The economic, political, strategic and cultural dynamism in Southeast Asia has gained added relevance in recent years with the spectacular rise of giant economies in East and South Asia. This has drawn greater attention to the region and to the enhanced role it now plays in international relations and global economics.

The sustained effort made by Southeast Asian nations since 1967 towards a peaceful and gradual integration of their economies has had indubitable success, and perhaps as a consequence of this, most of these countries are undergoing deep political and social changes domestically and are constructing innovative solutions to meet new international challenges. Big Power tensions continue to be played out in the neighbourhood despite the tradition of neutrality exercised by the Association of Southeast Asian Nations (ASEAN).

The Trends in Southeast Asia series acts as a platform for serious analyses by selected authors who are experts in their fields. It is aimed at encouraging policymakers and scholars to contemplate the diversity and dynamism of this exciting region.

The economic, political, strategic and cultural dynamism in Southeast Asia has gained added relevance in recent years with the spectacular rise of giant economies in East and South Asia. This has drawn greater attention to the region and to the enhanced role it now plays in international relations and global economics.

The sustained effort made by Southeast Asian nations since 1967 towards a peaceful and gradual integration of their economies has had indubitable success, and perhaps as a consequence of this, most of these countries are undergoing deep political and social changes domestically and are constructing innovative solutions to meet new international challenges. Big Power tensions continue to be played out in the neighbourhood despite the tradition of neutrality exercised by the Association of Southeast Asian Nations (ASEAN).

The Trends in Southeast Asia series acts as a platform for serious analyses by selected authors who are experts in their fields. It is aimed at encouraging policymakers and scholars to contemplate the diversity and dynamism of this exciting region.

EXECUTIVE SUMMARY

Malaysia is a signatory of the Global Methane Pledge, but the implications for national action on methane emissions remain unclear. We reviewed publicly available literature and data, arriving at the following key findings:

• 1. There is no clear national plan for methane action yet. Since signing the Pledge in 2021, there has been no demonstrable government initiative focusing on joined-up methane action at the national level. Malaysia does not have a methane strategy or policy, and sector-specific regulations focusing on methane emissions are either not present, vague, or publicly inaccessible.

• 2. There are indications emissions are falling due to positive corporate action. Effective methane reduction initiatives exist in Malaysia’s top two methane-emitting sectors, oil and gas and palm oil, and key players have committed to net zero pathways with methane reductions central to progress to 2030. Emissions should be expected to rapidly fall further if action can be scaled across all industry players.

• 3. Quantifying reductions with confidence remains challenging. Different reporting approaches and incomplete information on assumptions and uncertainties in quantification approaches, make independent analyses of reported emissions challenging. Wider

• deployment of measurement-based emission quantification is a key option to improve confidence in progress.

• 4. Improvements in corporate Monitoring, Reporting, and Verification (MRV) in the coming years are expected. While some corporate standards remain confidential, key companies have joined international frameworks featuring transparency and MRV measures like the Oil and Gas Methane Partnership 2.0 and, in a broader climate context, the evolving Science Based Targets initiative. Improved corporate MRV should enable improved national emissions reporting.

• 5. Methane reduction is a “low-hanging fruit”. Methane is a major initial lever to reduce greenhouse gas emissions up to 2030 in the climate plans of leading Malaysian industry players. Action to improve methane-related processes in the key oil and gas and palm oil sectors thus presents a valuable opportunity for Malaysia to contribute to global climate mitigation within its long-term national interests. Therefore, decisive methane action is needed even while plans for further crucial greenhouse gas emission reductions are developed and articulated in more detail.

1. METHANE AND CLIMATE CHANGE

The concentration of atmospheric greenhouse gases (GHGs) is steadily increasing, with the 2021 levels of carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O) 49 per cent, 162 per cent and 24 per cent, respectively, above pre-industrial levels. Due to continually rising GHG concentrations, the past eight-year period (2015–22) is likely the warmest on record at around 1.1°C above the pre-industrial temperature. Associated climatic extremes such as heatwaves and flooding are already causing “widespread adverse impacts and related losses and damages to nature and people”. Despite ongoing global efforts to address climate change, such as the Paris Agreement, which aims to keep global warming well below 2°C, cross-cutting challenges mean GHG emissions are not falling and leave climate change unresolved. Additional strategies are needed to slow the warming induced by GHG emissions.

