Green Infrastructure Finance

Green Investment Climate
Country Profile – Malaysia

East Asia and Pacific Region

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©2013 International Bank for Reconstruction and Development/The World Bank
East Asia and Pacific Region/Water and Energy Management Unit (EASWE)
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Table of Contents
Acknowledgements................................................................................................................................................ iii
List of Abbreviations and Acronyms.......................................................................................................................iv
1. Statistical Overview........................................................................................................................................... 2
2. Energy................................................................................................................................................................ 4
3. Green Policies and Incentives............................................................................................................................ 6
4. Green Programs and Institutions.................................................................................................................... 11
5. Green Regulatory Framework........................................................................................................................ 13
6. Investment Trends and Challenges................................................................................................................. 15
7. Concluding Remarks........................................................................................................................................ 18
8. Summary of Policy Instruments...................................................................................................................... 20
9. Annex............................................................................................................................................................... 21
10. References........................................................................................................................................................ 42
List of Tables and Figures:
Table 1: Electricity Generation by Source (% of total)...................................................................................... 4
Table 2: Promotion of Investment Act 1986....................................................................................................... 6
Table 3: Incentives for 8th Malaysian Plan........................................................................................................... 7
Table 4:
Table 5:
Table 6:
Table 7:
Table 8:
Table 9:
Table 10:
Table 11:
Table 12:
Table 13:

Incentives for Biofuel Policy 2006......................................................................................................... 7
National RE Policy and Action Plan 2010 Targets................................................................................ 8
Expected Impact of National RE Policy and Action Plan by year 2020............................................... 8
Tax Incentives in 10th Malaysia Plan...................................................................................................... 9
FiTs in Malaysia, 2012............................................................................................................................ 9
National Energy Efficiency Master Plan 2020 Targets....................................................................... 10
Green Technology Financing............................................................................................................... 30
National Target for Green Jobs per GDP/GNI..................................................................................... 33
National Petroleum Subsidies, 2001-2012.......................................................................................... 39
Green Projects Application Status as of 2012.................................................................................... 39

Figure 1:
Figure 2:
Figure 3:
Figure 4:
Figure 5:
Figure 6:

Total Primary Energy Supply................................................................................................................. 4
Electricity Consumption and Prices, 1990-2008.................................................................................... 5
Global Competitiveness Index............................................................................................................. 15
Malaysia Net FDI Flows, 2002-2011 (current US$).............................................................................. 16
Private Investment in New or Additional RE Capacity (US$ million)................................................ 16
Breakdown of RE Investments (US$ million)...................................................................................... 16

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Green Investment Climate Country Profile - Malaysia

Acknowledgements

T

his country profile has been prepared by the East Asia and Pacific Region of the World Bank.
The work was led by Aldo Baietti, Lead Infrastructure Specialist (EASWE) under the overall guidance of John Roome, Sector Director (EASSD) and Charles Feinstein, Sector Manager
(EASWE). The team and co-authors included Andrey Shlyakhtenko and Roberto La Rocca (EASWE)
from the World Bank. The team wishes to acknowledge the peer reviewers and other contributors
inside and outside the World Bank Group including, the Malaysia Economic Planning Unit team, the
Malaysia Energy Commission team, Alexander Jett, Research Analyst (TWISI), John Probyn (PPIAF),
Bastiaan Verink (TWISI), Banuchandar Nagarajan, Amar Causevic (EASWE), Yap Vui Soon (Local
Consultant) and 10EQS, Ltd. Edward Charles Warwick edited the report. Finally, the team wishes
to acknowledge the generous support from the Australian Agency for International Development
(AusAID) provided through the World Bank East Asia and Pacific Infrastructure for Growth Trust
Fund (EAAIG).

The World Bank – AusAID

iii

Green Infrastructure Finance

List of Abbreviations and Acronyms
AFFIRM

Awareness, Faculty, Finance, Infrastructure, Research and Marketing

bbl

Barrels of Oil

BioGen

Biomass Generation and Demonstration

BIPV

Building Integrated Photovoltaic

BPMB

Bank Pembangunan Malaysia Berhad

CDM

Clean Development Mechanism

CETREE

Centre for Education and Training in Renewable Energy and Energy Efficiency

CO2

Carbon Dioxide

CPI

Corruption Perceptions Index

DOEN

Department of Environment

EE

Energy Efficiency

EIA

Environmental Impact Assessment

FDI

Foreign Direct Investment

FiTs

Feed-in Tariffs

FTV

Fleet Program Test Vehicle

GBI

Green Building Initiative

GBIAP

Green Building Index Accreditation Panel

GDP

Gross Domestic Product

GHG

Greenhouse Gas

GNI

Gross National Income

GreenTech

Malaysia Green Technology Corporations

GTFS

Green Technology Financing Scheme

GW

Gigawatt

GWh

Gigawatt Hour

IGEM

International Green Tech and Eco Products Exhibition and Conference Malaysia

ITA

Investment Tax Allowance

KeTTHA

Ministry of Energy, Green Technology and Water

Kgoe

Kilogram(s) of Oil Equivalent

Ktoe

Thousand Tons of Oil Equivalent

kW

Kilowatt

kWh

Kilowatt Hour

kWp

Kilowatt Peak

LHDN

Inland Revenue Board of Malaysia

LPG

Liquefied Petroleum Gas

iv

The World Bank – AusAID

Green Investment Climate Country Profile - Malaysia

MBIPV

Malaysia Building Integrated Photovoltaic

MDTCA

Ministry of Domestic Trade and Consumer Affairs

MEEIP

Malaysian Energy Efficiency Improvement Program

MEISTA

Malaysian Electricity Supply Industry Trust Account

MIDA

Malaysian Industrial Development Authority

MITI

Ministry of International Trade and Industry

MOF

Ministry of Finance

MOHR

Ministry of Human Resources

MP

Malaysia Plan

MSW

Municipal Solid Waste

Mt

Metric Ton

MTHPI

National Green Technology and Climate Change Council

Mtoe

Million Tons of Oil Equivalent

MW

Megawatt

m/s

Meter per Second

NA

Not Available

NBP

National Biofuel Policy

NCCDM

National Council for Clean Development Mechanism

NCCP

National Climate Change Policy

NCS

National Competency Standard

NDP

National Depletion Policy

NEEMP

National Energy Efficiency Master Plan

NEP

National Energy Policy

NGTP

National Green Technology Policy

NPE

National Policy on Environment

NPP

National Petroleum Policy

NREPAP

National Renewable Energy Policy and Action Plan

OA

Occupational Analysis

ODS

Ozone-depleting Substances

PAM

Malaysian Institute of Architects

PDA

Petroleum Development Act

PETRONAS

Petroleum National Berhad

PPP

Public-Private Partnership

PTM

Malaysia Energy Centre

PV

Photovoltaic

RE

Renewable Energy

REBF

Renewable Energy Business Fund

REPPA

Renewable Energy Power Purchase Agreement

The World Bank – AusAID

v

RM

Malaysian Ringgit

R&D

Research and Development

SEDA

Sustainable Energy Development Authority of Malaysia

SIRIM

Standards and Industrial Research Institute of Malaysia

SREP

Small Renewable Energy Power Program

TNB

Tenaga Nasional Berhad

TWh

Terawatt Hours

US$

United States Dollar

VAT

Value-added Tax

WEF

World Economic Forum

3PU

Public-Private Partnership Unit

4FDP

Four-Fuel Diversification Policy

5FDS

Five-Fuel Diversification Strategy

5FP

Fifth Fuel Policy

Green Investment Climate Country Profile - Malaysia

Malaysia

has a total landmass of 329,847 km2.
The country is separated by the South China Sea into
two similarly sized regions namely Peninsular
Malaysia and Malaysian Borneo. Although existing oil and natural gas
fields make up the greater portion of the country’s energy supply, the
substantial renewable energy (RE) potential provides a great opportunity for diversification of the energy mix, improving energy security
and fostering sustainable development. Malaysia’s equatorial location
endows it with great solar energy potential and its extensive tropical
forests can supply large quantities of biomass. Endowed with abundant streams and rivers flowing from highland areas, Malaysia has
numerous sites for hydro power development. Finally, there is a significant untapped wind energy potential.

The World Bank – AusAID

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Green Infrastructure Finance

Indonesia

Philippines

Vietnam

China

Rep. of Korea

Singapore

Malaysia

1. Statistical Overview

847

225

124

7,318

1,116

240

278

242

95

88

1,344

50

5

29

49.9

48.7

30.4

49.2

82.9

100

72

5.1

4.5

6.4

9.6

3.4

5.8

4.5

24.7

50.9

48.8

16.5

34.7

108.3

51.8

5.4

4.7

18.7

5.4

4.0

5.2

3.2

Agriculture

15

12

21

10

3

0

11

Industry

47

33

41

47

39

28

44

Services

38

55

38

43

58

72

45

Energy production (Mtoe)8

352

24

77

2,085

44

0.03

90

Energy use (Mtoe)

202

39

64

2,257

229

19

67

Net energy exports/imports (Mtoe)9

147

(19)

11

(185)

NA

(51)

18

71

90

98

99

100

100

99

Electric transmission and distribution losses (%)

9.4

12.1

9.6

4.9

3.7

5.2

3.8

Energy intensity (kgoe/US$1,000 2005 PPP)

230

126

274

273

184

80

191

Macro Indicators
GDP (current US$ billion)1
Population (million)

2

Urban population (% of total)

3

Economic Indicators
Constant GDP 10 Year CAGR (%)4
Public debt (% of GDP)

5

Inflation, consumer prices (annual %)

6

Sector mix (% of GDP)7

Energy Indicators
8

Electricity access (% of population)

10
11

12

CO2 emissions (Mt of CO2)

376

71

114

6,832

515

45

208

Electricity tariffs (US$/kWh)14

0.07

0.14

0.05

NA

0.13

0.22

NA

6,095

348

165

126,215

139

NA

4.4

13,i

Fossil fuel endowment

15

Coal (2008, million short tons)

3.9

0.1

4.4

20.4

0

0

4

141.1

3.5

24.7

107

0.3

0

83

Coal and peat

15.1

15.2

19.7

67.2

28.3

0

15.8

Crude oil

Oil (2012, billion barrels)
Natural gas (2012, trillion cubic feet)
Total Primary Energy Supply (%)16

26.5

19.3

4.2

16.8

39.5

61.4

35.5

Oil products

6.7

14.3

21.2

0

0

0

0

Natural gas

17.4

8.3

11.1

3.3

13.8

38.4

43.4

0

0

0

0.8

16.8

0

0

Nuclear
Hydro

0.5

2.2

4.0

2.4

0.1

0

0.9

Geothermal, solar, wind

7.9

22.9

0

0.5

0.1

0

0

i CO2 emissions from fuel combustion only.

2

The World Bank – AusAID

Indonesia

Philippines

Vietnam

China

Rep. of Korea

Singapore

Malaysia

Green Investment Climate Country Profile - Malaysia

26.0

17.9

39.3

9

1.3

0.2

4.5

0

0

0.5

0

0

0

0

Renewables

13.3

32.6

36

17.5

1

0.1

6.3

Oil

22.8

8.7

2.5

0.4

4.4

18.8

2.0

0

0

0

1.9

32.7

0

0

Natural Gas

22.1

32.1

43.4

1.4

15.6

81.0

60.7

Coal

41.8

26.6

18

78.8

46.2

0

30.9

S&P’s Credit Rating (Foreign Currency)18

BB+

BB+

BB-

AA-

A+

AAA

A-

Doing Business Ranking

129

136

98

91

8

1

18

CPI Transparency Ranking

100

129

112

75

43

5

60

FDI, net (% of GDP)21

1.6

0.3

6.8

2.2

(1.9)

8.5

1.6

37,113 45,114

8,328

78,438

NA

NA

46,401

Energy Indicators (cont.)
Combustible renewable and waste
Electricity and heat
Electricity Sources (%)

17

Nuclear

Investment Climate
19
20

PPI (US$ million)22,ii
PPI renewable energy (US$ million)

22

Lending interest rate (%)

23

Lending - deposit spread (%)24
Liquid assets to deposits and short term funding (%)

25

3,876

3,844

1,839

8,380

NA

NA

198

13.2

7.7

13.1

5.9

5.4

5.6

5

6

4

2

3

2

5

3

30

29

35

20

8

37

27

ii Investments amounts include greenfield projects, concessions and management, and lease contracts.

