Most countries in Southeast Asia have expressed varying degrees of interest in nuclear energy for decades, with a few of them taking concrete steps to build the policy framework, technology, human resources, and physical infrastructure required. But longstanding anti-nuclear sentiment, the huge upfront costs inherent in building nuclear power plants, and a lack of political will from the region’s leaders have curtailed or delayed every project—so far. To make matters worse, after the 2011 Fukushima incident, fears about nuclear energy intensified—particularly in countries located along the seismic region known as the Pacific Ring of Fire—as well as other geological fault lines.
This reluctance may change, however, as the region faces the pressing need to meet fast-growing energy needs while simultaneously reducing carbon emissions. According to an estimate in Nikkei Asia, the countries of the Association of Southeast Asian Nations (ASEAN) will see their electricity demand almost triple from 2015 to 2040. To meet this demand, the share of fossil fuel use in their electricity generation is expected to increase from an already high 83 percent to 88 percent, while carbon dioxide emissions could almost quadruple (Arima 2020).
Furthermore, climate change is considered to be one of the most important threats to the region. Against this backdrop, some countries in the region are exploring carbon-free nuclear energy as a viable alternative to fossil fuels. The need for finding a clean and reliable energy source alternative to fossil fuels became even stronger after the United States rejoined the Paris Accord shortly after President Joe Biden was sworn in. For this reason, the ASEAN Center for Energy’s 2018 report predicted that ASEAN’s first reactor could be established by 2030, with possibly two more in the region by 2035 (ASEAN Centre for Energy 2018). With renewable energy sources such as wind and solar still struggling to gain a foothold in the region on a wide commercial scale—the International Energy Association (IEA) estimates that only about 15 percent of the region’s energy needs are currently being met by renewables—nuclear energy is an attractive option for some countries in the region (International Energy Association 2019).
Prospects for the Southeast Asian nuclear market, by country
The Philippines has the highest potential to develop a nuclear energy program among the Southeast Asian countries. In fact, the Philippines has built the only nuclear power plant in the region—a 621-megawatt facility in Bataan, which cost more than $2 billion since the start of construction in 1976 until the moment when it was largely completed in 1984. However, the plant was never used and subsequently retired in 1986 due to the nuclear phobia triggered first by the 1979 Three Mile Island incident and later the 1986 Chernobyl incident, as well as the collapse of the Marcos regime, which had ordered the construction of the plant. More recently, Manila has been exploring plans to revive the mothballed nuclear power plant. In July 2020, President Rodrigo Duterte created an interagency panel to assess the feasibility of either reopening Bataan or constructing a new nuclear power plant (Cruz 2020). Currently, Korea Hydro & Nuclear Power Co Ltd, Russia’s Rosatom, and China Nuclear Engineering and Construction are being considered for the rehabilitation project (Serapio and Dela Cruz 2018).
Vietnam was close to becoming the first country to actually generate electricity from nuclear power in Southeast Asia. In 2008, Hanoi decided to build two nuclear power plants, Nihn Thuan 1 and 2. Furthermore, Hanoi laid out an ambitious plan to build 10 units by 2030. Although the Korea Electric Power Corporation and China Guangdong Nuclear Power Group joined the competition to build Vietnam’s two nuclear power plants, eventually Russia’s Rosatom and Japan’s Tokyo Electric Power Company won. Russia was to build Ninh Thuan 1 with 85 percent Russian financing totaling $9 billion, along with providing nuclear fuel services and spent-fuel management services. (In effect, Russia offered to take back nuclear waste generated by its exported reactors, to relieve Vietnam of the burden of waste disposal.) Japan was to build Ninh Thuan 2. The combined capacity of the two power plants was supposed to be 4,000 megawatts, and they were due to go online between 2021 and 2022. In 2016, however, the Vietnamese National Assembly decided to suspend all nuclear development until 2030 due to rising costs, safety concerns, and lower energy demand forecasts, effectively shelving the plans for the two power plants.
