II - Structural Change and Energy Policy in ASEAN

Summary

ASEAN as a group has a fast-growing economy. The economic performance of individual member countries – Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand – has been impressive during the last two-and-a-half decades. The success of the economic development, in general, can be attributed to their market-oriented, outward-looking economic policies.

The region, whose economy is closely related with the energy sector, comprises both energy importers and energy exporters. Three major producers of oil and gas – Indonesia, Malaysia, and Brunei – depend heavily on oil and gas exports for foreign exchange earnings and government revenues. Singapore, the largest oil-refining and trading centre in the region, is a major exporter of petroleum products. On the other hand, the Philippines and Thailand depend overwhelmingly on imported oil. The high degree of dependence on energy has made the economy of these countries vulnerable to energy prices. Despite the impressive economic growth, the region was greatly affected by the oil crises.

Rapid price increases and vulnerability in supply in the 1970s led oil-importing countries to pursue various counter-acting policies. ASEAN countries formulated and implemented comprehensive energy policies; exploration and production activities of energy resources were intensified. Substitutions of other sources of energy for oil were sought and encouraged. Efforts were also made to increase the efficiency in energy use. Different pricing policies were adopted and macroeconomic policies were adjusted to ease the adverse impact of the oil crises. However, because of the diverse nature of the countries, the policy responses to the energy crises and the experiences were different.

The objective of this chapter is to provide a comparative analysis of the energy policies of ASEAN member countries, especially after 1973. Policy response to the crisis, relating to demand and supply management, pricing, non-pricing, and macroeconomic policies, is also discussed.

DEMAND AND DEMAND MANAGEMENT

ASEAN's share in the world's total energy consumption is small. The region accounts for only about 1.2 per cent of the world's total although it has more than 5 per cent of the population.