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Green Infrastructure Finance

2. Energy

O

ver the last half century, fossil
fuels have been the main source of
Malaysia’s energy mix, with oil and
gas being the two main components. Oil’s
contribution in the country’s energy mix
peaked to 87.9 percent in the 1980s. After
the international oil crisis, the Government
called for the diversification of energy
resources, over time reducing the share of
oil to 35.5 percent in 2009. Malaysia’s crude
oil reserves, including condensate, are estimated as 5.8 billion bbl as of 2011.26

Figure 1: Total Primary Energy Supply
Combustible
renewables
and waste 4.5%

Natural gas
43.4%
Renewables
5.4%
Oil
35.5%

Coal & Peat
15.8%

Hydro 0.9%

Source: International Energy Agency, 2009.27

Following the discovery of natural gas reserves in 1983, its contribution in the energy mix has grown
significantly, replacing oil as the main source. Natural gas has become the main energy contributor
since the early 2000s and in 2009 accounted for 43.4 percent of the total primary energy supply. As
of 2012, natural gas reserves are estimated to be 2.3 trillion m3. 26 Malaysia is a net exporter of oil
and natural gas with 236,400 bbl/day and 31.9 billion m3, respectively.26
The Government recently started pursuing coal in an effort to further diversify the energy mix and
to enhance energy security. Coal’s share in the energy mix began to rise in the early 2000s and by
2009 reached 15.8 percent (10,547 ktoe).29 While Malaysia’s coal reserves account for 1,483.06 Mt
(as of 2005), most of the consumed coal is imported.30 Malaysia is also the world’s second largest
producer and exporter of crude palm oil, which generates significant amount of residual biomass
during the production process. Biomass has thus become a promising source of RE. Biomass and
hydro currently comprise only about 5.4 percent of the energy supply of Malaysia.27
As of 2011, 94.5 percent of electricity was
Table 1: Electricity Generation by Source
still generated from fossil fuels.31 In 2001 the
(% of total)
Government initiated the Fifth Fuel Policy (5FP)
2002 2009
to enhance sustainability and security of the
Renewables
7.1
6.3
energy supply. The objective of the policy was
Oil
10.6
2.0
to develop other RE resources as the nation’s
fifth fuel in addition to oil, natural gas, coal,
Natural gas
70.3 60.7
and hydro. However, the achievements during
Coal
12.0 30.9
the period of the 8th Malaysia Plan (MP) 2001Source: International Energy Agency, 2009.28
2005 were disappointing, because financial
incentives still favored fossil fuels. Additional measures have been introduced to enhance support
to the 5FP in the 10th MP.

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Green Investment Climate Country Profile - Malaysia

Despite a relatively low energy intensity in comparison to other East Asia and Pacific countries,
Malaysia’s performance against the world averages in both energy intensity and CO2 emissions
can still be improved. Additionally, the energy intensity has been worsening in the recent years, as
energy consumption has surpassed GDP growth. This indicates a move towards more energy intensive economic activities and an increasing per-capita consumption of energy.
Figure 2: Electricity Consumption and Prices, 1990-2008iii
RM Million
(at 2000 prices)

GWh

500,000

89,000

450,000

79,000

400,000

69,000

350,000

59,000

300,000

49,000

250,000

39,000

200,000

29,000

150,000

19,000
1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

GDP (RM million)

180,059

205,312

221,319

239,792

261,951

283,645

312,017

335,556

310,381

328,194

356,401

358,246

377,559

399,414

426,508

449,250

475,526

505,919

528,311

Electricity consumption (GWh)

19,932

22,373

25,778

28,474

34,076

39,225

43,897

50,952

53,195

55,961

61,168

65,015

68,827

73,371

77,206

80,705

84,575

89,294

92,815

Sources: Central Bank of Malaysia, 2009; and Ministry of Energy, Green Technology and Water, 2008.32

iii Malaysian ringgit (RM) exchange rate is approximately RM3.052 = US$1.

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Green Infrastructure Finance

3. Green Policies and Incentives

T

he current National Energy Policy (NEP) was formulated in 1979 to provide broad guidelines
on long-term energy objectives and strategies to ensure efficient, secure and environmentally sustainable supplies of energy. The NEP identified three main objectives:

■■

Ensuring the provision of adequate, secure and cost-effective energy supply through developing indigenous non-renewable and RE resources and diversification of supply sources both from
within and outside the country;

■■

Promoting efficient utilization of energy and discouraging wasteful and non-productive patterns of energy consumption; and

■■

Minimizing negative impact on the environment imposed by energy production, transportation, conversion, utilization and consumption.

The National Depletion Policy (NDP) and Four-Fuel Diversification Policy (4FDP) were formulated
to support those objectives.33
The NDP 1980 was introduced to safeguard the exploitation of natural oil reserves because of the
rapid increase in the domestic production of crude oil. As a result of this policy, the total production of crude oil is currently limited to about 650,000 bbl/day.34
The 4FDP 1981 was introduced to utilize non-oil
domestic energy resources, improve the country’s energy independence and reduce foreign
exchange costs. It aimed for an increase of gas,
hydro and coal from the domestic resources.
The 4FDP reduced the dependence on oil for
electricity from 87.9 percent in 1980 to two
percent in 2009.

Table 2: Promotion of Investment Act, 1986
■■

Pioneer Status – revenue-based incentive
to companies proposing to generate RE or
undertake EE initiatives that grants a fiveyear exemption from income tax on up to
70% of the applicant-company’s statutory
income

■■

Or ITA – capital-based incentive that allows
a deduction of 60% of qualifying capital
expenditure against a maximum of 70% of
the company’s statutory income, for five years
from the “date of approval”

In 1986 the Government introduced the
Promotion of Investment Act, which provides
a number of incentives for alternative energy
supply including renewables. This Act provides
two major incentives including granting “pioSource: Government of Malaysia, 1986.35
neer status” and tax allowances for capital
investments in RE and energy efficiency (EE) initiatives.

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Green Investment Climate Country Profile - Malaysia

The 4FDP was revised again in 2000 with the
announcement of the Five-Fuel Diversification
Strategy (5FDS). As part of the 8th MP, the 5FP
added RE as the fifth fuel and set a target of
five percent in the country’s total electricity
generation by 2005.

Table 3: Incentives for 8th Malaysian Plan
■■

Companies that undertake forest plantation
projects or energy conservation measures
or use energy from renewable biomass,
mini-hydro or solar are eligible for Pioneer
Status with a tax exemption of 100% of the
statutory income for 10 years; and

In 2002, the Government adopted the National
■■ ITA of 100% on the qualifying capital
Policy on Environment (NPE) to support the susexpenditure incurred within five years, which
tainable development objectives of the 8th MP.
can be offset against 100% of the statutory
This policy integrates three elements of sustainincome for each year of assessment. Higher
able development: (i) economic development;
exemptions or allowances if the activities take
(ii) social and cultural development; and (iii)
place in “promoted areas”.
environmental conservation. The policy focused
Source: Prime Minister of Malaysia, 2005.36
on effective management of natural resources
and the environment, prevention and control of
pollution, and strengthening institutional capacity and awareness on environmental issues.
The commitment to clean development was reinforced by the ratification of the Kyoto Protocol
on September 4, 2002. As a developing country, Malaysia was not required to make concrete commitments towards reducing greenhouse gas (GHG) emissions. However, as a party to the Kyoto
Protocol, Malaysia could voluntarily participate in the Clean Development Mechanism (CDM) and
benefit from investments in the GHG emission reduction projects. For this purpose, the National
CDM guidelines were approved by the National Council for Clean Development Mechanism
(NCCDM) on August 15, 2003.
Performance in RE development during the 8th MP 2001-2005 period was disappointing. While
renewables were expected to grow to five percent (600 MW) in the country’s total electricity generation, Malaysia achieved an increase equal to less than one percent (12 MW) by the end of 2005.37
Despite various incentives offered by the Government, only two biomass plants were commissioned
under the Small Renewable Energy Power Program (SREP).38 This could have been improved if the
Government had obligated utilities to buy RE and as well as offered incentives for improving the
financial viability of the projects.
Despite the slow progress, the Government perseTable 4: Incentives for Biofuel Policy, 2006
vered with attempts to increase the utilization of
Biodiesel is included in the list of products/
RE under the 9th MP 2006-2010. The 9th MP set a
activities that are encouraged under the Promonew SREP target of 350 MW of RE electricity gention of Investments Act 1986. Biodiesel projects
eration from biomass, biogas, municipal waste,
are therefore eligible to be considered for:
solar and mini-hydro. The plan promoted the use
■■ Pioneer Status
of biomass resources from oil palm, wood, and
rice husks residue for development of biomass
■■ ITA
co-generation systems and electricity generation.
Source: Center for International Forestry Research, 2011.39
The National Biofuel Policy (NBP) and the National
Green Technology Policy (NGTP) were launched under the 9th MP to further support RE development.40

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Green Infrastructure Finance

The NBP 2006 aimed to reduce the country’s dependency on fossil fuels and to promote demand for palm
oil. This policy promoted the use of biofuels by blending processed palm oil (five percent) with petroleum
diesel (95 percent) and by giving incentives for the installation of biodiesel pumps at fueling stations.
The NGTP 2009 aimed to provide an enabling environment for green technology development.
This included the establishment of effective fiscal and financial mechanisms to support the growth
of green industries. The policy also aimed to establish cohesion between different agencies by
coordinating ministries, agencies, the private sector and key stakeholders to promote innovation
in green energy technology.
Recognizing the harmful effects of fossil fuels on the environment, in 2009 the Government also
adopted the National Climate Change Policy (NCCP). NCCP aimed at:
■■
■■
■■

Streamlining and coordinating existing legislation and policies;
Facilitating the implementation of adaptation and mitigation measures; and
Identifying options and strategies to achieve a low-carbon economy.

In 2010, the Ministry of
Table 5: National RE Policy and Action Plan 2010 Targets
Energy, Green Technology
Share Annual RE
Annual
and
Water
(KeTTHA)
Year
Cum. total
of REiv generation
CO2 avoidintroduced the National
ending
RE (MW)
capacity
(GWh)
RE mix ance (ton)
Renewable Energy Policy
2011
219
1%
1,230
1%
848,493
and Action Plan (NREPAP).
2015
985
6%
5,385
5%
3,715,415
The policy seeks to: (i)
2020
2,080
11%
11,246
9%
7,759,474
enhance the use of indig2030
4,000
17%
17,232
12% 11,889,887
enous RE sources to con2050
21,370
73%
44,208
24% 30,503,589
tribute to energy security;
(ii) increase the share of RE
Source: Sustainable Energy Authority Malaysia, 2009.41
in the energy mix; (iii) support the expansion of a local RE manufacturing sector; (iv) ensure reasonable RE generation costs;
and (v) protect the environment.
Table 6: Expected Impact of National RE Policy and Action Plan by year 2020
■■

Minimum RM2.1 billion savings of external cost to mitigate CO2 emissions (total 42 Mtoe avoided
from 2011 to 2020, on the basis of RM50 per ton of external cost)

■■

Minimum RM19 billion of loan values for RE projects, which will provide local banks with new sources
of revenues (at 80% debt financing for RE projects)

■■

Minimum RM70 billion of RE business revenues generated from RE power plants operation, which can
generate tax income of minimum RM1.75 billion to the Government

■■

50,000 jobs created to construct, operate and maintain RE power plants (on the basis of 15-30 job per MW)

Sources: Renewable and Sustainable Energy Reviews, 2011; and Sustainable Energy Authority Malaysia, 2009.42
iv Biomass is included in the RE definition.

