Global Energy Shock: Southeast Asia & China Effects & Countermeasures

"The US was much more pressurized to end this war whilst Israel wanted to accelerate this. Iran is taking a long-term view of saying it's already very painful and they can tolerate pain much better than the US. They don't have to worry about votes. They can last as long as they can, and I think the pressure's on the other side. This conflict might last for a very long time, even if at a low intensity." - Jianggan Li

"In Vietnam right now, you can see the amount of cars and bikes on the street has reduced by at least 30 to 40% because oil and gas prices spiked by up to 50% on some days. The government and big companies are even encouraging employees to work from home. This price hike is taking a significant toll on the regular daily life of Vietnamese people, as it impacts everything from transportation to the cost of food." - Valerie Vu

"Vietnam is in a difficult geopolitical position with its 'bamboo diplomacy' strategy. We are an energy-deficient country, importing 90% of our oil from Kuwait, and our refineries are structurally dependent on that specific oil type. As manufacturing hubs in Southeast Asia face rising electricity and fertilizer costs, the focus for government policy is now urgently shifting toward diversifying energy supplies and accelerating renewables like solar and wind." - Valerie Vu

Jeremy Au is joined by Valerie Vu (Vietnam expert) and Jianggan Li (China/SEA expert) for the first-ever three-person episode of BRAVE. They unpack the immediate and long-term impacts of the global energy crisis on Southeast Asia. From the streets of Vietnam, where traffic has thinned due to 50% gas price spikes, to China’s decades-long strategy of energy diversification through coal and renewables, this episode explores the second and third-order effects on logistics, food prices, and manufacturing. The trio discusses the "bamboo diplomacy" of Hanoi, Singapore’s role as a petrochemical and wealth hub, and why the US-Iran conflict could lead to a permanent shift in regional supply chains.

00:00 Immediate impact: 50% spike in Vietnam oil prices

02:30 Street reality in Vietnam: A 40% reduction in traffic

03:45 China's narrative: Social media enthusiasm and energy resilience

05:00 Singapore’s mixed picture: Calm energy mix vs. petrochemical hub drag

07:05 AI Simulation: Negotiating positions for Israel, US, and Iran

09:30 Vietnam’s dependency: Why 90% of oil comes from Kuwait

11:30 Bamboo Diplomacy: Navigating relations between the US, China, and Iran

13:10 China’s coal and renewable strategy: A masterclass in diversification

20:15 Second-order effects: Fertilizer prices and the impact on food security

24:30 Regional Winners & Losers: Malaysia and Brunei as energy exporters

30:20 Wealth migration: Capital movements between Dubai and Singapore

Keywords: Energy Crisis, Southeast Asia Tech News, Vietnam Economy, China Energy Strategy, Oil and Gas Prices

Global Energy Shock: Southeast Asia & China Effects & Countermeasures - E679

The Energy Crisis: A Southeast Asian Outlook

Jeremy Au: Hey Jianggan, hey Valerie. I’m so excited to have you both. This is actually our first ever three-person podcast on BRAVE! We thought this was an excellent time to talk because of the numerous listener questions regarding the current energy crisis, its impact on Southeast Asia, and the long-term outlook.

Jianggan, you are an expert on China and Southeast Asia, and Valerie, you are an expert on Vietnam and the region. To start, how is the energy crisis being portrayed and reported in your respective countries?

Valerie Vu: I can describe what is happening on the streets in Vietnam right now. The volume of cars and bikes has reduced by at least 30% to 40% because oil and gas prices have spiked—some days as much as 50%. This is one of the highest price increases in the Southeast Asia region; prices are about 30% higher than they were before the Iran conflict. It’s taking a substantial toll on daily life. The government and major companies are even encouraging employees to work from home to mitigate the impact.

Jianggan Li: I just returned to Singapore from Shanghai. In China, there is a narrative on social media focusing on whether Iran can stand up against the US. In public media, which is government-controlled, the narrative is focused on three points: first, acknowledging the shock; second, highlighting that oil supply is diversified after decades of effort; and third, reassuring the public that there are plans in place for external shocks to instill confidence.

I haven't seen a massive impact on people’s daily lives yet, as it’s still early days. Interestingly, there is a separate social media narrative poking fun at places that are too reliant on a single energy source—like Taiwan’s reliance on liquefied natural gas (LNG) after decommissioning nuclear plants.

Jeremy Au: In Singapore, things are relatively calm because the energy mix is quite diversified. We receive oil from various global sources and have a pipeline through Malaysia. While we aren't in a "crisis" and have enough reserves to manage, there is a drag on the economy because Singapore is a major petrochemicals hub. If you can't refine products due to supply issues, there’s a knock-on effect. Furthermore, the Singapore port is extremely busy right now because ships are being diverted from other conflict zones, increasing logistics traffic.