But the prospects for Vietnam’s nuclear energy program are not entirely bleak. Many experts have been urging the government to reconsider its nuclear energy program, as the country’s imports of coal, oil, and gas continue to rise with its rapid economic development. In mid-2020, Vietnam’s Industry and Trade Ministry released a draft of its 2021-2030 National Energy Master Plan for review, which envisages Vietnam’s nuclear power capacity reaching 1,000 megawatts by 2040 and 5,000 megawatts by 2045—even though it projects that nuclear energy would only be pursued after 2035 (Minh 2020). Depending on the country’s energy demands, the diplomatic as well as financial costs of using coal, and the advancement of its renewable energy capacity—including progress on developing higher quality, lower cost batteries—Vietnam may expedite its development of nuclear energy.
With the most advanced nuclear technology and infrastructure in Southeast Asia, Indonesia is another one of the potential frontrunners for nuclear power. Jakarta is currently operating three small research reactors, although it lacks commercial nuclear reactors. In 2015, the Indonesian government decided to provide 5 gigawatts of nuclear energy from commercial reactors by 2025. Also, Indonesia signed an agreement with the China Nuclear Engineering Corporation to jointly develop in Indonesia a new generation of technology in 2016. However, its 2017 National Energy General Plan excluded nuclear energy from its national energy plan due to safety concerns—understandable as the country lies within the Pacific Rim’s Ring of Fire (World Nuclear Association 2021a). But Indonesia does not seem to have renounced its ambition to pursue nuclear energy completely, because it is pursuing small-scale nuclear reactors in cooperation with Russia. In addition, Indonesia is exploring floating nuclear power plants that could alleviate safety concerns.
Thailand is also considered to be a potential contender to develop nuclear power. The country has only one small 2 megawatt research reactor that went operational in 1962. This reactor has been used for food preservation and medical purposes but not for electricity generation. Since then, Thailand has considered nuclear energy several times, including in the 2000s when Bangkok conducted a feasibility study for a nuclear energy program. But Bangkok’s pursuit of nuclear energy was postponed due to strong anti-nuclear sentiment in the wake of the 2011 Fukushima incident. As the country’s power imports continue to rise amid a growing population and economy, in its 2015 National Power Development Plan Thailand set out to build two 1,000 megawatt nuclear power plants by 2035-36, and has agreed to cooperate with Japan, China, and Russia. Once again, however, there has not been substantial progress with the project, nor a concrete plan to build the two nuclear power plants as of 2021.
Malaysia has seriously considered the prospect of its own nuclear energy program but at this point is not pursuing it. In 2008, Malaysia launched a feasibility study for a nuclear energy program and allocated $7 billion to build a 1,000 megawatt nuclear power plant in 2010, which was to become operational by 2021. In January 2011, the Malaysia Nuclear Power Corporation (MNPC) was established. However, the Fukushima disaster occurred several months later, and the country deferred the deadline to the 2030s. In 2014, the MNPC explored a plan to build three to four nuclear reactors by 2030 that could provide 10 to 15 percent of electricity. But in 2018, the new government decided not to proceed with the nuclear energy program, citing concerns over nuclear safety and waste disposal, and closed down the MNPC.
The remaining five countries do not seem likely to pursue nuclear energy in the foreseeable future. Myanmar, Cambodia, and Laos lack the infrastructure, legal regulations, and human resources to make nuclear power a reality anytime soon, although all of them have signed memorandums of agreement with Rosatom (World Nuclear Association 2021b). Singapore has decided not to pursue nuclear energy, due to the tiny landmass of this island/city-state with a high population density—which is less than 0.01 percent the of the United States (Tipakson 2020). Finally, Brunei, an oil-rich nation whose economy heavily depends on the export of crude oil and natural gas, has never expressed interest in developing nuclear power (ASEAN Centre for Energy 2018).
To summarize, although nuclear energy has not entered Southeast Asian countries’ energy mixes, and nuclear energy projects in various countries in the region have been canceled, the region’s rapidly growing economy and the pressing need to tackle climate change may lead some countries in the region—particularly the Philippines, Indonesia, and Thailand—to pursue nuclear energy as an alternative source of energy to fossil fuels.
Who’s leading the race?
Southeast Asia’s neighboring countries to the north—namely China, Russia, South Korea, and Japan—are pursuing nuclear exports to the region. Nuclear exports are not only a commercially lucrative business but also a strategic tool that helps to enhance influence over recipient countries. Which among them will be successful? The next section examines the competitiveness of each of these countries as nuclear vendors. (See Table 1.)