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Green Investment Climate Country Profile - Malaysia

Despite these efforts, by the end of the 9th MP,
the RE contribution towards the country’s total
electricity generation increased to only 56.7
MW.44 Several factors contributed to the disappointing results, including: (i) policy inconsistencies; (ii) mixed signals to investors; (iii)
lack of a robust and long-term orientation; (iv)
non-competitive tariffs; and (v) lack of mandatory requirements for utilities to buy RE.

Table 7: Tax Incentives in 10th Malaysia Plan
■■

Tax breaks for buildings and designs that are
environmentally sustainable

■■

Double tax deduction and tax benefits
granted for green technology R&D

■■

Tax deferrals

■■

Tax holidays

■■

Reduction of levies (income or VAT) on capital
investments in RE

Under the 10th MP 2011-2015, Malaysia is again
ramping up work to increase the share of RE in
Sources: Maybank, 2010; and PricewaterhouseCoopers,
the country’s energy mix. This plan emphasizes
2012.43
the use of green technology through the NGTP
as well as the new Renewable Energy Act. The new Renewable Energy Act regulates the establishment and implementation of a feed-in tariffs (FiTs) mechanism to catalyze RE investment.
The FiTs mechanism is managed and administered by
the Sustainable Energy
Development Authority
of Malaysia (SEDA).
The
new
FiTs
were
launched through the
Renewable Energy Act,
in December 2011. As of
September 2012, a total
capacity of 238 MW had
obtained FiTs approval
and a total of 75.5 MW had
been successfully installed
and commissioned.
The Government also
intends to address market
failures, end policy inconsistencies, and establish a
competitive tariff scheme
to reverse the previous
disappointing results.45
The RE Policies will soon
be complemented by the
National Energy Efficiency

Table 8: FiTs in Malaysia, 2012
RE utilization
Years RM/kWh Degressionv
Biogas
<4 MW
16
0.32
0.50%
>4 MW < 10 MW
16
0.30
0.50%
>10 MW < 30 MW
16
0.28
0.50%
Bonus for gas engine > 40% efficiency
16
0.02
0.50%
Bonus for local manufacturer
16
0.01
0.50%
Bonus for landfill or sewage gas
16
0.08
0.50%
Mini-hydro
<10 MW
21
0.24
0.00%
>10 MW < 30 MW
21
0.23
0.00%
Solar PV
<4 kW
21
1.23
8.00%
>4 kW < 24 kW
21
1.20
8.00%
>24 kW < 72 kW
21
1.18
8.00%
>72 kW < 1000 kW
21
1.14
8.00%
>1 MW < 10 MW
21
0.95
8.00%
>10 MW < 30 MW
21
0.85
8.00%
Bonus for rooftop
21
0.26
8.00%
Bonus for BIPV
21
0.25
8.00%
Bonus for local modules
21
0.03
8.00%
Bonus for local inverters
21
0.01
8.00%
Biomass
<10 MW
16
0.31
0.50%
>10 MW < 20 MW
16
0.29
0.50%
>20 MW < 30 MW
16
0.27
0.50%
Bonus for gasification
16
0.02
0.50%
Bonus for steam generation > 14% efficiency
16
0.01
0.50%
Bonus for local manufacturer
16
0.01
0.50%
Bonus for MSW
16
0.10
1.80%
Source: Sustainable Energy Authority Malaysia, 2012.46

v Degression is a mechanism according to which the price (or tariff) ratchets down over time.
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Master Plan (NEEMP), through which the Government is planning to implement well-managed EE
programs.vi The plan has an overall target to reduce the electricity consumption by 10 percent by
2020.47
Table 9: National Energy Efficiency Master Plan 2020 Targets

In 2008, the Government began
reforms to wind down energy sub■■ Reduce electricity consumption by 10%
sidies by shifting to cash rebates,
windfall taxes and expansion of
■■ Total reduction over plan period is about 70 million tCO2e
the social safety net.
Subsidies
■■ 85 TWh accumulated savings
on electricity and petroleum had
■■ 3 GW plant capacity savings
grown to approximately four
per cent of GDP or US$14 billion
Sources: Asia-Pacific Economic Cooperation, 2011; and Sustainable Energy
during the period of rising oil
48
Authority Malaysia, 2010.
prices in the late 2000s. Further
cuts to gasoline, diesel and liquefied petroleum gas (LPG) subsidies were made in July 2010.49
The Private Finance Initiatives Program is an important component of the 9th MP for achieving the
green energy targets of the country. The public-private partnership (PPP) model has been applied
to a wide range of public projects, including power generation. For the rolling plan of 2011-2012,
in addition to conventionally procured development projects which were allocated RM99 billion, 52
projects worth RM63 billion were conceived. Apart from budgetary consideration, PPPs are viewed
as an avenue for private sector innovation and efficiency. They are also a way to promote shared
responsibility and accountability in the provision of public services as well as achieve optimal utilization of the nation’s resources.
The foreign direct investment (FDI) is a key driver underlying the strong growth of the Malaysian
economy. Policy reforms, including the introduction of the Investment Incentives Act 1968, the
establishment of free trade zones in the early 1970s, the provision of export incentives and the
acceleration of an open policy in the 1980s led to a surge of FDI in the late 1980s. The Government
introduced more liberal incentives, including allowing a larger percentage of foreign equity ownership. This allowed FDI to grow at an annual average rate of 38.7 percent between 1986 and 1996.
The FDI has recently turned negative because of competition from China and other countries in
Southeast Asia. Despite this trend, given the well-educated workforce with strong foreign-language skills and good infrastructure (including the transport system), Malaysia remains an attractive investment destination in Southeast Asia. Malaysia’s natural endowments, together with its
strong human resource skills, provide an opportunity for the Government to shift the FDI focus to
more strategic sectors, such as RE.

vi The EE programs will be finalized by the end of 2013.

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4. Green Programs and Institutions
The Malaysia Building Integrated Photovoltaic (MBIPV) program was launched in 2005 as a part
of the 9th MP with an objective to increase installed Building Integrated Photovoltaic (BIPV) capacity by 330 percent as well as reduce unit costs by 20 percent by 2010. By December 2009, cumulative grid-connected BIPV capacity increased from 468 kW to 1,416 kW or 203 percent and the unit
cost of photovoltaics (PV) declined 40 percent. However, this reduction was more due to a general
decrease in PV costs globally. Since the implementation of BIPV program, a total of 1,070 tons of
CO2 equivalent GHG emissions have been avoided.50
The Centre for Education and Training in Renewable Energy and Energy Efficiency (CETREE) was
launched in 2000 to increase the awareness on developing RE and share knowledge – the critical elements to promote large-scale implementation of RE. The CETREE introduced the concepts of RE and
EE into the curricular activities of schools and universities. In August 2006, three competitions emphasizing RE and EE were organized under the collaboration of CETREE and the Ministry of Education.
The competitions featured solar cars, solar cookers, and EE beach houses. As of 2011, 8,260 students
and 1,714 teachers and lecturers visited CETREE, along with a general public of 14,109.51
A number of funds and financing schemes were also established in order to support the existing
incentives. Under the FiTs system, a Renewable Energy Fund was initiated to harmonize the prices
between renewable and non-renewable energy. Consumers that use more electricity than the set
minimum point, would have to contribute one percent of their bill towards the RE fund. The collected funds are then used to equalize the price between non-renewable and renewable sources of
energy administered by the SEDA.52
Another important initiative in financing RE projects in Malaysia is the Renewable Energy Business
Fund (REBF). The objective of the REBF is mainly for a Biomass Generation and Demonstration
(BioGen) implementation program to support the financial needs of the Full Scale Model Biomass
Power Project. Malaysia Energy Centre (PTM) and Bank Pembangunan Malaysia Berhad (BPMB),
formerly Bank Industri & Teknologi Malaysia Berhad, contributed RM28.0 million for the fund. The
PTM portion includes a contribution of RM9.2 million from the Global Environment Facility (GEF)
and RM5 million from the Malaysian Electricity Supply Industry Trust Account (MESITA).53
The Green Technology Financing Scheme (GTFS) aims to improve the supply and utilization of
green technology. The GTFS is a special financing scheme introduced by the Government to support the development of green technology in Malaysia. It was proposed in the 2010 budget with
a total financing amount of RM1.5 billion. The GTFS is a soft loan supported by the Government.
Under the GTFS, the Government will bear two percent of the total interest rate, and provide a
guarantee on 60 percent of the financing amount via the Credit Guarantee Corporation Malaysia
Berhad (with the remaining 40 percent financing risk to be borne by participating financial institutions). The scheme is expected to benefit more than 140 companies.54 As of December 2010, 10
green projects worth RM141,902,500 million have been approved for financing. A large pool of
funds available under the GTFS scheme will provide the impetus for rapid growth of green technology in the next few years.

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The Renewable Energy and Energy Efficiency Scheme was introduced in two phases in 2006 and
2007. A wide range of financing facilities for RE and EE projects — especially on biomass, biodiesel, mini-hydro, solar, municipal solid waste (MSW) and EE — was introduced. RE and EE Scheme
I allows businesses to borrow up to 80 percent of total project costs at attractive interest rates,
repayable up to 15 years. Anticipating increased interest in RE projects, the RE and EE Scheme II
increased the allocation by RM1 billion. Companies were allowed to borrow up to 85 percent of
total project costs with an attractive interest rate, repayable up to 15 years.
The Malaysian Energy Efficiency Improvement Program (MEEIP) was established under KeTTHA
to assist the industry manage energy more efficiently and choose best practices in equipment and
electrical facility maintenance for factories and premises.
The Green Technology Action Plan, developed by the Government, seeks to advance the Green
Technology Policy. The action plan is divided into two phases. A baseline survey that aims to identify gaps was conducted in the first phase. Started in 2012, the second phase aims to develop a
detailed action plan to achieve the goals of the NGTP.
The following provides an overview of the organizations that play a crucial role in the formulation
and implementation of Malaysia’s Energy Policy:
■■

The Economic Planning Unit, under the Prime Minister’s Department, is responsible for the formulation and evaluation of energy sector policies and strategies and for the preparation of
programs and projects to be implemented under the MP.

■■

The main objective of the KeTTHA, formerly known as the Ministry of Energy, Water and Communications, is to facilitate and regulate the growth of industries in sectors (energy, green technology and water) and to ensure the availability of high quality, efficient and safe services at a
reasonable price to consumers throughout the country.

■■

The Energy Commission, formerly known as Directorate General of Electricity and Gas was set
up in May 2001 as a regulatory body for both gas and electricity supply. It is charged with promoting EE as a part of its responsibility for viable development of the electricity supply industry.
The Commission is responsible for issuing directives for EE labeling and has the authority to
issue directives to set Minimum Energy Performance Standards for the energy-using equipment.

■■

The National Green Technology and Climate Change Council (MTHPI) conducts the implementation and coordination of policies amongst various stakeholders and beneficiaries. The Commission is chaired by the Prime Minister and its main function is to streamline and coordinate the
efforts to drive green technology development amongst the various ministries.

