Indonesian haze angers Singapore; Prabowo threatens to cut off energy supplies—who holds the stronger card?

Recently, the atmosphere between Indonesia and Singapore has grown somewhat delicate. On one side, cross-border haze from Indonesian forest fires has angered Singapore, which says it will hold parties accountable. On the other, Indonesian President Prabowo feels Singapore has gone too far—and is threatening to cut off gas supplies. On October 22, Indonesia’s Minister of Energy and Mineral Resources, Bahlil Lahadalia, publicly stated that Indonesia would reassess its energy export agreements with relevant countries and would not rule out halting energy exports to nations that “disrespect” Indonesia. Then, on October 24, Indonesia began reducing pipeline natural gas deliveries to Singapore. Singapore’s pursuit of accountability for the haze has prompted Indonesia to retaliate with an energy card—clearly signaling a standoff. Does Singapore depend on Indonesian energy? How effective is Indonesia’s energy leverage? First, we must examine Singapore’s energy mix. Singapore is a highly unusual energy market. Its land area is extremely limited, and domestic energy resources are scarce: there is insufficient space for large-scale solar deployment, nor does it possess coal or natural gas reserves capable of meeting national electricity demand. Consequently, Singapore’s power supply relies heavily on imported natural gas—about 95% of its electricity comes from gas-fired generation. Indonesia happens to be one of Singapore’s key natural gas suppliers. A pipeline connects the two countries, enabling Indonesia to deliver gas directly to Singapore via pipeline. For Singapore, such supply arrangements involve not only procurement pricing but also long-term contracts, pipeline infrastructure, and grid stability. Thus, Indonesia’s threat carries real weight. However, Indonesia’s current reduction is largely symbolic: a daily cut of 17 million British thermal units (MMBtu), amounting to roughly just 2% of Singapore’s daily gas consumption. In practical terms, unless both countries lose all rationality, neither would risk tearing up gas relations over a matter of ‘face’—as doing so would harm both sides. Prabowo is likely just posturing—while also appeasing domestic public anger. Beyond natural gas, Indonesia and Singapore have another major cooperation initiative: cross-border low-carbon electricity exports. Currently, around 3 GW of Indonesian power projects are slated for export to Singapore. It is highly unlikely either side would jeopardize such strategically important projects over transboundary haze. When will the Indonesian haze end? Energy brinkmanship is one thing—but when will the haze actually dissipate? There are already signs of easing in Indonesia’s haze situation. The number of high-confidence fire hotspots in Indonesia has dropped from over 1,200 on October 14 to 565 on October 22. Correspondingly, CO₂ emissions linked to these fires have also declined. The Indonesian government has deployed substantial firefighting resources. If sustained, effective rainfall arrives in November, the haze could gradually subside. But this does not mean a single rainstorm will resolve the issue entirely. A significant portion of the fires occur in peatlands.

While cutting natural gas supply, Singapore is buying biomethane—what calculations is it making?

Core inflation in September fell to 2.0%; Indonesia reduced natural gas supply—its daily cut accounts for less than 2% of Singapore’s power-generation gas demand; private residential property prices rose 1.4% in Q3, yet vacancy rates jumped to 7.2%, while HDB resale prices fell for the third consecutive quarter. Separately, the Ministry of Manpower investigated two firms for allegedly withholding salaries owed to about 240 foreign workers. Below is a detailed breakdown by sector. This Week’s Highlights 01 Indonesia’s Natural Gas Supply Cut 02 Surge in Private Residential Vacancy Rates 03 Core Inflation Returns to 2.0% 01 Core inflation in September eased year-on-year to 2.0%, down from 2.2% in August; headline inflation stood at 2.2%, down from 2.3% in August. Services inflation fell from 2.0% to 1.7%; retail and other goods inflation dropped from 1.8% to 1.2%; private transport inflation declined from 7.5% to 7.1%. Electricity and gas prices remained elevated at +8.7%; food inflation rose to 2.4%; accommodation inflation edged up to 0.9%. The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) forecast average core inflation for 2026 at 1.5%–2.0%, and for 2027 at 1.5%–2.5%, noting that risks remain tilted upward. Rui Rui’s Take: Goods prices are cooling—but energy costs remain stubborn; pressure from electricity bills and interest rates persists. 02 Indonesia cuts daily supply by 17 billion BTU; Chan Chun Sing says shortfall is under 2% of demand On October 25, Minister for Trade and Industry Chan Chun Sing clarified that Indonesia had begun reducing pipeline natural gas deliveries to Singapore on October 24, cutting daily supply by 17 billion BTU for 18 days—a reduction representing less than 2% of Singapore’s gas demand for power generation. The shortfall will be covered by alternative sources, including liquefied natural gas (LNG). The Central Gas Agency stands ready to procure additional LNG at short notice, and power generation companies are required to maintain diesel reserves. Chan emphasized that import contracts must be honored, and importers will assess whether Indonesia’s action constitutes a breach—pursuing remedies as stipulated in their contracts. He reaffirmed that Singapore’s second LNG import terminal is under construction. Rui Rui’s Take: The volume cut itself is painless—but the political signal is sharp. Whether contracts can be enforced matters more than those 18 days. 03 Biomethane imports to begin in 2028; pilot capped at 300 MW The Economic Development Board (EDB) appointed Keppel Energy, Sembcorp Utilities, and Tuas Power as biomethane aggregators, authorizing them to import and supply biomethane under a 300-MW regulatory sandbox. The 15-year pilot program’s first shipments are expected by end-2028, sufficient to meet the annual electricity needs of approximately 600,000 HDB households—primarily targeting data centers and industrial manufacturers. On the same day, EDB announced a S$143-million Industrial Decarbonisation Grant Scheme, with up to S$100 million earmarked for enterprise-led R&D. Industry accounts for about 65% of Singapore’s national emissions, and roughly 95% of national electricity comes from natural gas. Rui Rui’s Take: Biomethane is a stopgap—not a replacement. For a power system where 95% of electricity comes from gas, 300 MW will bring no meaningful structural change in the short term. 04 Citi: Local affluent investors’ fund-holding rate rises to 31%, highest in Asia A Citi and RFI Global report shows that the share of mutual funds held by high-net-worth investors in Singapore rose from 11% in 2022 to 31% in 2026—the highest in Asia, surpassing India’s 24% and Hong Kong’s 16%. Yet locally, affluent individuals still keep 72% of their wealth in cash and deposits, with only 26%–28% allocated to investments. Indonesian clients account for 41% of Singapore’s cross-border affluent banking customers, while Malaysian clients make up 36%.

Singapore GasCo States No Additional LNG Required After Indonesia Pipeline Cut

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Singapore GasCo confirmed no additional LNG is needed after Indonesia curtailed pipeline supplies by less than 2% of daily demand, citing sufficient base inventory. The company remains secure on supplies through 2027 despite inquiries from power producers seeking coverage for the shortfall.

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Singapore GasCo States No Additional LNG Required After Indonesia Pipeline Cut

Singapore GasCo States No Additional LNG Required After Indonesia Pipeline Cut

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