GCC and ASEAN Expand Collaboration on Climate Investment
The Gulf Cooperation Council (GCC) and the Association of Southeast Asian Nations (ASEAN) met on 27 May 2025 in Kuala Lumpur, Malaysia, for the first ASEAN-GCC-China Summit, marking a turning point for ASEAN-GCC cooperation on investments, renewable energy, and economic resilience. What began as ministerial exchanges since 1986 has evolved into a strategic partnership, formalised through the ASEAN-GCC Framework of Cooperation (2024-2028) which was launched at the inaugural ASEAN-GCC Summit in Riyadh in October 2023.
The 2025 ASEAN-GCC-China Summit marked a new milestone in strategic cooperation between ASEAN, the GCC, and China. The summit focused on pressing issues such as trade, finance, and the green energy transition. It largely builds on the ideas from the ASEAN-GCC Framework of Cooperation (2024-2028), placing particular emphasis on collaboration in areas such as sustainable infrastructure, renewable energy, petrochemicals, agriculture, manufacturing, healthcare, tourism, logistics, smart cities, connectivity, and digital transformation.
In his opening address, Malaysian Prime Minister Anwar Ibrahim emphasised the strategic value of this trilateral relationship, noting: “ASEAN, the GCC, and China collectively represent a combined GDP of $24.87 trillion and a population of approximately 2.15 billion. This collective scale offers vast opportunities to synergise our markets, deepen innovation, and promote cross-regional investment.”
From the GCC’s perspective, this deepening engagement reflects a broader strategic recalibration. In today’s emerging multipolar world—and amid perceptions of a waning US presence in the Gulf—GCC member states are increasingly pursuing a strategy of multi-alignment and regionalism. This shift is evident in recent developments, including the accession of Iran, Egypt, Saudi Arabia, and the UAE to BRICS; Saudi Arabia and the UAE in the India-Middle East-Europe Economic Corridor; as well as Iran and Saudi Arabia joining the Shanghai Cooperation Organisation. Collectively, these moves reflect the Gulf’s efforts to diversify its strategic partnerships beyond traditional allies such as the United States and China.
The strengthening of ties between the GCC and ASEAN—and, from 2025, with China—further signal this evolving approach to diversified global engagement. The ASEAN-GCC-China Summit is particularly significant as it reflects Asia’s growing weight in the global economy. Amid shifting geopolitical and economic dynamics, the Asia-Pacific region is increasingly viewed as a key engine of global growth, contributing to a broader transition of global economic activity from the Global North to the Global South. Some observers have characterised this shift as the onset of an "Asian century" or the rise of a broader "Asian alliance."
The ASEAN-GCC-China Joint Statement articulates a shared commitment to the green energy transition, affirming the three parties' intent to work “towards a sustainable, just, affordable, inclusive and orderly energy transition in line with the Paris Agreement.” It also highlights plans to jointly invest in renewable and low-carbon technologies, aiming to enhance the energy supply chain and ensure energy security. This includes key clean energy sources such as solar, wind, biofuels, bio-LNG, low-carbon hydrogen, and ammonia, as well as Carbon Capture, Utilisation and Storage (CCUS).
Back in 2010, during Vietnam’s ASEAN Chairmanship, President Nguyen Minh Triet emphasised the mutual interdependence between the two regions: “You have what we don’t have, and we have in plenty what you don’t have, so we need to join hands together.” Indeed, the Gulf countries continue to leverage their hydrocarbon reserves while actively working to diversify their economies beyond oil and gas. This strategic shift is particularly significant given Southeast Asia’s rising energy demand, driven by population growth, rapid economic development, and industrial expansion. Notably, electricity consumption in the region is expected to outpace overall energy demand, with forecasts indicating an average annual growth rate of around 4 percent through to 2035.
Trade between the two blocs had already strengthened considerably by 2023, rising from $77.87 billion in 2010 to $138 billion in 2022. Among GCC countries, the United Arab Emirates (UAE) is ASEAN’s largest trading partner, accounting for roughly 50 percent of total ASEAN-GCC trade, followed by Saudi Arabia and Qatar. On the ASEAN side, Singapore and Thailand remain the two primary partners.