■■

The Malaysia Green Technology Corporation (GreenTech Malaysia) will act as a national energy
research center that will coordinate research on energy planning and technological development and demonstration. GreenTech Malaysia aims to be a central hub for establishing the
connection between business and research institutions and universities.

■■

The Malaysian Institute of Architects (PAM) endorsed the formation of the new Sustainability
Committee that will develop the Green Building Index and set up an accompanying panel for
certification and accreditation of green-rated buildings.

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5. Green Regulatory Framework

T

he Malaysian energy sector is regulated through the following laws: (i) the Electricity Supply
Act (1990, amended 2011); (ii) the Energy Commission Act 2001; (iii) the Efficient Management
of Electrical Energy Regulation 2008; and (iv) the Renewable Energy Act 2010.

The Electricity Supply Act 1990 provides for the establishment of the Department of Electricity
Supply. This Act governs the supply of electricity at reasonable prices and the licensing of electrical
installations and equipment.
The Energy Commission Act 2001 was established to provide the Energy Commission with functions and powers to regulate the energy supply activities in Malaysia. These functions and powers
include enforcing the energy supply laws, regulating all matters relating to the electricity supply,
promoting the use of RE and conservation of non-renewable energy sources.
Under the Efficient Management of Electrical Energy Regulation 2008 any installation with a total
electricity consumption of 3 million kWh or more over six consecutive months is required to implement measures to reduce consumption by efficient management.
The installation is also required to engage an electrical energy manager who shall:
■■

Audit and analyze the total electrical energy consumption or generation;

■■

Advise on developing and implementing measures to the ensure efficient management of the
electrical energy installation;

■■

Monitor effective implementation of the measures;

■■

Supervise the record-keeping on efficient management of electrical energy installation and
verify its accuracy; and

■■

Ensure the timely submission of information and reports under the regulations.

The Renewable Energy Act was adopted in 2010 to provide a special tariff system in order to catalyze the generation of RE. The FiTs scheme encourages adoption of RE by bridging the gap between
the cost of fossil fuel and renewable sources. The Act envisages that RE capacity in the country will
increase from 61.2 MW in 2010 to at least 985 MW by 2015 and 2,080 MW by 2020.55 The objectives
of the Act are to:
■■

Increase RE contribution in the national power generation mix;

■■

Facilitate the growth of the RE industry;

■■

Ensure reasonable RE generation costs;

■■

Conserve the environment for future generation; and

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Green Infrastructure Finance

■■

Enhance awareness on the role and importance of RE.

In addition, the MOE should finalize the NEEMP by the end of 2013, with the aim of providing a
mechanism for successful implementation of EE measures. The NEEMP is expected to consist of six
main thrusts:
■■

Thrust 1: Establish an overall long-term national plan for EE;

■■

Thrust 2: Create legal and regulatory framework for EE;

■■

Thrust 3: Create champion for EE;

■■

Thrust 4: Create adequate and sustained funding mechanism for EE;

■■

Thrust 5: Implement EE programs; and

■■

Thrust 6: Enable commercial finance institutions to support EE.

With regards to the country’s PPP program, Malaysia adopts a centralized approach to implementation. A dedicated unit under the Prime Minister’s Department is entrusted with the responsibility of
spearheading the development and execution of PPP projects. While projects may originate from
line ministries, state and local authorities or the private sector, the Public-Private Partnership Unit
(3PU) is responsible for screening, evaluating, as well as negotiating and structuring the contractual
obligations of the projects. Line ministries are responsible for management of PPP contracts. This
involves the monitoring of asset development, construction, enforcement of contractual and payment obligations as well as public and community relations.
The evaluation of PPP projects is supervised by the PPP Committee, chaired by the Director General
of 3PU. Permanent members of the Committee are drawn from the Ministry of Finance (MOF),
Attorney General Chambers, Economic Planning Unit, Federal Land Commissioner, and the Valuation
and Property Services Department. Representatives of relevant line ministries also participate on
the Committee for projects that fall under their jurisdiction.
The PPP Guideline issued by the Government provides greater clarity on the types of projects suitable
for PPPs, procedures to follow when making proposals, qualifying criteria for bidders of the projects, operating models, payment mechanisms as well as process flow for project approvals. Private
participation in infrastructure is further encouraged through a pragmatic approach towards risk
allocation. Accordingly, there is no standard or common risk-allocation matrix-framework across all
PPP projects or one that is rigid through time. Instead, the prevailing risk and nature of projects are
taken into account. For new sectors developed using the PPP approach, the Government does not
assume asset construction risks. Instead, the Government assumes the entire or substantial portion
of the demand risk by being the off-taker.

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6. Investment Trends and Challenges

F

DI has been an important source of economic growth for Malaysia, bringing in
capital investment, technology, and management knowhow.vii The Government has
been trying to encourage FDI by streamlining
its regulatory framework, and reducing restrictions on foreign investment. Emphasis has been
recently given to the services sector, which has
been identified as a leading engine of growth.

Figure 3: Global Competitiveness Index
Stage of development
Transition
1-2

1
Factor driven

2
Efficiency driven

Transition
2-3

3
Innovation driven

Institutions
7
Innovation
Business
sophistication

6
5
4

Infrastructure
Macroeconomic
environments

3

Malaysia’s laws governing FDI do not provide
2
Health and
general principles and rules for foreign partic1
primary
Market size
education
ipation in local businesses.viii FDI in Malaysia
is mainly regulated under the Promotion
Higher education
Technological
of Investment Act 1986, and the Industrial
and training
readiness
Coordination Act 1975.ix The Malaysian
Goods market
Financial market
Industrial Development Authority (MIDA),
efficiency
development
Low market efficiency
under Ministry of International Trade and
Industry (MITI), is in charge of promoting forMalaysia
Efficiency-driven economies
eign and local investment, and for evaluating
Source: World Economic Forum, 2012.56
applications for tax incentives. As a “one-stop
center”, MIDA coordinates with relevant authorities on investment facilitation measures.
The 2012-13 Global Competitiveness Report of the World Economic Forum (WEF) ranks Malaysia
at 25 among the 144 countries in the world.56 Malaysia retained a high ranking among the
Association of Southeast Asian Nations countries, second only to Singapore. Moreover, the country’s stage of development was also upgraded from “efficiency-driven” to “transition towards
innovation-driven”.57
Malaysia owes this success to its notable advantages in efficient and competitive markets for goods
and services (11th globally), its remarkably supportive financial sector (6th globally), and its business-friendly institutional framework. WEF noted innovation and labor market efficiency as the
country’s strengths, where it tops the Global Competitiveness Index rankings. It is also well known
for a sophisticated business sector.
vii Based on data from 1970 to 2005, a one percentage increase in FDI could lead to real GDP growth increasing by 0.046
percent, and real GNI growth increasing by 0.045 percent.
viii Arguably, this had allowed the Government maximum policy and regulatory space to screen and control FDI to suit
the economic and industrial needs of the particular time.
ix The Promotion of Investment Act was amended in March 2007 to incorporate incentives approved from 2001 to 2007
annual Budgets. The Industrial Coordination Act is currently being amended.

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The PPP program in Malaysia is an important
component of the Malaysia Incorporated
Concept — a development approach introduced in 1983. PPP in Malaysia is defined
broadly as an arrangement where private
sector provides services and invests in infrastructure assets that are traditionally undertaken by the Government.

2.56

2 1.30 1.10

0.99
0.05

US$ billion

0
-2

-2.74

-4

-4.35 -3.99

-6
-6.63

-8
-10

-7.83
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: World Bank, 2012.21

Figure 5: Private Investment in New or Additional
RE Capacity (US$ million)
60
50
40
30
20
10

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1

0

20
1

9

20
1

8

20
0

7

20
0

6

20
0

5

Source: World Bank, 2011.58

Figure 6: Breakdown of RE Investments
(US$ million)
28.4,
24%
n Hydro, Large (>50MW)
n Solar, PV
n Waste
67.3
56%

Source: World Bank, 2011.58

16

20
0

4

20
0

3

20
0

2

20
0

1

20
0

0

0
20
0

As part of the policy favoring private enterprise and competition, Malaysia aims to shift
away from reliance on public investment and
towards private participation. In this regard,
PPPs provide a great opportunity for the
Malaysian Government to initiate this shift
through various government programs.

4

20
0

FDI could be an opportunity for Malaysia
to expand further on the green energy sector. Building collaborations with multi-national firms will encourage technology and
knowledge transfer to local firms in green
energy. The Government plans to relax
rules governing foreign ownership further in 2012-2016, which will help accelerate inflows. Greater liberalization will be
needed, however, in order to attract the
large amounts of FDI required to transform
Malaysia into green economy.

Figure 4: Malaysia Net FDI Flows, 2002-2011
(current US$)

US$ million

Despite being characterized for its favorable investment environment and openness, Malaysia has experienced negative
net FDI flows in recent years. This can be
attributed partly to the competition pressures from China and because incentives in
Malaysia are being matched by other countries in Southeast Asia. The Government
strongly encourages FDI, although it still
maintains restrictions or limits on investment in some sectors.

24
20%

Green Investment Climate Country Profile - Malaysia

To date, the PPP model has been used on a wide range of public projects including RE projects. The
volume of PPP projects is, however, far from its potential. The breakdown of the investments illustrates that the largest amount of investment is in biomass waste followed by small-scale hydroelectric and solar PV facilities.
The RE market for Malaysia is showing promising results. However, the development could be constrained by financial, technical, regulatory, institutional and informational barriers, which will need
to be addressed.
Presently, many green energy projects are implemented with the assistance of grants. This is because
new technologies are more expensive and bear additional risk and uncertainty. As such, RE projects
generally face difficulties in obtaining financing. The financial community is also not sufficiently
knowledgeable of these technologies, creating an additional barrier. Additionally, there is limited
local expertise on efficient practices and equipment handling and, specifically in the case of biomass, there is uncertainty in securing long-term biomass supply at stable prices.
In order to accelerate investments in RE, subsidies for conventional fuel sources should also be
gradually decreased or, at the very least, rebalanced to promote clean-technologies. Further, the
efficiency of institutional network on RE could be improved by encouraging joint efforts between
governmental agencies and private institutions in exploring viable energy generation options.
Such collaborations can also enhance capacity building of key players, such as Government’s decision-makers, industries and utilities.
Finally, lack of information and awareness often create additional impediments. There is a need
for governmental agencies to advise the private sector on how to apply for RE incentives as well as
to provide more channels for information dissemination.

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7. Concluding Remarks

M

alaysia possesses considerable potential for greening its economy without impeding economic growth or productivity. The country has abundant clean and RE resources, particularly in hydro-power. It is a vibrant, multi-faceted economy, an attractive investment
destination, and a great location to conduct business. For more than a decade the Government has
expressed its full commitment to develop clean energy resources through a series of national plans.
This commitment was reiterated by the Prime Minister of Malaysia, Najib Razak, at the United
Nations Climate Change Conference 2009, when he articulated Malaysia’s proposal to reduce its
CO2 emissions by 40 percent until 2020. Moreover, Malaysia has expressed a keen desire in becoming an active developer of green technologies. Yet, while gains have been made in the production
and use of natural gas, overall progress of cleaner energy development has been disappointing.
The share of RE production in TPES has slipped over the years to only five percent. Progress against
its own plans has also been disappointing. For example, only 15 percent of the 9th MP RE targets
have been achieved. Malaysia’s hydro-electricity potential has been barely realized, and progress
in the other technologies including wind, biomass or solar has been slow.
Several factors, including fossil fuel subsidies, have contributed to the slowdown in the growth of
RE. While fuel subsidies have contributed to Malaysia’s rapid economic prosperity over the last two
decades, they have also disadvantaged clean technology development. As such, Malaysia is confronting a fundamental dilemma as a way forward in favoring the continued use of conventional
fossil fuels, against fostering the development and use of cleaner technologies. The Government
could consider the following in order to accelerate RE investment.
First, only 6.4 TWh (12 percent) of the 50.3 TWh of Malaysia’s hydro potential has been realized.59
While in some cases hydropower can compete with polluting technologies, in most cases it is more
costly and capital intensive, thus disfavoring its development. A revisit of the risk/responsibility
allocation, especially during the construction phase, could unlock more private sector interest.
Moreover, FiT levels for hydropower could also be reviewed to ensure that distortions from fossil fuel subsidies are neutralized and that hydro can compete on an equal footing. Further, the
Government could review its FiTs levels, which are well below the comparable rates in the region.

