and construction of domestic grids.
Addressing resource nationalism in Southeast Asia will require an appreciation of the interests of multiple stakeholders at the domestic levels, and greater clarity of the links between national and regional priorities.
Author: Mirza Sadaqat Huda
This article was first published in Fulcrum, ISEAS – Yusof Ishak Institute’s blogsite.
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