The 2023 ASEAN-GCC Summit institutionalised bloc-to-bloc cooperation, identifying energy transition, digital innovation, and climate action as key pillars of collaboration. GCC members, particularly the Gulf 3 (UAE, Qatar, and Saudi Arabia), have primarily engaged ASEAN through bilateral investments. For instance, ACWA Power signed a $10 billion investment agreement with the Malaysian Investment Development Authority to develop up to 12.5 gigawatts of renewable energy capacity by 2040.
The UAE has also emerged as a leading GCC actor in climate finance for emerging markets such as ASEAN. It recently launched ALTÉRRA, a $30 billion fund aimed at mobilising up to $250 billion in private financing by 2030 for climate-related investments. Distinctly, the UAE’s Masdar has entered joint ventures with Indonesia’s PLN and Citaglobal Berhad to support renewable energy projects in Indonesia. Likewise, Qatar also prioritises investment in energy and infrastructure with ASEAN, markedly under its $2.5 billion green investment initiative across Asia. This includes ongoing discussions on strategic energy imports between Vietnam and Qatar.
Given these rapid advancements, several key considerations must be addressed to further strengthen ASEAN-GCC collaboration on green economic development.
Crucially, both parties must establish a joint climate finance framework. ASEAN could integrate its Taxonomy for Sustainable Finance with corresponding GCC frameworks to create a more coherent and harmonised green investment environment. Currently, most green investments between the two regions occur on a bilateral basis between individual GCC and ASEAN member states. A more unified framework would reduce regulatory friction, establish consistent standards, and provide clearer guidelines for Gulf investors, thereby facilitating easier access to Southeast Asian markets.
Moreover, as emphasised in both the ASEAN-GCC and ASEAN-GCC-China joint statements, public-private partnerships (PPPs) will be instrumental in advancing climate finance. ASEAN has taken meaningful steps in this direction, including the development of frameworks to mobilise sustainable private sector finance. As part of these efforts, the ASEAN Capital Markets Forum released the ASEAN Sustainability Bond Standards, which offer detailed guidelines for the issuance of ASEAN Sustainability Bonds. However, private sector investment in climate-related projects currently represents only a small proportion of the regional total investment and remains insufficient to meet the growing financial needs of a just energy transition.
A number of structural challenges continue to inhibit greater private sector participation—these include limited financial incentives, underdeveloped regulatory frameworks, and capacity constraints across member states. To overcome these barriers, ASEAN must adopt a more proactive role in mobilising financial resources from the Gulf’s private sector and institutional investors. At the same time, mechanisms such as carbon pricing should be explored to help address climate financing gaps more systematically.
This effort should not be limited to the region’s more developed economies—such as Singapore, Indonesia, Thailand, Malaysia, and Vietnam—but must also target less developed ASEAN member states. Bridging the climate finance gap across the region is essential for a truly equitable and effective energy transition
Lastly, the GCC’s experience with regional energy infrastructure offers instructive lessons. The establishment of an interconnected power grid through the GCC Interconnection Authority (GCCIA) has improved energy security, lowered costs, and enabled electricity trading across member states, including from renewable sources. This system, which connects the national grids of the UAE, Bahrain, Saudi Arabia, Oman, Qatar, and Kuwait, and now Iraq, provides a valuable model of best practices that ASEAN could draw upon when developing its own regional power grid.
However, technical knowledge and technology transfers alone will not suffice. Almost all large power grid building projects in ASEAN, most recently in Vietnam, Indonesia, or Thailand, require substantial financial investment. A range of external actors, including China through the Belt and Road Initiative, Japan via the Japan International Cooperation Agency, and the European Union through the EU-ASEAN Smart Green Energy Partnership, are already seeking a more prominent role in ASEAN’s energy sector.
With ongoing improvements in both bilateral ties and the trilateral partnership with China, the GCC and its member states are well-positioned to increase their financial contributions to ASEAN’s energy transition. This includes not only funding for national power grid updates but also support for transboundary renewable energy corridors across the region.
Ultimately, the evolving ASEAN-GCC partnership represents a significant development in the global climate finance architecture and the broader South–South cooperation, especially amid intensifying geopolitical competition among major world powers.
Photo: ASEAN