Short-Term Shock vs. Long-Term Conflict

Jeremy Au: What is the impact of a short versus a long conflict? If it’s short, things normalize quickly. But what does a long-term scenario look like?

Jianggan Li: A historian friend in Beijing ran a simulation using AI tools to act as negotiators for Israel, the US, and Iran. The simulation suggested that the US felt the most pressure to end the war, while Israel wanted to accelerate it. Iran took a long-term view, similar to the narrative about China last year: they can tolerate pain much better than the US because they don't have to worry about immediate voter sentiment. This conflict could drag on for a long time, potentially as a low-intensity "frozen" conflict.

Jeremy Au: That reminds me of a speech by former Foreign Minister George Yeo at the start of the Ukraine-Russia conflict. He predicted it would be a very long conflict, and many were skeptical then because people haven't grown up with long-term wars recently.

Valerie Vu: It’s interesting that you both are so calm, because in Vietnam, it feels chaotic. When the news broke, our stock market dropped 12% in a single day, mostly driven by foreign investors. Vietnam is an energy-deficient country; we import 90% of our oil from a single country: Kuwait.

Geopolitically, we are in a difficult spot. We recently had high-level visits with the US, and they removed us from the export control list, allowing us to import semiconductors and aerospace materials. Then, in March, the Chinese government visited. We have a historically friendly relationship with Iran, dating back to when they supported us during trade embargos in the 70s and 80s. We use a "bamboo diplomacy" strategy—bending but not breaking—but I don't know how much longer we can stay neutral if the conflict intensifies.

Diversification and Industry Winners

Jeremy Au: I was surprised to learn how diversified China’s energy has become. Coal still accounts for 60% of their electricity, with oil and gas at 30% and renewables/nuclear at 10%. Because they have plenty of coal and a massive solar industry, this crisis is more manageable for them than for others.

Jianggan Li: That diversity took decades to build. Back in the 1990s, my great uncle, who was a petroleum university president, was visiting Kazakhstan to diversify supply and help them build infrastructure. China also committed early to wind and solar, even when it was expensive and required importing turbines from Germany. Now, they produce everything domestically.

Jeremy Au: Looking at industries, renewables and EVs are clearly "up." Many Southeast Asian countries will likely accelerate their solar and EV adoption to gain energy sovereignty. However, Valerie mentioned that manufacturing is hurting.

Valerie Vu: Every industry in Vietnam is affected. Transportation and logistics costs are up, which has increased food costs and inflation. We are feeling inflation at around 4%, even if the government is hesitant to admit the full extent of the shock. Even the EV industry suffers because you still need energy to produce batteries and move goods. Everyone is suffering right now.

Jeremy Au: We are also seeing a renewed interest in nuclear energy. Singapore signed a research treaty with the US, and Indonesia has flagged interest. Second-order impacts are also hitting agriculture; oil and gas are used to make fertilizer, so high energy prices lead to high food prices. This hits manufacturing-heavy countries harder than service-oriented ones.

The Regional Ripple Effect

Jianggan Li: Downstream, high factory inputs and electricity costs eventually translate into inflation for importing countries like the US. This could be a deciding factor in the 2024 US election, just as inflation was a top concern in 2023.

Jeremy Au: At the country level, Malaysia and Brunei are net exporters of oil and gas, so they are seeing increased revenue, though Malaysia still deals with the high cost of domestic fuel subsidies.

Jianggan Li: Brunei only has 400,000 people, so subsidies aren't a huge burden. Malaysia, with 30 million people, faces a much tougher challenge. Hopefully, this external shock can be a catalyst for leaders to accelerate EV adoption, much like the energy crisis in Europe accelerated green projects there.

Jeremy Au: We might also see a hit to tourism. If fuel costs drive up airfares by 20% to 30%, low-cost travel—which Thailand and Vietnam rely on—will slow down.

Jianggan Li: Interestingly, Chinese outbound tourism had already started diverting from Thailand to Vietnam recently due to safety concerns in Thailand. Tourism is resilient, but those who aren't prepared for disruption will be hit hardest.

Valerie Vu: Vietnam is getting squeezed, but we always survive crises. One of my portfolio companies pivoted from B2C to B2B catering to survive. Ironically, their first big client this month was a petroleum company!

Jeremy Au: We’re also seeing wealth movements. Capital is starting to move from Dubai to Singapore as investors look for stability amidst the Middle Eastern conflict.

Ultimately, this crisis forces us to look at our vulnerabilities. While countries like China spent decades diversifying, others like Vietnam and Indonesia may need to rely on domestic coal in the short term, which unfortunately means air pollution will likely get worse before it gets better.

Valerie Vu: The air quality in Ho Chi Minh City has already reached unhealthy levels, matching Hanoi. It’s a tough compromise for policy-makers.

Jeremy Au: On that note, we hope the crisis resolves sooner rather than later. Diversity and regional cooperation will be key to reducing the impact on food prices, jobs, and inflation. Stay well and stay brave.

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