Secondly, technical and financial support for clean technologies must be adequate in order to foster greater development and competence. Although, the Government has taken several measures
in the 10th MP, the requisite skills and expertise in these areas will inevitably take time to develop
fully. While, the Malaysian economy provides significant opportunities for RE technology development, the current knowledge gap and lack of sufficient experience is hindering the ability of the
sector to reach the necessary scale internationally. Part of the problem is that business models for
these technologies have not yet been adequately developed for the internal markets, which are
essential for creating a bridge to the export markets. The greening of the domestic economy will
also open up new employment opportunities in non-traditional sectors. However, the business case

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for the internal market requires the review of the incentives structure and possibly greater commitment for domestic RE investment.
Finally, Malaysia can also look for opportunities on the demand side. Malaysia’s industrial base
can be more energy efficient. The relatively high urbanization rate provides good prospects for
reducing energy intensity in the residential and commercial sectors. Recent EE programs have
attempted to tap these opportunities, but there is still ample room for improvement. Malaysia’s
energy demand has been growing rapidly, particularly in energy-intensive sectors and transport,
and growth in these sectors has outstripped GDP growth.60 Greater productivity in energy use can
improve the economy’s competitive advantage in the region. The Government additionally could
consider a package of financial incentives, as well as mandatory energy consumption reduction targets for high energy users. Concessional finance and other financial incentives for the purchase of
low-energy consuming equipment should also be considered.

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8. Summary of Policy Instruments
Below is a summary table of renewable energy, energy efficiency and market-based instruments for
seven selected East Asia and Pacific countries.
China

Korea,
Rep. of

Indonesia

Philippines

Tax Incentives

Carbon Tax

Capital Subsidy/Grants - RE

Policy Distortions

Feed-in Tariff

Domestic

Foreign

 

Renewable Energy

 

Concessional
Financing

 

Partial Risk Guarantee
Renewable Portfolio
Standard
 

Energy Efficiency & Green
Tech

 

Market
Based

Malaysia



 

Capital subsidy/Grants - EE

Domestic

Foreign

Concessional
Financing

Partial Risk Guarantee

Green Labeling

Awareness Campaigns

 

CDM

Carbon market

Cap-and-trade scheme

● Full implementation
● Limited scale and/or early stage implementation
● Existing barriers

20

Vietnam

Tax Incentives

 

 

Singapore

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9. Annex
Table of Contents
9.1 Policies, Objectives, and Targets...................................................................................................... 22
9.2 Financial and Economic Instruments............................................................................................... 28
9.3 Programs and Institutions................................................................................................................ 31
9.4 Regulatory Environment.................................................................................................................. 36
9.5 Supplementary Materials................................................................................................................. 39

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9.1 Policies, Objectives and Targets
Overarching Policies
• Petroleum Development Act
• National Petroleum Policy (NPP)
• National Energy Policy (NEP)
• National Depletion Policy (NDP)
• Promotion of Investment Act
• Fifth Fuel Policy (5FP)
• National Policy on the Environment (NPE)
• National Clean Development Mechanism (CDM)
• National Biofuel Policy (NBP)
• National Green Technology Policy (NGTP)
• National Climate Change Policy (NCCP)
• 10th Malaysia Plan (MP)

Petroleum Development Act was adopted in 1974. Through the Petroleum Development Act,
the Government vested all the petroleum resources of Malaysia to a wholly-owned governmental
company called Petroleum National Berhad (PETRONAS). The Petroleum Development Act comes
under the purview of the Prime Minister and is responsible for its planning, investment and regulation of all up-stream activities. Downstream activities are regulated by the MITI as well as the
Ministry of Domestic Trade and Consumer Affairs (MDTCA). The MITI issues licenses for the processing and refining of petroleum and the manufacture of petrochemical products, while the MDTCA
issues licenses for marketing and distributing petroleum products.

National Petroleum Policy (NPP) was formulated in 1975 and aims to regulate the oil and gas
industry. The policy’s main goals are:
■■

Subsidizing fuel supplies to make them available at a reasonable price to support national economic objectives, making tapping oil and gas a priority;

■■

Promoting greater Malaysian representation and providing a favorable investment climate, including creating opportunities for downstream industries; and

■■

Creating an optimal social and economic pace of exploration of the country’s endowment of exhaustible oil and gas resources, taking into account the need to conserve these depleting assets
and protect the environment.

National Energy Policy (NEP) was adopted in 1979. The main purpose of the Policy is to ensure
the availability of the energy supply and that the supplies are reasonably priced to support the

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nation’s economy development. Under this policy, the KeTTHA has identified three principal energy
objectives that would be instrumental in guiding the development of its energy sector. Those are:
■■

To ensure the provision of adequate, secure and cost-effective energy supplies through developing indigenous energy resources (both non-renewable and RE), using the least cost options
and pursuing a diversification strategy;

■■

To promote the efficient utilization of energy and discourage wasteful and non-productive patterns of energy consumption; and

■■

To minimize the negative impacts of energy production, transportation, conversion, utilization
and consumption on the environment.

National Depletion Policy (NDP) was introduced in 1980 to safeguard the exploitation of natural
oils reserves because of the rapid increase in the production of crude oil. As a result, the total production of crude oil is currently limited to about 650,000 bbl/day. As such, at the current production
rate, proven oil reserves are expected to last another 16 years.

Promotion of Investment Act was introduced in 1986. A company incorporated in Malaysia and
engaging in the manufacturing of a “promoted product” or undertaking a “promoted activity” is
eligible for either the Pioneer Status or an investment tax allowance (ITA) under the Promotion of
Investment Act.61 The general Pioneer Status incentive confers a five-year exemption from income
tax on 70 percent of the applicant-company’s statutory income. The ITA incentive allows a deduction of 60 percent of qualifying capital expenditure against a maximum of 70 percent of the company’s statutory income, for five years from the “date of approval”. Pioneer Status is a revenue-based
incentive, which is suitable for a company expecting to earn taxable income in the first five years
of the manufacturing operation. On the other hand, the ITA is capital expenditure-based, which is
suitable for a company expecting to incur large capital expenditure in the first five years and only
becoming profitable towards the end of, or after, the five-year period.
Income exempted from tax by virtue of Pioneer Status or ITA is credited to an exempt dividend
account. First tier shareholders that are Malaysian companies can, in turn, pay tax-free dividends
from such dividend income. Companies located in the Eastern Corridor of Peninsular Malaysia and
the East Malaysian States of Sabah and Sarawak can claim increased tax exemptions under Pioneer
Status or ITA. Likewise, tax exemption of up to 100 percent of statutory income may be granted to
manufacturers in specified sectors, including high technology, research and development (R&D),
the Multimedia Super Corridor and projects of national strategic importance. The Pioneer Status
and ITA incentives are extendable beyond five years, subject to a number of conditions.

Fifth Fuel Policy (5FP) was introduced in 2001. Under the 5FP, introduced by the Government in
2001, RE was identified as the nation’s fifth fuel in addition to coal, gas, hydropower and oil. Under
this policy, the Small Renewable Energy Power Program (SREP) was introduced to facilitate smallsized RE power producers.

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National Policy on the Environment (NPE) was adopted in 2002. NPE was designed to ensure
economic, social and cultural progress through environmentally sustainable development. Its main
strategies focused on: (i) the effective management of natural resources; (ii) the prevention and
control of pollution; (iii) the strengthening of the country’s institutional capacity, education and
awareness; and (iv) the formulation of action and implementation plans.

National Clean Development Mechanism (CDM) guidelines were approved by the NCCDM in
2003. According to the guidelines, CDM projects must comply with the sustainable development
policies of the Government and the project must fulfill all of the following conditions underlined by
the CDM Executive Board: (i) implementation of CDM projects must involve participation between
Malaysia and an Annex 1 party or parties; (ii) participation must be voluntary; (iii) the benefits
related to mitigation of climate change must be real, measurable and long-term; (iv) reductions in
emissions must be additional to any that would occur in the absence of the certified project activity;
(v) the project must provide technology transfer benefits and/or improvement in technology; and
(vi) the project must bring direct benefits towards achieving sustainable development.
National Biofuel Policy (NBP) was launched in 2006 to support the 5FP and it is aimed to reduce
the country’s dependency on depleting fossil fuels, and promoting the demand for palm oil as a
source of RE. Five key thrusts includes: (i) transport; (ii) industry; (iii) technologies; (iv) export; and
(v) cleaner environment.62 The NBP 2006 highlights are:
■■

Producing a biodiesel fuel blend of five percent processed palm oil and 95 percent petroleum
diesel;

■■

Encouraging the use of biofuel by giving incentives for providing biodiesel pumps at fueling
stations;

■■

Establishing industry standard for biodiesel quality under Standards and Industrial Research
Institute of Malaysia (SIRIM); and

■■

Setting up of a palm oil biodiesel plant.63

National Green Technology Policy (NGTP) was adopted in 2009. The policy: (i) recognizes that
green technology could be the new economic driver for growth, as it offers enormous opportunities
and immense potential for economic regeneration, innovation and wealth creation; (ii) is built on
the four core pillars of energy, the environment, the economy and the society; (iii) aims to reduce the
rate of energy use, yet increases economic growth and facilitate the growth of the green technology industry and increases its contribution to the national economy; (iv) enhances Malaysia’s global
competitiveness in the green technology development race; (v) ensures sustainable development and
conserves the environment; and (vi) improves public education and awareness on green technology
and encourage its widespread use. Also, the Policy covers the following four main areas:
■■

Energy — the NGTP Policy will encourage the deployment of green technologies in power generation and in energy supply-side and demand-side management.

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■■

Buildings — the NGTP Policy will encourage the adoption of green technologies in the construction, management, maintenance and demolition of buildings.

■■

Water and Waste Management — the NGTP Policy will encourage the utilization of green technologies in the management and use of water resources, wastewater treatment, solid waste
and sanitary landfill.

■■

Transport — the NGTP Policy will encourage the adoption of green technologies in transportation infrastructure and vehicles, with a special focus on biofuels and public road transport.

National Climate Change Policy (NCCP) was adopted in 2009. The NCCP aims to: (i) streamline
and coordinate existing legislation and policies; (ii) establish an inter-ministerial and cross-sectoral
committee to drive and facilitate implementation of adaptation and mitigation measures; and (iii)
identify options and strategies to achieve a low-carbon economy.
10th Malaysia Plan (MP), 2011-2015 includes initiatives to finance and promote sustainability measures, such as: (i) introducing a FiTs to help finance the cost of generating power from RE sources;
(ii) promoting projects eligible for carbon credits; and (iii) promoting funding for green technology
investments. Under the 10th MP, the Government has introduced the Awareness, Faculty, Finance,
Infrastructure, Research and Marketing (AFFIRM) framework to create a comprehensive ecosystem
for environmental sustainability:
■■

Awareness — the Government will raise awareness that environmental sustainability is a shared
responsibility involving co-operative efforts with the private sector and civil society.

