JAKARTA — Finance and energy chiefs from the ten-nation Association of Southeast Asian Nations (ASEAN) on Friday endorsed a four-pronged package aimed at shielding the region’s 680 million consumers from the steepest jump in crude prices in more than a year, according to an official communiqué released after a hastily convened virtual meeting.
The measures, agreed after benchmark Brent crude rose above US$87 a barrel this week, include temporary reductions in fuel excise taxes, the selective release of strategic petroleum reserves (SPRs), closer coordination of consumer-fuel subsidies and the creation of a joint procurement facility intended to secure better terms from global suppliers.
“We are acting collectively to reduce price pass-through and keep inflation expectations anchored,” the statement said, adding that the framework would remain in force for at least six months and be reviewed at the next ASEAN Summit in November.
Several members moved ahead of Friday’s announcement. Indonesia’s finance ministry on Wednesday cut the value-added tax on diesel to 5 percent from 11 percent, while Thailand’s energy regulator authorised the release of up to 30 percent of its strategic stockpile. Singapore, which lacks domestic crude, said it is exploring a regional hedging facility with state investor Temasek Holdings to lock in prices for future deliveries, according to officials briefed on the talks.
Analysts described the joint steps as the most coordinated energy response by ASEAN since the 2008 financial crisis. “A common front gives smaller economies greater leverage — particularly on procurement and shipping costs — than they would have acting alone,” said Clara Nguyen, an energy economist at VietCapital Securities.
Still, some economists warn that tax holidays and wider subsidies could strain budgets already stretched by post-pandemic recovery packages. “The risk is that governments end up borrowing more at a time when global yields are heading north,” noted Rahul Menon of Singapore-based consultancy Agora Energy.
Looking ahead, officials hinted that ASEAN may deepen cooperation with Gulf producers and explore joint green-energy investments to reduce future exposure to oil price swings. A technical working group is expected to present funding options for the procurement facility and guidelines for coordinated SPR releases by July.
“If the region can institutionalise these tools, we’ll not only tame the current spike but build a more resilient energy market for the next decade,” an ASEAN secretariat source said.