Singapore and Indonesia to collaborate on carbon credits, cross-border trade for SMEs
“We want Indonesia to succeed because our futures are closely linked. And our confidence in Indonesia is reflected in our actions,” says Prime Minister Lawrence Wong.
Singapore's Prime Minister Lawrence Wong (centre) and Indonesia's President Prabowo Subianto (right) attend a welcome ceremony at the Merdeka Palace in Jakarta on Jul 6, 2026. (Photo: AFP/Yasuyoshi Chiba)
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JAKARTA: Singapore and Indonesia have agreed to collaborate on carbon credits and to help Indonesian small- and medium-size enterprises (SMEs) trade more easily across borders.
Indonesia’s sovereign wealth fund Danantara also signed an agreement with Keppel Electric, Sembcorp Industries and the Singapore Energy Interconnections. This will provide a clear roadmap for negotiations and discussions, paving the way for the cross-border electricity project, Prime Minister Lawrence Wong said on Monday (Jul 6).
Speaking at a press conference with Indonesian President Prabowo Subianto, Mr Wong said Singapore "has every confidence" in Indonesia's future.
The two leaders met for their second Singapore-Indonesia leaders’ retreat at Istana Merdeka in Jakarta to reaffirm bilateral ties.
“We want Indonesia to succeed because our futures are closely linked. And our confidence in Indonesia is reflected in our actions,” said Mr Wong, noting that Singapore has invested consistently in Indonesia for many years.
“By working together, we can create many more opportunities for our peoples, strengthen our resilience and make our two countries, as well as our region in ASEAN, more competitive,” he added.
CARBON CREDITS AND ENERGY COOPERATION
Singapore and Indonesia signed a memorandum of understanding on carbon credits under Article 6 of the Paris Agreement.
The agreement was signed by Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong and Indonesia’s Minister of Environment Mohammad Jumhur Hidayat, signalling both countries’ commitment to work together on carbon markets that accelerate climate action, the Ministry of Trade and Industry (MTI) said in a separate press release.
Under the agreement, Singapore and Indonesia will exchange information and technical expertise on carbon markets, work towards an implementation agreement aligned with Article 6, and identify high-integrity carbon credit projects, MTI said.
The environment ministries of both countries also signed a separate memorandum of understanding on environmental cooperation last week, which will expand cooperation in areas such as waste management.
ENERGY AND SUPPLY CHAIN RESILIENCE
On energy security, Mr Wong said recent developments in the Middle East were a reminder of the importance of diversification.
"Indonesia has tremendous potential in renewable energy and Singapore would like to partner Indonesia in unlocking this potential," he said, citing Singapore's role in jointly constructing one of Indonesia's largest solar projects in Morowali to power local industries.
Danantara Indonesia was designated by the Indonesian government to spearhead cooperation in cross-border electricity trade, it said in a joint press release with MTI later on Monday.
With Keppel Electric and Sembcorp Utilities, they will explore potential collaboration on the offtake of imported low-carbon electricity, said Danantara and MTI in the press release.
With Singapore Energy Interconnections, the agreement allows for information-sharing and potential collaboration on commercial and technical issues related to cross-border interconnector development.
Both Minister-in-charge of Energy and Science and Technology Tan See Leng and Indonesia's Minister of Investment and Downstream Industry Rosan Perkasa Roeslani, who is also Danantara's CEO, look forward to at least 3.4GW of commercial projects by 2025.
"The projects will advance energy connectivity between and decarbonisation for both countries, including by catalysing new investments and jobs in Indonesia's clean energy sector," said MTI and Danantara in the press release.
Singapore believes the cross-border electricity project is “win-win” for both countries and an important building block for a wider power grid across the Association of Southeast Asian Nations (ASEAN), said Mr Wong.
Singapore and Indonesia are also committed to strengthening their supply chain resilience to support each other while navigating any external shocks, he added.
In a joint statement on supply chain resilience, Mr Gan and Indonesia’s Coordinating Minister for Economic Affairs Airlangga Hartarto expressed serious concerns over the situation in the Middle East and its implications for global peace and stability.
The two ministers called for all parties to observe the ceasefire and for the right of transit passage for vessels and aircraft in the Strait of Hormuz under the United Nations Convention on the Law of the Sea. They also reinforced their commitment to keeping markets open and connected, and resolved to swiftly ratify relevant ASEAN agreements to strengthen the region's resilience to external economic disruptions.
Separately, the Singapore Business Federation and Indonesia's Chamber of Commerce and Industry signed a memorandum of understanding to help Indonesian SMEs trade more easily across borders.
Both organisations agreed to work together on digital enablement, policy engagement and capability building, the federation said in a release.
“As you can see from our discussions, Singapore and Indonesia are trusted partners with a shared stake in each other's success,” said Mr Wong, noting that the two countries will mark 60 years of diplomatic ties in 2027.
“Our partnership is deep, forward-looking and full of potential. Together, we can create more opportunities than either of us could achieve alone.”