■■

Faculty — the Government will introduce a system of grading and certifying competent personnel in the green technology sector.

■■

Financial Incentives — the Government is providing effective financial incentives for businesses
to explore green technologies and adopt green practices with a fund of RM1.5 billion. The 2011
budget also included incentives, such as tax deductions for contributions towards environmental funds and tax breaks for environmentally-sustainable buildings and designs.

■■

Infrastructure — the Government will initiate green townships in Putrajaya and Cyberjaya with
guidelines and rating scales based on their carbon footprint. The introduction of these guidelines will be implemented in other green townships across the country.

■■

Research — the Government will enhance research, development and commercialization efforts
of green technologies through local research centers and industries, and will encourage partnerships with foreign institutions, such as universities or multi-national companies.

■■

Marketing — the Government is developing an eco-labeling scheme so that local products can
be internationally recognized as green and successfully exported.x This labeling program will
also be critical in securing buy-in from the public in supporting the green economy.

The two main areas of environmental focus under the 10th MP are: (i) developing a road map for
climate-resilient growth; and (ii) enhancing conservation of the nation’s ecological assets.
x More information on eco-labeling scheme is available in the Environmental Law.

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Renewable Energy Policies
• National Renewable Energy Policy and Action Plan (NREPAP)
• Renewable Energy Act 2011 (Act 725)

National Renewable Energy Policy and Action Plan (NREPAP) was adopted in 2010. This plan
is a result of a study to overcome the main obstacles hindering the growth of RE in the country. The
NREPAP included the introduction of the Renewable Energy Act in 2011.

Renewable Energy Act 2011 (Act 725) provides a mandatory requirement for the utilities to
accept and buy RE power. The Renewable Energy Act together with the country’s FiTs system were
enforced in 2011. Malaysia plans to have at least five percent of its energy resources from RE by
2015. Within this context, Malaysia endeavors to become one of the global hubs for solar energy.
There are already three global manufacturers of solar PV systems in Malaysia to serve the global
market. Malaysia’s aspiration is to increase its market share for PV manufacturing to 17 percent
of world production by year 2020, second only to China. On biomass, Malaysia expects to increase
power generation from incineration and methane production. Five bio-oil plants will be constructed over the next five years and the first in Lahad Datu, Sabah will be built at a cost of approximately RM124 million. Hydropower will continue to feature prominently in the country’s energy
plans and five dams with a total capacity of 5 GW have been identified for future development.

Energy Efficiency Policies
• National Energy Efficiency Master Plan (NEEMP)

National Energy Efficiency Master Plan (NEEMP) is a policy through which the Government has
put in place a well-managed strategy and programs for EE development. The strategies under the
plan will be focused on the industrial, commercial and residential sectors. The NEEMP is expected
to consist of six main thrusts:
■■

Thrust 1: Establish an overall long-term national plan for EE;

■■

Thrust 2: Create legal and regulatory framework for EE;

■■

Thrust 3: Create champion for EE;

■■

Thrust 4: Create adequate and sustained funding mechanism for EE;

■■

Thrust 5: Implement EE programs; and

■■

Thrust 6: Enable commercial finance institutions to support EE.

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Environmental Laws
Information Availability
• Eco-labeling Scheme

Eco-labeling Scheme is one of the most important governmental initiatives supporting sustainable
development in Malaysia. Under the marketing framework of AFFIRM in the 10th MP, the KeTTHA,
together with the SIRIM, will develop a national eco-labeling scheme and standards for products
and services that matches international standards. This will in turn support the Government’s green
procurement initiative as well as assist local manufacturers to export their products. Increased
labeling of environmentally friendly goods and services, such as Energy Efficiency Star Rating,
Low Carbon Footprint products and the use of the Green Building Index will increase Malaysia’s
competitiveness.

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9.2 Financial and Economic Instruments
Fiscal Incentives and Direct Subsidies
• Pioneer Status
• Investment Tax Allowance (ITA)
• Tax Exemptions from Payment of Import Duty and/or Sales Tax
• Tax and Stamp Duty Exemption
• 10th Malaysia Plan (MP) Tax Incentives and Subsidies
• National Petroleum Policy (NPP) Subsidies

Pioneer Status granted under the Promotion of Investment Act 1986 to companies proposing to
generate RE or undertake EE initiatives, the general Pioneer Status incentive confers a five-year
exemption from income tax on 70 percent of the applicant-company’s statutory income.

Investment Tax Allowance (ITA) is granted under the Promotion of Investment Act 1986 to companies proposing to generate RE or undertake EE initiatives. The ITA incentive allows a deduction
of 60 percent of qualifying capital expenditure against a maximum of 70 percent of the company’s
statutory income, for five years from the “date of approval”.

Tax Exemptions from Payment of Import Duty and/or Sales Tax refers to equipment purchased from local manufacturers; which in that case is provided a sales tax exemption. Import duty
and sales tax exemptions are available on EE equipment, such as high efficiency motors and insulation materials.

Tax and Stamp Duty Exemption is provided for Green Building Initiative (GBI) certified property.64
10th Malaysia Plan (MP) Tax Incentives are included in the Government new budget. Hence,
the Government under 10th MP provides a number of tax incentives to home owners as well as for
green technologies research.xi The following range of tax deductions is available: (i) tax breaks
for buildings and designs that are environmentally sustainable; (ii) double tax deduction and tax
benefits for green technology R&D; (iii) tax deferrals; (iv) tax holidays; and (v) reduction of levies
(income or VAT) where buyers purchasing buildings with Green Building Index certificates from
developers are given stamp duty exemption on instruments of transfer of ownership. The exemption amount is equivalent to the additional cost incurred in obtaining the GBI certificates. This
exemption is given to buyers who execute sales and purchase agreements from October 24, 2009
until December 31, 2014.

xi Such governmental incentives have encouraged some local companies to invest in the development of green technology. An example is Megafirst Corporation who has developed a project to produce green construction material locally and
have planned to invest up to RM150 million in the project.

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National Petroleum Policy (NPP) is a mechanism that provides the Government with indirect subsidization of petroleum and petroleum-based products since its inception in 1975.65 The mechanism
was then strengthen in 1982. The Government derived revenue from the sale of petroleum products when the market price remained below the fixed retail price. However, subsequently the world
market prices of petroleum rose, which in turn has increased the importance of the NPP. Malaysia
has been subsidizing liquefied natural gas since January 1990, diesel since October 1999 and petrol
since June 2005. In the 2012 budget, the Government allocated RM17 billion for subsidies on petrol, diesel and LPG compared with RM15 billion in 2011. These subsidies deliver a 30-35 percent discount of the market price for petrol and diesel and a 40-45 percent for LPG.
PETRONAS contributes significant revenue to the Government through annual income taxes. The
income tax revenue from PETRONAS has been reinvested partly as direct subsidies for petroleum
and partly for the development of RE technologies. This includes the GTFS as well as previous
government-initiated RE technology initiatives. Policies introduced after the NPP illustrate the
Government’s effort in adopting alternative and RE technologies.

Financial Measures
• Feed-in Tariffs (FiTs) Program
• Renewable Energy Business Fund (REBF)
• Green Technology Financing Scheme (GTFS)
• Renewable Energy and Energy Efficiency Scheme

Feed-in Tariffs (FiTs) Program aims to achieve 2,000 MW of RE by 2020 and 4,000 MW by 2030.
Under the Renewable Energy Power Purchase Agreement (REPPA), the ceiling price agreed upon
by the Tenaga Nasional Berhad (TNB) for all RE grid-connected projects ranged from RM0.14 to
RM0.17/kWh. However, the tariff is not high enough to attract investors or project developers.
Consequently, in September 2006 the Government increased the tariff for biomass and biogas projects to RM0.19/kWh and in August 2007 it was subsequently adjusted to RM0.21/kWh. However, the
tariff for other RE resources, such as hydro power and solar power remains at RM0.17/kWh.

Renewable Energy Business Fund (REBF) is expected to give better opportunities to project
developers and financial institutions towards developing and financing RE in the country. The total
size of the fund is RM28.0 million, which is equally contributed by PTM and BPMB. The PTM’s share
of the fund is comprised from GEF (RM9.2 million) and MESITA (RM5 million) contributions.

Green Technology Financing Scheme (GTFS) with US$500 million has been launched to provide
soft loans to companies that supply and utilize green technologies. The Government bears two
percent of the total interest rate and provides a guarantee of 60 percent of the total financing,
while banking institutions guarantee the remaining 40 percent.

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Table 10: Green Technology Financing
Features
Financing Size

Producers of Green Technology
Maximum RM50 million

User of Green Technology
Maximum RM10 million

Financing Tenure
Eligibility Criteria

Up to 15 years
Legally registered Malaysian-owned
Company (at least 51%) in all economic
sectors

Up to 10 years
Legally registered Malaysian-owned
Company (at least 70%) in all economic
sectors

Source: Green Technology, 2012.66

Renewable Energy and Energy Efficiency Scheme provides a wide range of financing facilities
for RE and EE projects, especially for biomass, biodiesel, mini-hydro, solar, MSW and EE. The RE and
EE Scheme I and II were introduced in 2006 and 2007, respectively. The RE and EE Scheme I allowed
a business to borrow up to 80 percent of the total project costs (repayable up to 15 years) at an
attractive interest rate. The second phase increases the allocation by RM1 billion, with companies
allowed to borrow up to 85 percent.

Market-based Mechanisms
• Central Forest Spine

Central Forest Spine (encompasses 4.32 million hectares across Malaysia) will be implemented
under the 10th MP in the bid to offset carbon and protect biodiversity and habitats.

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9.3 Programs and Institutions
Programs67
• Green Building Index (GBI)
• Adaptation Strategies
• Greenhouse Gas (GHG) Emissions Reduction
• Small Renewable Energy Power Program (SREP)
• Malaysian Energy Efficiency Improvement Program (MEEIP)
• Biomass Power Generation and Demonstration (BioGen) Project
• Malaysia Building Integrated Photovoltaic (MBIPV) Technology Application
• Green Technology Action Plan
• Electric Vehicle Infrastructure Roadmap
• Green Jobs
• International Green Tech and Eco Products Exhibition and Conference Malaysia (IGEM)
• BioXcell Ecosystem Industrial Park
• Waste Exchange Program
• Green Township

Green Building Index (GBI) includes six main criteria for the evaluation of residential and commercial buildings. The criteria encompasses: (i) EE; (ii) indoor environmental quality; (iii) sustainable
site management and planning; (iv) materials and resources; (v) water efficiency; and (vi) innovation. The Government is currently drafting a similar standard for green buildings, including an
index for public sector buildings. There are already more than 40 pilot sites currently under construction, including the Prime Minister’s office complex in Putrajaya.

Adaptation Strategies support the creation of stronger incentives for investments in RE, which
include the introduction of a one percent contribution from electricity consumers, except those
consuming less than 300 kWh/month. The RE Fund is utilized to: (i) bear the cost of FiTs; (ii) promote EE; (iii) improve solid waste management; (iv) conserve forests; and (v) reduce emissions to
improve air quality.

Greenhouse Gas (GHG) Emissions Reduction is another important sustainable development initiative. The Government pledged a voluntary reduction of up to 40 percent in emissions intensity
of GDP by 2020 compared to 2005 levels, conditional on receiving the transfer of technology and
adequate and effective levels of financing.

