Philippines Advocates for Regional Structure to Boost Blended Finance as ASEAN Chair, According to Central Bank Sustainability Lead

The Philippines, set to assume the ASEAN chairmanship in 2026, has announced its intention to drive sustainable development in the region through the implementation of the "ASEAN Blended Finance Initiative." This project, spearheaded by key officials from the Marcos administration, aims to bridge the gap between public and private sectors, NGOs, and philanthropists, providing a platform for shared investment in adaptation and resilience projects.

In a speech commemorating the 58th founding year of Southeast Asian cooperation, President Ferdinand Marcos, Jr pledged that the Philippines' chairmanship will build on ASEAN's achievements. The Philippines expects to attain upper middle-income status by 2026, reducing its access to concessional loans but boosting its creditworthiness. This transition, however, brings a new challenge: the need for private financing to fill the gap left by the waning Western aid.

Blended finance, a strategy that combines public and philanthropic funds to catalyse larger private investments, is seen as increasingly vital in this context. The International Energy Agency estimates that Southeast Asia will need at least $7 billion in concessional finance between 2026 and 2030 to meet net-zero targets.

Central to this initiative is the central bank representative, Ellen Joyce Suficiencia, who stated that the country will push for more regional initiatives on climate and energy finance. Suficiencia hopes to champion a framework that sets out what each actor in the ASEAN group of countries can do to promote blended finance and sharpen the focus of how to unlock climate finance through de-risking mechanisms.

The Philippines is not alone in this endeavour. Indonesia, the Philippines, and Vietnam have led the region in deal activity, with ASEAN already recording 107 blended finance deals worth over $20.7 billion. Notable examples include pilot projects like the floating solar power between Singapore and Indonesia, and the Lao PDR-Thailand-Malaysia-Singapore Power Interconnection, demonstrating the feasibility of regional energy trade.

Climate Change Commission commissioner Rachel Anne Herrera concluded that this moment could define the region's trajectory. As traditional official development assistance (ODA) has fallen sharply, with the United States, European Union, United Kingdom, France, and Germany all slashing their aid budgets since 2023, the need for innovative financing solutions like blended finance becomes even more pressing.

The spirit of communal unity, or "bayanihan" in Tagalog, is at the heart of this initiative. By working together, the ASEAN nations can navigate the challenges posed by climate change and strive towards a sustainable future. The proposed ASEAN Power Grid, which aims to export offshore wind energy from the Philippines, is a testament to this shared vision.

As the Philippines prepares to take the helm of ASEAN, it does so with a spirit of hope and determination. This moment could indeed define the region's trajectory, and the "ASEAN Blended Finance Initiative" is a significant step towards a sustainable and resilient future for Southeast Asia.

Philippines Advocates for Regional Structure to Boost Blended Finance as ASEAN Chair, According to Central Bank Sustainability Lead