Among the GHGs, methane is gaining increasing attention as a significant shorter-term driver of warming. Although there is around 200 times less methane than CO2 in the atmosphere, the global warming potential (GWP) metric indicates each unit of methane causes around 80 times more warming than a unit of CO2 over twenty years. The increasing methane concentration has made the second-largest contribution to observed global warming, after CO2. Due to its warming potency and its shorter atmospheric lifetime (about twelve years) than CO2 (usually assessed as hundreds to thousands of years), rapid reductions in methane emissions have great potential to slow climate change in the coming decades. Unfortunately, methane concentrations are rising at an increasing rate, with a record increment of 18 parts per billion (ppb) in 2021. While the precise reasons for recent records are the subject of ongoing research, methane is known to be emitted from several anthropogenic sectors, including waste (e.g., from wastewater), energy (e.g., from oil and gas (O&G) production) and agriculture. Importantly, owing to methane’s role in producing global surface ozone pollution, reductions in methane emissions should also yield air quality improvements and associated health and crop productivity benefits.

Launched by the United States and the European Union in 2021 during the 26th Conference of the Parties (COP26) of the United Nations Framework Convention on Climate Change (UNFCCC), the Global Methane Pledge (GMP) aims to catalyse global anthropogenic methane emission reductions of at least 30 per cent by 2030, relative to 2020 levels. By November 2022, more than 150 countries have joined the pledge.

This first section provides an overview and analysis of the full Quantitative Report which follows.

Southeast Asia’s growing economic linkages with and dependence on China for investment have generated political opportunities and strategic concerns in equal measure. However, recent discussions have tended to focus on infrastructure projects, especially those associated with the Belt and Road Initiative (BRI). This narrow focus can be misleading, and an understanding of the fuller picture of Chinese investments in Southeast Asia is necessary for those seeking to understand its significance and impacts. The People’s Republic of China (PRC) is not a new player in this game, having had a longer history of providing investment and aid in this region, particularly in support of independence struggles and civil and regional conflicts during the Cold War. After 1990 and reflecting Beijing’s economic reform and internationalization strategy, Chinese investment in Southeast Asia picked up gradually across varied sectors. Prior to President Xi Jinping’s unveiling in 2013 of what has come to be called BRI, Southeast Asia had already seen a turning point in the growing significance of Chinese investments during the global financial crisis in 2008/9.

This report is part of a research project that examines China’s investment in Southeast Asia, aiming to provide a regionwide, multi-sectoral analysis that allows comparisons and facilitates policy calibration and focus. In this quantitative report, we present the baseline quantitative survey and analysis of key changes in Chinese investments in Southeast Asian economies over the most recent fifteen years, from 2005 to 2019, for which comparable data is available.

By “investment”, we refer to Chinese investment, project financing, and service provision in the region. The CGIT dataset that our report relies on captures the two key forms of Foreign Direct Investment (mergers and acquisitions, and greenfield investment), as well as other forms of cross-border investment flows associated with Chinese investments in Southeast Asia. Construction contracts, in particular, often accompany Chinese overseas investment and are a form of trade in services that can be even more significant than FDI.

1.1 Regionwide Trends

Foreign investments in Southeast Asia (SEA) originating from China grew twentyfold during this fifteen-year period. This trend is more marked when we define foreign investments as including both ownership acquisition of specific enterprises, and service provision (such as construction contracts).

A1. Selection of Datasets on Chinese Investments in Southeast Asia

This report surveys key changes in Chinese investments in SEA economies since the mid-2000s (following from the Chinese government’s 1999 “Going Global” strategy). To achieve this research objective, we examined various databases on Chinese overseas investments, including:

• • China Global Investment Tracker (CGIT) database;

• • ASEAN Statistical Yearbooks;

• • Foreign direct investment (FDI) data compiled by the World Bank;

• • FDI data compiled by the International Monetary Fund (IMF);

• • FDI data compiled by the Asian Development Bank;

• • Statistical Bulletin of China’s Outward FDI released by China’s Ministry of Commerce;

• • Data on China’s outward direct investment released by China’s Bureau of Statistics;

• • Global Chinese Official Finance Dataset, 2000–2014, Version 1.0; and

• • China Global Energy Finance database.

