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Championing the Green Economy
Malaysia Leads the Way

Malaysia’s future lies in the green economy. And this is reflected in various national policy initiatives over the past 10 years. Starting from the formation of the Ministry of Energy, Green Technology and Water (KeTTHA) in 2009, to the creation of the National Energy Efficiency Action Plan (NEEAP) and the National Green Technology Master Plan (NGTP) in 2015 and 2017 respectively, to KeTTHA’s restructuring as the Ministry of Energy, Science, Technology, Environment and Climate Change in 2018. 

“Looking forward, as technology evolves, we can expect an increase in the creation of new green jobs, and stronger growth in current occupations and greening industries.” – Tun Dr Mahathir Mohamad, Prime Minister of Malaysia

The national commitment to going green has been further reinforced over the past year with the mid-term review of the 11th Malaysia Plan (2016 – 2020) in 2018. Initiated to look at the national economic direction after the 2018 General Elections, the review restructured priorities for 2018 to 2020. As such, “Enhancing Environmental Sustainability through Green Growth” was identified as one of the six key policy pillars.

Similarly, the green economy has been identified as a Key Economic Growth Activity (KEGA) under the Shared Prosperity Vision 2030 (SPV2030) initiative, which was introduced in the middle of 2019.

The drive towards going green in Malaysia is not just spurred by environmental or social concerns (although the nation is committed to fulfilling the United Nations Sustainable Development Goals). It is also an economically sound one as well.

As highlighted by Prime Minister Tun Dr Mahathir Mohamad during the launch of the International Greentech & Eco Products Exhibition & Conference Malaysia (IGEM) 2019, the share of green businesses and investments in global market value is expected to go up from 6 percent presently to 10 percent by 2030. “The opportunity for Malaysia to take the lead and make a positive impact on economic growth are enormous,” he noted.

This growth is apparent in Asean, where employment in the green economy has gone up by 3.2 percent from 2015 to 2017 according to the DBS Annual Report on Green Job Opportunities in ASEAN. This translates to around 1.4 million green jobs being created in the region. For Malaysia, the target is for the green technology sector to contribute 200,000 new jobs by 2030, and to generate revenue of RM180 billion.

“The growth potential of the green economy in Malaysia is enormous with large untapped opportunities. Financial intermediaries can play a catalysing role in the development of this sector and support the government’s transformation efforts towards a more sustainable and green economy.” – YB Lim Guan Eng, Minister of Finance

Government Commitment  

More than just set targets to achieve, the Malaysian government has been actively leading the way to becoming green through the implementation of the Government Green Procurement (GGP) policy.

Spearheaded by the Malaysian Green Technology Corporation (GreenTech Malaysia) – an agency under MESTECC – GGP, which was implemented in 2013, commits all government departments to ensure that 20 percent of all products and services procured to be green-labelled. These include ICT equipment, air-conditioning systems, and cleaning services.

By doing so, the authorities hope to encourage the innovation and manufacture of green certified products and services in the country. At the same time, the government also aims to set the way forward for the private sector to adopt more green technologies into their operational processes.

The move towards becoming a green economy has also seen a concerted effort against single-use plastics, an initiative which was introduced by MESTECC in 2018. This has been further supported by the Ministry of Finance, which introduced tax incentives for companies that produce biopolymer products, during the 2019 Budget.

At the same time, there has been a move towards encouraging green financing instruments. For instance, the Green Technology Financing Scheme (GTFS), which is managed by GreenTech Malaysia, allocates RM5 billion for the development of green technology. Then there is the RM250 million Green SRI Sukuk Tadau, which was launched in 2017, and is the first green sukuk (Islamic bond) in the world.

Focus on Energy 

While the green economy affects every aspect of the economy, perhaps no sector stands to gain as much from it as the energy industry. This is because one of the first initiatives introduced by MESTECC Minister YB Yeo Bee Yin, after taking office in July 2018, was for the share of renewable energy in electricity generation to rise from 2 percent at present to 20 percent by 2025.

The introduction of such an ambitious target has spurred the renewable energy industry, as an additional 3.9GW of installed renewable energy capacity is expected to be needed within the next five years.

The solar power industry has been the main beneficiary of this as MESTECC has been focused on encouraging take-up of the Net Energy Metering (NEM) scheme. Under NEM, building owners can install solar panels on their properties and generate electricity for their own use, before selling any excess to the grid.

As YB Yeo highlighted, “We have 3.2 million residential properties, 450,000 commercial lots, 90,000 terraced factories, and 21,000 factories, which illustrates the great potential for rooftop solar in Malaysia.”

Another area of growth for renewable energy has been that of large scale solar (LSS) power plants. Thus far, three LSS bidding exercises have been carried out by the Energy Commission of Malaysia up to February 2019, resulting in installed solar power capacity rising to 1GW.

The focus on solar power has also brought about benefits for the Malaysian solar photovoltaic industry. Already the country is a major exporter of solar PV components, and larger domestic demand is expected to boost the industry. In fact, according to the International Renewable Energy Agency (IRENA), Malaysia is the sixth-largest solar PV employer in the world, accounting for 54,300 jobs.

“Malaysia has an opportunity to lead the green agenda in the region, rather than just being a participant, as the global green economy gains momentum.” – YB Yeo Bee Yin, Minister of Energy, Science, Technology, Environment and Climate Change

For long, there has been an impression that economic growth and sustainability are opposite ends of the spectrum, and that in order to be green, one has to sacrifice prosperity. By championing the green economy, Malaysia is showing that this need not be the case and in doing so, is carving out a path for other developing nations to follow. 

Call us at 03-77325886 or email us at marketing@ibrasiagroup.com for more information on the Green Champion feature of the International Business Review.

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