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Title page 1

Contents 6

Foreword 4

Acknowledgements 5

Abbreviations and acronyms 9

Executive summary 10

1. Blue economy trends and pressures in Southeast Asian countries 12

1.1. The blue economy is prominent in Southeast Asia, but it faces structural and transition challenges 14

1.2. Environmental degradation threatens blue ecosystems and the economic activities they sustain 18

1.3. ASEAN's regional policy response is constrained by insufficient long-term finance and investment 22

References 25

Notes 27

2. Development assistance: A crucial but constrained basis for blue economy finance 28

2.1. Development assistance is vital despite its small share of the overall finance mix 29

2.1.1. Most ASEAN countries access development finance, with lower-income countries receiving the most concessional terms 30

2.1.2. Development finance can help overcome the different barriers to blue economy finance and investment 32

2.2. Ocean-related ODA to Southeast Asia shows problematic patterns in scale, allocation and delivery 34

2.2.1. Ocean-related ODA has increased but exhibits high year-over-year volatility driven by large individual transport projects 35

2.2.2. The dominance of large individual projects creates delivery and modality challenges 37

2.2.3. ODA allocations do not consistently reflect countries' ocean and aid dependencies 39

2.3. Declining aid budgets increase the urgency of mobilising alternative capital sources 41

References 43

Notes 44

3. Diversifying blue economy finance: Opportunities and constraints across alternative sources 45

3.1. Different capital types serve distinct purposes, but their flow to ASEAN's blue economy is poorly tracked 46

3.1.1. Each capital type - international private, domestic private, and domestic public - plays a distinct role within the ASEAN Blue... 46

3.1.2. Visibility of the flows from different capital sources into the blue economy in Southeast Asia remains limited 47

3.2. Macroeconomic conditions create uneven availability of capital for the blue economy across Southeast Asia 49

3.2.1. Fiscal constraints limit domestic public finance availability 50

3.2.2. International private capital concentrates in financially developed economies 53

3.2.3. Domestic private capital availability is shaped by heterogenous financial market depth and inclusion 55

3.3. Even when available, capital may not always flow to Southeast Asia's blue economy due to policy gaps 57

3.3.1. Certain Southeast Asian countries have advanced blue economy policies whilst others are in more nascent stages - though... 58

3.3.2. Financial standards for blue economy investments and expenditures are underdeveloped 59

References 61

Note 64

4. Financing solutions: Tools and lessons learned 65

4.1. Blended finance can mitigate individual capital availability challenges but has achieved limited success 66

4.1.1. Blended finance can help de-risk blue economy investments by absorbing macroeconomic and project-level risks 66

4.1.2. Blended finance deployment in Southeast Asia shows limited scale and is concentrated across a narrow set of geographies,... 67

4.2. Innovative instruments could ease capital constraints, but adoption remains patchy in Southeast Asia 69

4.2.1. Blue debt instruments come in different forms, with blue use-of-proceed bonds being the most prominent in Southeast Asia 69

4.2.2. Debt-for-nature swaps can help ease domestic public finance constraints, but have had limited regional application 72

4.2.3. There is momentum for monetising blue ecosystem services, but blue carbon schemes are not ubiquitous in the region 74

4.2.4. Parametric insurance can de-risk blue economy investments but lacks regional precedents 76

4.3. Viability of these instruments is not guaranteed - making development support and hence additionality essential 77

4.3.1. Economic viability remains an underlying constraint 77

4.3.2. System-wide capacity needs constrain implementation 80

4.3.3. Additionality concerns require careful scrutiny 84

References 85

Notes 89

5. Synthesis of recommendations 90

5.1. National level: Build the foundation for blue economy finance 91

5.1.1. Develop clear national priorities, institutional set-up and assess financing needs 91

5.1.2. Leverage existing models, guidelines and platforms 92

5.1.3. Integrate blue economy into aid co-ordination 92

5.2. ASEAN-level: Translate regional policies to co-ordinated action 92

5.2.1. Establish a mechanism for knowledge exchange and agenda setting on blue finance 92

5.2.2. Mainstream blue economy in regional integration efforts 93

5.2.3. Explore a regional blue finance facility, learning from other regional efforts 93

5.3. Development partners: Maximise value in a constrained environment 93

5.3.1. Prioritise strategically in a challenging aid environment 94

5.3.2. Seek co-benefits across blue economy and broader sustainable development goals 94

References 95

Tables 8

Table 1.1. List of ocean economic activities, both established and emerging 14

Table 1.2. Blue economy finance gap to meet the Sustainable Development Goals by 2030 in the Asia Pacific 24