Small Renewable Energy Power Program (SREP) is designed to fast-track RE power generation
development in Malaysia. The SREP program permits power generated from renewable resources

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to be sold through Malaysia’s grid system. The SREP developers can sell power to utilities through
the REPPA. The REPPA allows RE power sales for up to 21 years. However, RE power purchase agreements for a RE installations are limited to a net export capacity of up to 10 MW.

Malaysian Energy Efficiency Improvement Program (MEEIP) is coordinated by the KeTTHA,
while the Malaysian Energy Centre is the implementing agency providing the industry with guidelines to manage their electricity more efficiently. The project was extended from 2006 to 2007 to
implement additional activities, including an energy audit on three additional energy-intensive
sectors, namely: plastics, oleochemicals and petroleum. The EE and conservation guidelines that
were jointly developed with the Energy Commission and Malaysian Energy Centre were completed
in 2006 and launched in 2007. The guidelines are intended to make energy management more
efficient and implement best practices in equipment and electrical facility maintenance. Under the
energy audit program, the MEEIP hopes to conduct an analysis on the audit carried out by energy
service companies in the textile and plastics sectors to further increase the efficiency of energy
usage in the industry sector.

Biomass Power Generation and Demonstration (BioGen) Project was introduced in 2002 to promote and demonstrate biomass and biogas grid-connected power generation projects and reduce
GHG emissions by utilizing excess oil palm biomass residues. The project is designed to: (i) facilitate
development of the grid connected biomass-fueled small power systems; (ii) disseminate awareness
information in palm oil industry; (iii) provide building and technical assistance in policy formulation;
and (iv) provide financial facility assistance through favorable bank loans and tax exemptions. A significant BioGen project is the first 14 MW power plant in Tawau, Sabah which used oil palm residues
(empty fruit bunch, fiber and shell) to successfully mitigate 40,000-50,000 tons of CO2 in 2004.

Malaysia Building Integrated Photovoltaic (MBIPV) Technology Application was a five-year
project launched in July 2005. The primary objective was to lower GHG emission from the country’s
electricity sector by reducing the long-term cost of BIPV technology in the Malaysian market and to
create a sustainable BIPV market. The energy generated by the project is expected to avoid 65,100
tons of CO2 emissions from the country’s power sector. The MBIPV program Suria 1000 obtained a
great success. The Suria 1000 program instruments provided direct opportunities to the public and
industry to be involved in RE initiatives and environmental protection. As of December 2009, the
cumulative grid connected PV capacity in Malaysia totaled 1,416 kWp, an increase of 203 percent
compared to 468 kWp connected in 2005. With the implementation of the BIPV, 1,070 tons of CO2
equivalent have been avoided.

Green Technology Action Plan is divided into two phases. The first phase is the baseline survey
(June 2010-June 2011) while the second phase, which started early in 2012, will develop a detailed
action plan. The baseline study focuses on six identified sectors, namely: (i) energy; (ii) buildings;
(iii) transportation; (iv) water and waste management; (v) manufacturing; and (vi) information
communication technology. The study aimed to identify the status application of green technology
in Malaysia with an emphasis on gap analysis and how to fill these gaps. The second phase aims to
design the Low Carbon Economy Action Plan to achieve the goals of the NGTP.
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Electric Vehicle Infrastructure Roadmap is a fundamental document to enable electric vehicle
pilot demonstration projects to be carried out. As a part of this initiative, KeTTHA was responsible in preparing the Infrastructure Development Long-term Plan for Electric Vehicles. The KeTTHA
appointed GreenTech Malaysia to facilitate the preparation of the Electric Vehicle Infrastructure
Roadmap. GreenTech Malaysia, together with TNB Research, has defined seven key areas for the
overall development of electric vehicles: (i) institutional framework; (ii) resources; (iii) technology;
(iv) industry performance matrices; (v) value chain; (vi) market & industry development; and (vii)
demonstration/pilot project.
Based on these seven key areas, the KeTTHA, GreenTech Malaysia and the Malaysian Automotive
Institute convened the First Electric Vehicle Roundtable Discussion in December 2010. The program
sought feedback and input from stakeholders consisting of representatives from the Government
and agencies and representatives of related industries as well manufacturers of electric vehicles. This
input was used to prepare the initial strategic plan for the Electric Vehicle Infrastructure Roadmap.
The second phase of the Electric Vehicle Infrastructure Roadmap is the implementation of an electric vehicle pilot project. The KeTTHA, in collaboration with the MITI, has been working with Proton
to run the Fleet Program Test Vehicle (FTV) in Putrajaya and Cyberjaya in 2011. Implementation of
the FTV will help to ensure that the electric vehicle infrastructure roadmap is comprehensive and
available country-wide. This program is a step towards the wider promotion and introduction of
electric vehicles.
The third phase of the electric vehicle infrastructure roadmap will involve the preparation of the
overall electric vehicles roadmap which will include all seven key areas listed in the preparation of
the framework roadmap. Output and outcomes from the third phase will determine the implementation for the development of the electric vehicle roadmap at the national level.

Green Jobs is an initiative established by

Table 11: National Target for Green Jobs per GDP/GNI

the KeTTHA which has been working with
Parameter
Year 2020
Year 2025
the Department of Skill Development and No. of Green Jobs
304,968
495,364
the Ministry of Human Resources (MOHR) National GDP (RM million)
67,332
125,406.9
to develop the occupational analysis (OA) National GNI (RM million)
65,992.7
122,908.5
and the National Competency Standard
Sources: Green Technology, 2012; and Ministry of Energy, Green
(NCS) on green technology. The OA and Technology and Water, 2012.68
NCS documents were approved by MOHR
in 2010. The OA is a systematic process to collect information on important tasks from specified
work. The NCS was developed to list the generic competencies of green jobs.

International Green Tech and Eco Products Exhibition and Conference Malaysia (IGEM)
is an annual event which has been organized by the KeTTHA since 2010. It is important for the
Government’s initiatives in green growth, as it brings together key players from the green industry,
including buyers, sellers and investors from around the world to explore trade and collaboration
opportunities.

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BioXcell Ecosystem Industrial Park is a premier biotechnology research park and ecosystem facility. The park will be operated by the BioCorp/UEM. COX Architecture and FAA Arkiteks prepared a
master plan for the proposed BioXcell Ecosystem Industrial Park in Nusa Jaya. The master plan proposes a manufacturing and workplace environment which combines the best of contemporary business park attributes with the functional and operational needs of a well-planned industrial park.

Waste Exchange Program is led by Cypark Resources Bhd, an environmental technology and
engineering firm, which plans to invest RM500 million to convert 16 landfills into RE parks following the official opening of the country’s first RE park in Negeri Sembilan. The RE park in Pajam is
capable of generating 10 MW of electricity with the integration of three potential resources available at the landfills including solar, landfill gas (biogas) and waste (biocell).
Green Township is a program for the development of green cities in Malaysia. The KeTTHA and
GreenTech Malaysia have agreed for Putrajaya and Cyberjaya to become the two pilots for the
Green Township project. A Green Township Coordinating Committee was established to coordinate the development of the Putrajaya and Cyberjaya townships.

Institutions
• Ministry of Energy, Green Technology and Water (KeTTHA)
• Malaysia Green Technology Corporations (GreenTech Malaysia)
• Centre for Education and Training in Renewable Energy and Energy Efficiency (CETREE)
• Tenaga Nasional Berhad Research
• Malaysian Institute of Architects (PAM)

Ministry of Energy, Green Technology and Water (KeTTHA) was established in 2009. One of
the primary objectives of the new ministry was to promote high impact R&D for green technologies in Malaysia. The KeTTHA is currently working with the MOF to develop a mechanism for green
procurement to be implemented by governmental agencies. The KeTTHA is also developing standards, certifications and labeling mechanisms, including green procurement manuals and procedures in association with the SIRIM. These will enable government departments and private sector
to undertake green procurement.
Malaysia Green Technology Corporations (GreenTech Malaysia) was formerly known as
the PTM. The rationale behind PTM’s establishment was to fulfill the need for a national energy
research center that will co-ordinate energy planning, research, development and demonstration
in the energy sector. This co-ordination is necessary due to the long lead time required for energy
projects to come on stream. GreenTech Malaysia aims to become a one-stop focal point for linkages with universities, research institutions, industries and other various national and international
organizations on energy issues.

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Centre for Education and Training in Renewable Energy and Energy Efficiency (CETREE)
was established by the Government to promote RE and EE for professionals, tertiary institutions
and schools in Malaysia. The establishment of CETREE is in line with the strategic thrusts of the
KeTTHA. To date, the CETREE has been making progress with the creation of RE-powered van and
bus technology.

Tenaga Nasional Berhad Research (TNBR) acts as the in-house solution provider for TNB (a stateowned electricity utility company). The institution provides a centralized, one-stop center for technical solutions and innovation. TNB Research has been working closely with various governmental
agencies on a number of advanced research projects and is positioning its parent company and the
Government to be early adopters of promising technologies.

Malaysian Institute of Architects (PAM) is the national professional institute representing architects in Malaysia. In August 2008, the PAM Council endorsed the formation of the new Sustainability
Committee to set-up the GBI and the accompanying panel for certification and accreditation of
green-rated buildings. The GBI was later adopted by the construction industry and the Government.

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9.4 Regulatory Environment
Procedures and Mechanisms
• Environmental Quality Act
• Standard Specifications

Environmental Quality Act was adopted in 1974. The Environmental Quality Act and its accompanying regulations call for Environmental Impact Assessment (EIA), project siting evaluation, pollution control, monitoring, and self-enforcement. Industrial activities are required to obtain the
following approvals from the Director General of Department of Environment (DOEN) prior to project implementation.
■■

EIA for Prescribed Activities — potential investors should examine whether an EIA is required
for their industrial proposal according to the Prescribed Activity list under the Environmental
Quality Order 2000.

■■

Site suitability evaluation for Non-Prescribed Activities — all potential sites for the establishment of a new industrial activity are evaluated based on the compatibility of the project to the
structure or local plans, surrounding land use, provision of set-backs or buffer zones, the capacity of the area to receive additional pollution load and waste disposal requirements.

■■

Written permission is required for any activity that will result in a new source of effluent or
discharge as stipulated under Regulation 4, Environmental Quality (Sewage and Industrial Effluents) Regulations 1979.

■■

Written approval is required for any new installation (including incinerators), resisting or alteration of fuel burning equipment, chimney or near dwelling area into which air impurities may
be discharged as detailed in Regulations 4, 36 and 38 of the Environmental Quality (Clean Air)
Regulations 1978.

■■

Applicants are required to obtain a license to occupy the premise after these requirements have
been fulfilled.

Ozone-depleting substances (ODS) are controlled by the introduction of the Environmental Quality
(Refrigerant Management) Regulations 1999 and the Environmental Quality (Halon Management)
Regulations 1999. ODS are categorized as environmental hazardous with the enactment of these
regulations.
In 2006, Malaysia developed a comprehensive set of legal provisions related to the management of
toxic and hazardous wastes. These regulations were based on the cradle to grave principle. The
Environmental Quality (Scheduled Wastes) Regulations came into force in August 2005 to replace
the previous enacted regulations of 1989.

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Standard Specifications do not exist at a national level in Malaysia. Natural green product and
service policies have not yet been established and therefore binding green standards cannot be
imposed on all industries. The current standards are mostly developed by independent bodies; they
are voluntary and have a market-based approach. These standards are being adopted by innovative industry leaders who are aware of the need to incorporate such practices in their organization
in order to continue to be competitive in their respective industries.

