Southeast Asia’s development trajectory is closely intertwined with its blue economy – a diverse range of economic activities reliant on and non-market ecosystem services provided by the region’s rich coastal, marine, and freshwater resources. However, as highlighted in the ASEAN Blue Economy Framework, the overarching policy guiding Southeast Asia’s blue economy priorities, adequate and effective finance and investment are essential for the region to realise the potential of the blue economy for sustainable development. A key consideration is the need to move beyond excessive reliance on development assistance towards longer-term financing solutions, particularly in light of increasing pressures on international public finance. To support this shift and the implementation of the ASEAN Blue Economy Framework, this report assesses the current landscape of development assistance for the blue economy in Southeast Asia and examines the range of financial sources and instruments that can be leveraged to advance sustainable blue economy financing in the region.
Financing Southeast Asia's Blue Economy
Abstract
Executive summary
Southeast Asia's blue economy is both a major growth engine and a source of mounting risk. Together with Oceania, Southeast Asia’s share of the global ocean economy has grown from 7.4% in 1995 to 10.7% in 2019. Yet the region faces structural productivity gaps, heavy reliance on carbon-intensive activities and growing environmental pressures that erode marine and coastal natural capital. Without a shift toward more sustainable, higher-value blue activities and better protection of critical ecosystems, the region risks stranded assets, lost livelihoods and foregone opportunities in emerging sectors.
Development assistance currently plays a crucial, if relatively small, role in financing the blue economy in Southeast Asia. Ocean-related official development assistance (ODA) is well-placed to support essential public goods such as data, capacity building, governance reforms and early-stage project preparation that are difficult to finance through commercial capital, helping countries begin to address overfishing, pollution, ecosystem degradation and climate risks. However, ODA flows to the blue economy in the region are constrained and exhibit problematic patterns in scale, allocation and delivery. Ocean-related ODA to ASEAN averaged just USD 680 million annually in 2022-2023, and early projections suggest this could decline further as donor budgets tighten. Slow disbursement, sectoral concentration and possible mismatch with needs all weaken ODA’s ability to fund ocean priorities while unlocking resources from broader sources.
On the latter, Southeast Asia faces uneven availability of public and private capital to support blue economy priorities. The region confronts a blue economy finance gap of nearly USD 2.1 trillion through 2030, yet macroeconomic headwinds, fiscal space constraints, relatively low tax to gross domestic product ratios and weaknesses in public financial management reduce governments' capacity to invest in coastal resilience, ecosystem restoration and sustainable ocean industries at the scale required. On the private side, constraints such as concentration of international credit and equity in the region’s advanced economies and shallow domestic capital markets in some countries, as well as limited financial inclusion impede adequate and effective blue economy finance and investment. At the same time, limited data, weak use of integrated ocean policies and underdeveloped financial policy levers further limit the flow of the available capital into blue economy priorities.
Blending different sources of capital can conceivably ease capital constraints, but has not been a panacea for the region. In fact, even at its peak, the total private finance mobilised by ODA for ocean activities and land-based ocean-relevant activities in Southeast Asia totalled only USD 128.4 million, and much of this was concentrated in a few countries and blue economy sectors.
Meanwhile, innovative instruments offer opportunities to navigate constraints in capital availability and flow to Southeast Asia’s blue economy, although their uptake across the region remains uneven. Blue use-of-proceeds bonds are the most established mechanism in the region, adapting conventional debt structures to channel capital towards ocean-related projects. Debt-for-nature swaps can simultaneously ease fiscal pressures and generate funding for marine conservation, yet their use in Southeast Asia remains marginal. Blue carbon mechanisms present opportunities to monetise ecosystem services and generate revenue streams for coastal protection, but adoption in the region remains patchy. Parametric insurance products can reduce investment risks through predefined, trigger-based payouts; however, Southeast Asia lacks precedents despite successful implementation in blue economy contexts elsewhere.
Moreover, the viability of innovative blue finance instruments is not guaranteed, underscoring the continued importance of development support even as these mechanisms seek to reduce dependence on it. The same economic fundamentals that constrain conventional capital flows – including macroeconomic stability, project-level returns and creditworthiness – also shape the feasibility of innovative instruments. In sub-investment-grade countries, blue bonds and debt-for-nature swaps frequently require credit enhancements from development finance institutions to secure commercially viable terms. Parametric insurance products often depend on blended finance arrangements to offset otherwise prohibitive premiums in highly climate-vulnerable settings. Blue carbon projects may also struggle to achieve financial viability from carbon revenues alone, necessitating complementary income streams to support long-run sustainability. Beyond financial constraints, limited implementation capacity – including a lack of bankable project pipelines, inadequate governance frameworks (e.g. marine spatial planning) or weak data systems – can create additional bottlenecks. Critically, additionality remains contested; instruments may simply refinance existing commitments or redirect obligated payments rather than genuinely mobilising new resources or improving development and environmental outcomes.
Bearing these factors in mind, tackling the blue finance gap in Southeast Asia demands a co-ordinated response across national governments, regional institutions and development partners:
National level: Strengthen policy and fiscal foundations for blue finance by developing integrated blue economy strategies, leveraging existing tools and systematically integrating blue priorities into aid co‑ordination.
Regional level: Enhance regional co‑ordination under ASEAN by reinforcing the institutional architecture for blue finance, mainstreaming blue economy objectives into regional integration efforts and exploring the case for a regional blue finance facility.
Development partners: Maximise the value of development support by directing funding to activities systematically undervalued by markets, using blended and other innovative instruments only where they demonstrably deliver additionality and pursuing co‑benefits between blue economy outcomes and wider development priorities.