Table 2.1. Eligibility of Southeast Asian countries for development finance 31

Table 3.1. Count of ocean-relevant economic environmental policy instruments in Southeast Asian countries 48

Table 3.2. Level of blue economy policy development across Southeast Asian countries 58

Table 3.3. Southeast Asian countries with ocean-related measures in their 2025 NDCs 59

Table 4.1. Blue carbon ecosystems: global extent, rates of conversion, estimated carbon dioxide (CO₂) emissions due to human activities,... 74

Table 4.2. Parametric insurance programmes in the Caribbean 77

Figures 7

Figure 1.1. Southeast Asia's GDP over time 13

Figure 1.2. Contribution of ocean economy to the overall economy 15

Figure 1.3. Sectoral composition of Southeast Asia and Oceania's ocean economy in 2020 16

Figure 1.4. Composition of Southeast Asia and Oceania's ocean economy, in terms of gross value added, over time 17

Figure 1.5. Southeast Asia and Oceania's share of the global ocean economy, in terms gross value added 18

Figure 1.6. Fish stock status, according to the Yale Environmental Performance Index 19

Figure 1.7. Plastic use in ASEAN countries 20

Figure 1.8. Number of climatological, geophysical, hydrological and meteorological natural disasters, 2000-2025 21

Figure 1.9. The ASEAN Blue Economy Framework 23

Figure 2.1. ODA as a share of the overall financing mix of Southeast Asian countries 29

Figure 2.2. ODA as a share of the financial inflows and tax revenues across ODA-eligible Southeast Asian countries 32

Figure 2.3. Barriers to finance and investment for the blue economy 33

Figure 2.4. Framework for measuring ocean-related ODA 34

Figure 2.5. Ocean-related ODA over time to ASEAN 35

Figure 2.6. Sectoral distribution of ocean-related ODA to ASEAN 2022-2023 36

Figure 2.7. Commitments versus disbursements 37

Figure 2.8. Share of commitments from 2010-2013 disbursed as of 2023 38

Figure 2.9. Loans and grants over time in ocean-relevant ODA 39

Figure 2.10. Ocean-related ODA versus size of EEZ and length of coastline 40

Figure 2.11. Ocean-related ODA versus share of ODA in overall financing mix 40

Figure 2.12. Early projections of DAC members ocean-related ODA to Southeast Asia 42

Figure 3.1. Different capital types mapped to the strategic pillars of the ASEAN Blue Economy Framework 46

Figure 3.2. Philanthropic contributions to SDG14 in Southeast Asia 49

Figure 3.3. Downward adjustment of Southeast Asia's economic outlook 50

Figure 3.4. Tax-to-GDP ratio across Southeast Asian countries 51

Figure 3.5. Quality of public finance management according to the PEFA indices 53

Figure 3.6. FDI flows to and stocks in Southeast Asia 54

Figure 3.7. FDI Restrictiveness Index across Southeast Asian countries 55

Figure 3.8. Availability of domestic private capital 56

Figure 3.9. Financial inclusion across Southeast Asia 57

Figure 4.1. Blended finance instruments 66

Figure 4.2. Private finance mobilised by ODA for ocean-related activities in Southeast Asia 67

Figure 4.3. Blended finance instruments for ocean-related activities in Southeast Asia 68

Figure 4.4. Blue bonds and its relation to other use-of-proceed bonds 69

Figure 4.5. Sustainable bond Issuance as Share of Total Bond Issuance in Q2 2025 71

Figure 4.6. Debt-for-nature swap architecture 72

Figure 4.7. Mean annual carbon sequestration potentials 75

Figure 4.8. The Seychelles sovereign blue bond 78

Figure 4.9. Belize blue bond transaction structure 79

Figure 4.10. The "Five Is" framework: Policy areas where donors can support GSSS bond issuances 83

Boxes 8

Box 1.1. What is the blue economy? 14

Box 2.1. Eligibility for and access to development finance 30

Box 3.1. Non-profit seeking private capital: Remittances and philanthropic contributions 47

Box 3.2. Debt sustainability and Lao PDR 52

Box 4.1. Belize debt-for-nature-swap 79

Box 4.2. What is marine spatial planning 82

Box 4.3. The "Five Is" Framework: Donor support to green, social, sustainability and sustainability-linked (GSSS) bond issuances 83