Russia is a strong contender in this competition. It is currently the world’s dominant nuclear vendor, making up about 60 percent of global reactor sales and technical assistance as of 2018. In that same year, Russia’s state-owned nuclear firm Rosatom announced that it was implementing 36 nuclear reactor projects in 12 countries, including Egypt, Uzbekistan, Turkey, Bangladesh, Armenia, India, and Iran. Rosatom offers full-service packages, the so-called “Build, Own, Operate” deals, with generous financing backed by government subsidies, which makes it a highly attractive partner. Although once nuclear power plants are built, the cost for generating electricity from nuclear energy is significantly lower than other sources of energy, the actual building of the plants incurs billions of dollars per unit—and figures of a similarly large scale for their dismantlement and radioactive waste disposal.
Consequently, many developing countries require at least partial external financing. Russia provides 90 percent of the upfront costs of the Rooppur nuclear power plant in Bangladesh ($11.85 billion of the total $12.65 billion). In the case of Hungary, Russia initially suggested covering 100 percent of the estimated $12 billion, although the two countries eventually settled on a $10 billion loan. Russia’s nuclear fuel services also give it a competitive edge (in 2017 Rosatom held 36 percent of the global enrichment market).
In addition, Russia offers to take back nuclear waste from its exported reactors, as mentioned previously. Although no country has yet to accept this offer (Turkey is known to be negotiating on the terms of spent-fuel services), this service could potentially enhance Russia’s attractiveness as a nuclear vendor. As the only nuclear supplier providing the entire fuel cycle services, Russia is a particularly appealing nuclear vendor for newcomers to nuclear energy.
China is also a very strong contender in the competition to get a piece of the Southeast Asian nuclear market. Although China is a relative newcomer to the global nuclear market, China will likely become a powerful actor, challenging Russia’s dominance. China is the third-largest nuclear energy producer only after the United States and France. As of January 2022, 54 of the world’s 439 nuclear reactors, as well as 14 out of the world’s 52 new reactors under construction, are in Chinese territory (IAEA 2022). Mark Hibbs, a nuclear expert, predicts that China may surpass the United States as the largest nuclear energy generator before 2030 (Hibbs 2018). In order to fulfill Chinese president Xi Jinping’s pledge to reach carbon neutrality by 2060, the demand for nuclear energy will further increase.
In addition, China has imported technologies from the United States, France, and others—using them as rough starting points to build upon for developing nuclear reactor models with their own intellectual property rights. China’s first homegrown pressurized water reactor, the Hualong One reactor, went online in Fujian Province in November 2020. In December 2021, the China National Nuclear Corporation (CNNC) announced that its high temperature gas cooled reactor, the world’s first fourth-generation nuclear power plant, was connected to the grid (CNNC 2021).
As a nuclear vendor, China has many advantages. The Chinese nuclear industry’s economies of scale, based on its large domestic market, enables it to reduce production costs. The development of its own technologies allows China to offer even better prices without having to pay foreign licensing fees. Chinese nuclear firms offer generous financing backed by its state-owned banks to cover the huge upfront costs—financing that is particularly attractive for the relatively small economies of Southeast Asia. China’s ability to build nuclear power plants on time is also a plus: The first Hualong One reactor was completed well ahead of schedule, only five years after construction began. The CNNC boasts that the Hualong One reactors “are the only third-generation pressurized water reactor projects in the world that are being constructed on schedule” (Reuters 2019).
On the other hand, China’s weakness is its record regarding overall safety. Fortuitously, no significant accidents have occurred at China’s nuclear facilities. Also, after the 2011 Fukushima incident in Japan, Beijing inspected nuclear facilities in China to enhance emergency preparedness, and strengthened their overall nuclear safety regulations (Lam et al 2018). But China’s overall industrial safety track record has suffered from what even He Zuoxiu— a Chinese nuclear expert with pro-Communist Party views—describes as “rash planning, endemic corruption and careless construction, supervision, and regulation” (Xuecon 2015). Rightly or wrongly, such problems with Chinese industry and construction raise concerns about China’s nuclear safety as well, with Chinese social critic Murong Xuecun warning that “[f]rom everything we know of Chinese building and supervision practices, an accident in a Chinese nuclear power station is just a question of when and where” (Xuecon 2015).
