Indo-Pacific 5x5: July 3rd 2025
EV impacts on China's oil demand - Batam as strategic manufacturing hub - US-Philippines ammunition plant - Indonesia, Malaysia and the Sulawesi Sea - ASEAN balances BRICS engagement
Electric Trucks and the Future of Chinese Oil Demand
"There are three explanations for the decline in diesel consumption: the slowdown in real estate construction, the expansion of liquid natural gas (LNG) trucking, and the electrification of transportation. China’s structural decline in construction is well understood, as is the anticipated hit to diesel demand. But even as real estate construction activity stabilizes at lower levels and infrastructure construction picks up to some extent, diesel demand has still continued its decline. This leaves us to consider the other variables: increased LNG trucking and electrification of transport in China."
"China is now pivoting away from transportation fuels to power-based energy across all modes of transport. Chinese companies are also exporting the electrification of transportation to the rest of the world, which has meaningful implications for oil markets. BYD is targeting 800,000 overseas passenger car sales this year, in a global auto market of 75 to 80 million vehicles. Domestically, China’s new energy vehicle (NEV) sales are expected to top 12 million units, which has impacted China’s gasoline demand. Gasoline demand in May 2025 has fallen to roughly the same level as May of 2022, when Shanghai was almost entirely locked down under zero-COVID."
"Following in the footsteps of its passenger vehicle market, China's heavy transport is increasingly being electrified. In 2020, 69% of light duty truck sales were diesel. By April 2025, diesel’s share of annual sales had fallen below 50%. Over the same period, annual light duty electric truck sales rose from 1% to 15%. In 2024 alone, China sold 256,000 light duty battery electric trucks, a 25% increase year on year. Light duty electric truck sales were the first to take off, but sales growth is now growing across all truck categories. Other formats, such as hybrids, plug-in hybrids and gasoline, have also reduced demand for light duty diesel trucks."
https://rhg.com/research/electric-trucks-and-the-future-of-chinese-oil-demand/
Batam's strategic role in regional industrial development
"The data indicates that interdependence in electronics manufacturing is very high among Southeast Asian countries (including Indonesia, Malaysia, Singapore, Thailand, Vietnam and the Philippines) and major electronics-producing nations in Asia (such as China, Japan, Korea, Taiwan and Hong Kong). The total value of electronic product exports and imports among these countries is approximately $2.3 trillion, representing 65.3 percent of the global electronics trade."
"In the Malay Peninsula, the key manufacturing hubs in Southeast Asia are Singapore and Johor, Malaysia. Both regions have announced plans to implement an integrated corridor aimed at accelerating industrialization in both Malaysia and Singapore. The governments of Malaysia and Singapore are officially cooperating to develop the Johor-Singapore Special Economic Zone (JS-SEZ), which seeks to strengthen strategic partnership and improve connectivity between the two countries."
"We find that Batam is highly strategic due to its close geographical proximity to Singapore and Johor, Malaysia. To date, Batam has shown strong export interconnectedness, with its main export products being electronic goods (HS Code 85), totaling $6.9 billion, which accounts for 44 percent of Batam's total exports. Its primary import product is also electronics, valued at $5.9 billion, representing 40 percent of Batam's total imports. These findings indicate that Batam has significant potential to become a part of regional manufacturing hub, particularly for electronic products."
Congress Eyes Ammunition Plant at former U.S. Naval Base in the Philippines
" 'The Committee is concerned with the lack of a forward-staged ammunition manufacturing facility in the Indo-Pacific. Therefore, the Committee directs the Department of Defense to assess, in coordination with the Department of State and the International Development Finance Corporation, the feasibility of establishing a joint ammunition manufacturing and storage facility at United States Naval Base Subic Bay,' stated the report."
"This call for joint ammunition production follows Manila’s renewed defense industrial base under the Self-Reliant Defense Posture Revitalization Act, which aims to develop Philippine industries to aid the country’s military modernization program."
"Lawmakers also directed the Secretary of Defense to provide updates on the feasibility study within 60 days of the enactment of the appropriations act. If pursued, the facility would be one of the most significant American defense investments in the Philippines since the Cold War and Commonwealth era."
Indonesia and Malaysia agree on joint development of disputed Ambalat Block
"Indonesia and Malaysia have reached a mutual agreement to pursue a joint development approach to address longstanding border disputes, including the contentious Ambalat Block, a commitment made during a bilateral meeting between President Prabowo Subianto and Malaysian Prime Minister Anwar Ibrahim at the Presidential Palace in Jakarta on Friday, June 27, 2025."
"The Ambalat Block, spanning roughly 15,235 square kilometers, lies in the Sulawesi Sea (Makassar Strait) and is rich in oil and gas reserves, making it a highly strategic and economically valuable zone for both countries. The dispute stems from overlapping maritime claims between Indonesia and Malaysia."
"Previously, the 1979 map drew criticism not just from Indonesia, but also from countries such as the Philippines, Singapore, Thailand, China, and Vietnam, all of whom regarded it as an overextension of Malaysian maritime claims."
Decoding ASEAN's Measured Engagement with BRICS
"Why did Bangkok, Kuala Lumpur and Hanoi only join BRICS as 'partner countries' while Indonesia was determined to seek full BRICS membership? By pursuing partner status, Thailand, Malaysia, and Vietnam are walking a fine line between BRICS and the West, which remain at odds on many important issues."
"Malaysia considers its economy as 'highly open' and maintains a 'neutral' foreign policy. Hence, joining BRICS is a vital step towards diversifying the country's economic relations. Meanwhile, Vietnam remains committed to 'bamboo diplomacy' – an overarching foreign policy strategy rooted in multi-alignment, multilateralism, and strategic autonomy. Hanoi's partnership with BRICS allows it to lay low geopolitically while enhancing its ability to 'influence international affairs' through the bloc, via 'forums and meetings that facilitate dialogue, cultural exchange, and cooperation' in security and economic matters."
"However, BRICS partnership is not a risk-free endeavor. Heavily influenced by Russia and China, the bloc is advancing a de-dollarization agenda aimed at challenging U.S. financial dominance. In the wake of the Ukraine war and Russia’s SWIFT exclusion in 2022, Moscow has pushed BRICS members to advance this agenda by building an alternative international payments platform, thereby strengthening BRICS' role in the global financial and monetary system. In 2024, Russia announced a series of initiatives – including the BRICS Pay e-payment system, the BRICS Bridge cross-border payment platform, and the BRICS Grain Exchange – as part of its broader efforts to establish an independent economic and financial framework relatively immune from Western influence."
https://thediplomat.com/2025/07/decoding-aseans-measured-engagement-with-brics/
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Disclaimer: Headlines, and content selections, presented here are taken directly from the referenced articles and online platforms, and do not reflect any personal value judgment, statement or opinion. I make no warranty as to the accuracy, completeness, or truthfulness of the content of these articles. All news and information presented should be carefully scrutinized, considering the credibility of each source, the documented or discernible facts, the statements presented, and the strength of supporting evidence. Readers should form their own conclusions through the application of informed critical analysis. In detail >