We eventually decided to use the CGIT database as the primary data source for this project for three reasons. First, unlike other datasets on Chinese investment which are either too aggregated or too segmented, CGIT provides up-to-date data on Chinese investments in each SEA country by industrial sector over a reasonably long period, from 2005 to 2019 (as at the time when data analysis first commenced in early 2020). This allowed us to examine the industry-specific trends and patterns of Chinese investments in every SEA country over the past fifteen years and to compare the features of Chinese investments across SEA countries. Section A of this Appendix explains how we selected and classified industrial sectors for this project. Second, the CGIT database includes two broad types of Chinese investments—transactions involving Chinese acquisition of asset ownership, and Chinese provision of services, in SEA countries. These two classifications enabled us to further disaggregate the relative spread of types of investments across SEA countries and industrial sectors. Third, the CGIT database provides additional information about investors and other transaction parties, facilitating our identification of specific Chinese investments that were of significance or particular interest. The CGIT database is a public dataset compiled and published by the American Enterprise Institute and the Heritage Foundation in the United States.

However, it is important to note that the CGIT database only tracks “large” investments worth at least US$100 million.

2.1 Overview of Chinese Investments in Southeast Asia, 2005–19

Absolute Scale

Overall, foreign investments in SEA originating from China exhibited a general upward trend between 2005 and 2019, rising approximately twentyfold during this fifteen-year period. This trend is evident across different datasets that use differing measures of foreign investments (see Figure 9). Foreign direct investment is a commonly used measure of cross-border investments that captures foreign acquisition—by both state-owned entities and private entities—of ownership of target enterprises in destination countries. Data from ASEAN’s Statistical Yearbooks show that Chinese FDI to SEA grew exponentially from just over US$500 million in 2005 to roughly US$10 billion in 2018, peaking at US$13.7 billion in 2017. A broader measure of foreign investments would take into account cross-border transactions that involve not only ownership acquisition but also service provision. The CGIT database adopts this broader measure of foreign investments to track “large” Chinese overseas investments (those that are worth at least US$100 million). According to the CGIT database, Chinese investments in SEA soared from US$1.3 billion in 2005 to nearly US$31 billion in 2019, peaking at US$33.5 billion in 2018. A closer look at the trend of Chinese investments in SEA reveals that Chinese investments in SEA experienced its first phase of rapid expansion between 2009 and 2011, right after the end of the global financial crisis, and a second phase of rapid increase between 2014 and 2017, following the official announcement of Beijing’s BRI. Indeed, the vast majority of very large (at least US$1 billion) Chinese investments came after the advent of the BRI in 2013 for all SEA countries except Vietnam and Myanmar (as indicated in red and pink on Figure 10). However, between 2018 and the time of writing (late 2021), this growth appears to be slowing down or even declining modestly.

Relative Importance

Despite the substantial surge in the absolute amounts of Chinese investments in SEA between 2005 and 2019, the relative importance of Chinese FDI—as compared to other sources of FDI in SEA—did not increase as significantly. While China’s share of total FDI in SEA more than doubled—from an average of 3 per cent in 2005–10 to an average of 7 per cent in 2011–18—China had yet to establish itself as a dominant foreign investor in SEA. Table 1 displays annual FDI flows into ASEAN from 2005 to 2018.

Standing at the beach in East Coast Park, the eye is struck immediately by the huge ocean liners and cargo ships anchored out at sea as far as the horizon. On an exceptionally clear day it is possible to see as far as Batam, just across the Singapore Strait. At night, the lights from the ships come on, like shimmering little bonfires dotting the line of water. From land, this is an image of idyllic calm and irrepressible peace, with the sound of the waves taking one far from the chaos and bustle of the city. Yet this image is deceptive. Unless one has spent time at sea, it would not be immediately apparent that the reality is far less irenic and immutable. Indeed, for much of Singapore's history, the waters in and around the island had an unsavoury reputation as a place of danger and death. Traversing the Singapore Straits in the past often tested the mettle of a captain, and recounting this experience of the voyage formed a favourite subject in tales and lore, many of which have been forgotten today. The aim of this essay therefore is to provide a short history of sailing past Singapore, to familiarize those on terra firma with the four different waterways that sailors used and the incipient dangers they faced when navigating past the island before the modern era. This brief overview will equip the reader with a more seaward perspective and help to locate Singapore's arteries within a larger maritime framework.

Defining the Singapore Straits

The Singapore Strait (singular) is a body of water situated south of the Island of Singapore, separating the tip of the Malay Peninsula from the islands of Riau. Running approximately 113 kilometres in length, it includes small islands and reefs and merges, from west to east, the Melaka Strait and the Karimata Strait with the South China Sea. Today, the narrowest navigable part of the strait is between Singapore's southernmost island, Pulau Satumu, and Indonesia's Pulau Takong Besar, which is a distance of a mere 5.2 kilometres. Its widest point, by contrast, measures some 20 kilometres, between Malaysia's Tanjong Rumania and Bintan, of Indonesia's Riau Islands archipelago.