Furthermore, China’s homegrown technologies are newer—and as a result, their safety has yet to be proven when compared to the older, more tested technologies that other nuclear vendors are offering. The safety aspect may be a disadvantage for China, particularly in Southeast Asia’s market with its high nuclear phobia.
Moreover, China’s sometimes bullying tactics (Patey 2021) and its ambitions for regional domination make Southeast Asian countries wary of cooperating with China for nuclear energy. While it may initially seem that the fact that China is already cooperating with many countries in the region through its the Belt and Road Initiative may make it easier for China to win nuclear contracts, there is a flip side to the coin: Because these countries are already heavily reliant on China economically, nuclear cooperation with China is considered to be risky because it would vastly increase their dependency even further. This perception is further aggravated by the fact that China has been using its economic clout to bully countries for political purposes—such as the export restrictions that Beijing imposed on Norway after the Norwegian Nobel Committee awarded the Nobel Peace Prize to a jailed Chinese intellectual and human rights activist (Foreign Policy 2021). The same restrictions happened to Australia, after that country called for an international investigation into the origins of COVID-19 (Sydney Morning Herald 2021).
Japan has both strengths and weaknesses as a nuclear vendor. Japan’s strength in the Southeast Asian nuclear market is its positive image among regional populations. Unlike China, Japan enjoys huge popularity in Southeast Asia. According to the 2021 State of Southeast Asia Survey Report, published by the ASEAN Studies Center at Singapore’s ISEAS-Yusof Ishak Institute, the largest number (36.9 percent) of respondents chose Japan as their preferred strategic partner to replace the United States if the United States declines. In addition, 67.1 percent of the respondents said that they were “confident” or “very confident” that Japan would do the right thing when it comes to providing global public goods (Seah et al. 2021). Another survey, conducted by the Pew Research Center in 2015, confirmed Japan’s popularity in the region. In light of Southeast Asians’ fear of external powers, their trust in Japan is a highly positive factor (Pew Research Center 2015).
At the same time, Japan faces serious challenges as a nuclear vendor. Although Japan is the world’s fourth-largest nuclear energy generator and an established nuclear vendor, Japan’s nuclear industry has been struggling since the 2011 Fukushima accident. The accident revealed Japan’s major failings in nuclear operations and oversight. It also heightened anti-nuclear sentiment domestically, with only 39 percent of Japanese citizens in favor of nuclear energy—a significant drop from the 52 percent of support enjoyed before the accident. Japan’s domestic nuclear industry has been severely hit, with the majority of nuclear reactors closed after the incident. Before the events at Fukushima occurred, nuclear energy accounted for nearly 30 percent of Japan’s electricity generation but dropped to a mere 2 percent in 2013, before rising to 6 percent as of 2021. The number of nuclear reactors in operation decreased from 50 before the accident to nine in 2021, with only 16 more in the process of restarting and two under construction.
With its domestic nuclear market in deep-freeze, Japan’s nuclear sector has a pressing need to turn to nuclear markets abroad, but that has been hard due to financing issues. Japanese nuclear firms are mostly private and do not enjoy financial backing from its government—a major weakness in comparison to Russian and Chinese state-owned firms. Japan’s 2010 multi-billion dollar contract to build a nuclear reactor in Vietnam was canceled in 2016. In 2020, Turkey canceled a 2013 agreement with Japan’s Mitsubishi-led consortium to build four nuclear reactors at Sinop. This decision was caused by a two-fold increase in construction costs due to safety requirements heightened after the Fukushima incident. In the same year, the Japanese firm Hitachi also announced that it would end the Horizon project to build nuclear reactors in the United Kingdom. This project, which started in 2012, was suspended in January 2019 due to disagreements over financing between Hitachi and London, and finally canceled amid tougher financial environment triggered by the Covid-19 pandemic. This series of canceled nuclear deals has dealt a severe blow to Tokyo’s ambitions for nuclear exports, which aimed to resuscitate Japan’s nuclear industry. With its contracted domestic market and its lack of attractive financing offers, Japan’s prospect for entering the Southeast Asian nuclear market is not bright.
South Korea, the world’s sixth-largest nuclear power producer, rose as a promising nuclear vendor after its first nuclear reactor sale to the United Arab Emirates (UAE). In 2009, the Korea Electric Power Corporation won the $20 billion contract to build four nuclear power plants in the UAE thanks to their relatively affordable price and South Korea’s reliability in adhering to building schedules. The construction of the four nuclear power plants was completed in 2019. In 2010, a consortium made up of the Korea Atomic Energy Institute and Daewoo Engineering and Construction was selected to build a research reactor in Jordan. Since then, South Korea has been ambitiously pursuing further nuclear deals with Turkey, India, Vietnam, Indonesia, Argentina, the South African Republic, Finland, and Lithuania, aiming at exporting 80 nuclear reactors by 2030 (Lee 2013).
In the time since, however, South Korea has not won additional nuclear deals. One reason is the Moon Jae-in administration’s decision to phase out nuclear energy due to safety concerns. In 2017, Seoul announced that it would reduce the number of operating nuclear reactors from 25 to 14 by 2038. To make up for these losses in the domestic market, the Korea Electric Power Corporation is pursuing exports of its nuclear reactors abroad, including to countries in Southeast Asia. But it is hard to sell a project abroad that lacks a domestic market (Gordon 2020). Unless the decision to phase out nuclear energy is reversed after the next presidential election in 2022, the prospect for South Korea’s nuclear exports would not seem bright.
Another weakness for South Korea as a nuclear vendor is its lack of enrichment or reprocessing capabilities. South Korea is the only nuclear vendor country without those capabilities. Although the country is known to have the technical capacity to develop those capabilities, it can do so only with US consent under its nuclear cooperation agreement with the United States, also known as the “123 Agreement.” Given the ease with which nuclear fissile materials can be converted to nuclear weapons, and a strong call for nuclear armament among the South Korean public (Kim et al. 2021), Washington is unlikely to give such consent. South Korea considers this lack of capability to be a huge disadvantage in its competition with other nuclear vendors, in particular as buyers are increasingly demanding fuel assurances when they purchase reactors (McGoldrick and Kim 2013).
As can be seen, all four of the nuclear vendor countries have strengths and weaknesses. China and Russia seem to be the most competitive nuclear vendors when compared to South Korea and Japan for most Southeast Asian countries. Both Russia and China provide generous financing offers backed by the governments, which make them very attractive partners. In this regard, China’s massive foreign exchange reserves (approximately $3.36 trillion in 2020), give China a competitive edge over Russia, which had only $597 billion in that same year (World Bank 2021). Both provide nuclear fuels (in the form of enriched uranium), but only Russia offers to take back spent-fuel in addition to providing fuel supply—an attractive element that could appeal to Southeast Asian countries that lack an advanced capacity to manage spent fuel.
Moreover, political factors are also at play. For example, Vietnam is a highly unlikely partner for China given the long-term, historic antagonistic relationship between the two countries. Which country the Philippines would choose as a nuclear partner would partially depend on who will lead the country after pro-China Duterte’s term ends in 2022. Japan and South Korea are losing competitiveness as nuclear vendors due to their contracting domestic nuclear market. If anti-nuclear sentiment subsides in Japan, and a new South Korean administration in 2022 reverses the decision to phase out nuclear energy, Japan and South Korea could still become more competitive in the Southeast Asian nuclear market, though. (See table 2.)
China, Russia, South Korea, and Japan are striving to enter the Southeast Asian nuclear market. Each of these countries has strengths and weaknesses as a nuclear vendor, but at this point Russia and China seem to have the highest potential to succeed in entering the Southeast Asian nuclear market. In terms of financial strength, China has a competitive edge—but on the other hand, China’s diplomatic bullying and poor safety standards serve as disadvantages.
Changes in domestic sociopolitical environments in Japan and South Korea could enhance those countries’ competitiveness as nuclear vendors. In light of the pressing need to meet Southeast Asia’s growing electricity demands while simultaneously reducing carbon emissions, there is an increasing chance that nuclear energy will enter Southeast Asia’s energy mix. Which country gains the competitive edge in the region’s nuclear market will have important geopolitical implications. Given the strategic as well as economic benefits nuclear exports offer, countries that make forays into the Southeast Asian nuclear market will likely wield significant influence in the region for a considerable period of time
The views expressed are those of the author and do not necessarily reflect the official policy or position of the Department of the Army, Defense Department, or the US Government. No potential conflict of interest was reported by the author.
Part of this research was supported by the Wilson Center and the Carnegie Corporation of New York.
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