Regulatory Agencies
• National Green Technology and Climate Change Council (MTHPI)
• Department of Environment (DOEN)
• Energy Commission of Malaysia
• Sustainable Energy Development Authority of Malaysia (SEDA)
• Green Building Index Accreditation Panel (GBIAP)
• Malaysian Industrial Development Authority (MIDA)

National Green Technology and Climate Change Council (MTHPI) chaired by the Prime
Minister, held its first meeting in January 2010. The main function of this council is to streamline
and coordinate the efforts to promote green technology amongst the various ministries. Under the
Council, eight working committees have been established, namely: (i) Human Capital; (ii) Industrial;
(iii) Research and Innovation; (iv) Promotion and Public Awareness; (v) Transportation; (vi) Green
Neighborhood; (vii) Green Growth; and (viii) Climate Adaptation.

Department of Environment (DOEN) is the regulating agency that administers the Environmental
Quality Act. An Environmental Quality Council was established in April 1977 with representatives
from various industries, non-governmental organizations and government departments and other
agencies in order to advise the Minister on the implementation of the Environmental Quality Act.

Energy Commission of Malaysia is a statutory body responsible for regulating the energy sector,
particularly the electricity supply and piped gas supply industries in Peninsular Malaysia and Sabah.
The Energy Commission ensures that the supply of electricity and piped gas to consumers is secure,
reliable, safe and reasonably priced.

Sustainable Energy Development Authority of Malaysia (SEDA) is a statutory body formed
under the Sustainable Energy Development Authority Act 2011 (Act 726). The key role of SEDA is
to administer and manage the implementation of the FiTs mechanism which is mandated under the
Renewable Energy Act 2011 (Act 725). In September 2011, the SEDA was made operational to oversee all aspects relating to sustainable energy and to facilitate the development of the RE industry.
By 2020, the policy is expected to have the following impact:
■■

A minimum of RM2.1 billion savings to mitigate CO2 emissions (total 42 million tons avoided
from 2011 to 2020, on the basis of RM50 per tons of external cost);

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Green Infrastructure Finance

■■

A minimum of RM19 billion for loans to RE projects, which will provide local banks with new
sources of revenues (80 percent debt financing for RE projects);

■■

A minimum of RM70 billion of RE business revenues generated from RE power plants operation,
which in turn can generate a minimum tax income for the Government of RM1.75 billion; and

■■

Close to 50,000 jobs created to construct, operate and maintain RE power plants (on the basis
of 15-30 job per MW).

Green Building Index Accreditation Panel (GBIAP) is an independent non-governmental committee consisting of professionals from the PAM and the Association of Consulting Engineers
Malaysian, which oversees the implementation of GBI.

Malaysian Industrial Development Authority (MIDA) oversees the application of incentives for
RE, EE and green buildings in coordination with other relevant agencies. Any tax-related incentives
are regulated by the Inland Revenue Board of Malaysia (LHDN). Documents for such incentives
must be kept for possible future audits by the LHDN.

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9.5 Supplementary Materials
Petroleum Subsidies in Malaysia
Table 12: National Petroleum Subsidies, 2001-2012
Year
2001

Subsidy
(RM billion)
2.40

Tax Exemption
(RM billion)
5.08

Total
(RM billion)
7.48

2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012

0.92
1.82
4.79
7.85
7.59
7.41
2.72
17.91
9.61
10.26
NA

3.31
4.76
7.15
8.16
7.28
8.77
15.38
5.59
NA
5.64
NA

4.23
6.58
11.94
16.01
14.67
16.18
18.10
23.50
NA
15.9
17.0

Source: Authors, 2012.xii

Project Application Status under Green Technology Financing Scheme
Table 13: Green Projects Application Status as of 2012
Year
Project Certification (Technical)
Completed project applications under evaluation
Certified green projects
Rejected applications
Financing Applications
Approved green project for financing
Approved green technology value for financing
Balance of green technology value for financing

No. of Projects
12
68
14
10
RM141.9 million
RM1.358 billion

Source: Authors, 2012.xiii

xii Authors compilation based upon the data acquired from the Malaysian GTFS Program data.
xiii Authors compilation based upon the data acquired from “Malaysia’s Strategic Green Initiatives Report”.

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Green Infrastructure Finance

Initiatives of Local Companies
■■

Close cooperation is underway between Modenas and Proton in the development of electric
motorbikes and vehicles. Modenas has already unveiled its electric motorbike at the IGEM 2010,
while Proton is now working on a prototype.

■■

DIGI has developed a “Deep Green” program as part of its Corporate Social Responsibility strategy where old equipment is swapped for newer, and more energy efficient ones. In addition,
DIGI has implemented a “Mangrove-saving Project” designed to preserve mangrove forests in
Kuala Selangor.

■■

Sime Darby has implemented a “Plant a Tree Program”.

■■

Canon Malaysia has promoted its “Canon Goes Green Campaign”.

■■

Shell Malaysia has offered grants up to RM300,000 for sponsorship of sustainability projects for
forest and marine conservation programs. The company is also involved in environment awareness, conservation and preservation.

■■

YTL Group of Companies is actively involved in environment awareness, conservation and preservation.

■■

Panasonic Malaysia has promoted inverter technology in a positive contribution to the green
culture.

■■

HP Malaysia has conducted a similar program through its green products, services and operations strategy.

■■

Malaysia Airlines is adopting green management strategies for its fleet of commercial aircraft
and has introduced a carbon-offsetting scheme in response to local and international carbon
emissions reduction performance targets.

Sustainable Energy Development Authority of Malaysia’s Functions
SEDA has all the functions conferred to it under the Renewable Energy Act 2011 and other sustainable energy laws as well as the following functions:
■■

To advise the Minister and relevant governmental entities on all matters relating to sustainable
energy, including recommendations on policies, laws and actions to be applied to promote sustainable energy.

■■

To promote and implement the national policy objectives for RE.

■■

To promote, stimulate, facilitate and develop sustainable energy.

■■

To implement, manage, monitor and review the FiTs system including carrying out investigations, collect, record and maintain data and statistics concerning the FiTs system, and to provide
such data information and statistics to the Minister as may be required.

40

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Green Investment Climate Country Profile - Malaysia

■■

To implement sustainable energy laws and to recommend reform to such laws to the Government.

■■

To promote private sector investment in the sustainable energy sector including a recommendation to the relevant government entities, incentives in relation to taxes, customs and excise
duties and other fiscal incentives applicable to such investment.

■■

To carry out or arrange for the conduct of research, assessment, studies and advisory services,
collate, analyze and publish information, statistics and factors influencing or relevant to the
development of sustainable energy and to disseminate such relevant information, statistics and
factors to government entities, the public and investors or potential investors investing in sustainable energy.

■■

To conduct, promote and support research and innovation activities relating to sustainable energy.

■■

To conduct, promote and support training or other programs relating to the development of
human resources and capacity building in the sustainable energy sector.

■■

To implement measures to promote public participation and to improve public awareness on
sustainable energy.

■■

To act as a focal point on matters relating to sustainable energy and on climate change.

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Green Infrastructure Finance

10. References
1

World Bank Data Bank. “GDP (current US$).” Accessed July 21, 2013. http://data.worldbank.org/indicator/
NY.GDP.MKTP.CD.

2

World Bank Data Bank. “Population, total.” Accessed July 21, 2013. http://data.worldbank.org/indicator/
SP.POP.TOTL.

3

World Bank Data Bank. “Urban population (% of total).” Accessed July 21, 2013. http://data.worldbank.org/
indicator/SP.URB.TOTL.IN.ZS.

4

International Monetary Fund. “World Economic Outlook Database 2011.” Accessed July 21, 2013. https://
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Economist Intelligence Unit. “EIU Country Data.” Accessed July 21, 2013. http://www.eiu.com/site_info.
asp?info_name=EIUcountryData&=entr.

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World Bank Data Bank. “Inflation, consumer prices (annual %).” Accessed July 21, 2013. http://data.
worldbank.org/indicator/FP.CPI.TOTL.ZG.

7

Central Intelligence Agency. “GDP Composition by Sector.” Accessed July 21, 2013. https://www.cia.gov/
library/publications/the-world-factbook/fields/2012.html#rp.

8

International Energy Agency. “Statistics and Balances 2009.” Accessed July 21, 2013. https://www.iea.org/
stats/.

9

Adapted from:

International Energy Agency. “Statistics and Balances 2009.” Accessed July 21, 2013. https://www.iea.org/
stats/.
U.S. Energy Information Administration. “Countries Data.” Accessed July 21, 2013. http://www.eia.gov/
countries/data.cfm.
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siteresources.worldbank.org/INTEASTASIAPACIFIC/Resources/226262-1271320774648/windsofchange_
fullreport.pdf.
World Bank Data Bank. “Energy imports, net (% of energy use).” Accessed July 23, 2013. http://data.
worldbank.org/indicator/EG.IMP.CONS.ZS.
10

Adapted from:

Indriyanto, Asclepias R., Nasrullah Salim, Fabby Tumiwa, Tri Mumpuni et al. “Electricity Governance in
Indonesia: Assessment Report.” World Resources Institute, 2007. Accessed July 23, 2013. http://pdf.wri.org/
egi_report_indonesia.pdf.
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worldenergyoutlook.org/resources/energydevelopment/accesstoelectricity/.

World Bank Data Bank. “Access to electricity (% of population).” Accessed July 23, 2013. http://data.
worldbank.org/indicator/EG.ELC.ACCS.ZS.

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Green Investment Climate Country Profile - Malaysia

11

World Bank Data Bank. “Electric power transmission and distribution losses (% of output).” Accessed July
21, 2013. http://data.worldbank.org/indicator/EG.ELC.LOSS.ZS.

12

Adapted from:

Asia-Pacific Economic Cooperation. “Energy Overview 2012.” Accessed July 23, 2013. http://publications.
apec.org/publication-detail.php?pub_id=1432.
Energdata. “Energy intensity of GDP at constant purchasing power parities.” Accessed July 21, 2013. http://
yearbook.enerdata.net/energy-intensity-GDP-by-region.html.
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Adapted from:

International Energy Agency. “Statistics and Balances 2009.” Accessed July 21, 2013. https://www.iea.org/
stats/.
Intergovernmental Panel on Climate Change. “Revised 1996 Intergovernmental Panel on Climate Change’s
National Guidelines.” Accessed August 1, 2013. http://www.ipcc-nggip.iges.or.jp/public/gl/invs1.html.
14

Adapted from:

Energy Market Authority of Singapore. “Singapore Energy Statistics, 2012.” Accessed July 21, 2013. http://
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Washington D.C.: International Bank for Reconstruction and Development/ World Bank, 2011.
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Electricity Sector and Subsidies. Jakarta: Economic Research Institute for ASEAN and Eastern Asia, 2012.
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15

Adapted from:

Organization for Economic Co-operation and Development. “Energy Statistics of Non-OECD Countries
(2012).” Accessed July 23, 2013. http://www.oecd-ilibrary.org/energy/energy-statistics-of-non-oecdcountries_19962851-en.
U.S. Energy Information Administration. “Countries Data.” Accessed July 21, 2013. http://www.eia.gov/
countries/data.cfm.
16

Adapted from:

International Energy Agency. “Statistics and Balances 2009.” Accessed July 21, 2013. https://www.iea.org/
stats/.
Organization for Economic Co-operation and Development. “Energy Statistics of Non-OECD Countries
(2012).” Accessed July 23, 2013. http://www.oecd-ilibrary.org/energy/energy-statistics-of-non-oecdcountries_19962851-en.

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Green Infrastructure Finance

17

Organization for Economic Co-operation and Development. “Energy Statistics of Non-OECD Countries
(2012).” Accessed July 23, 2013. http://www.oecd-ilibrary.org/energy/energy-statistics-of-non-oecdcountries_19962851-en.

18

Standard & Poor’s Rating Services. “Sovereigns Rating List.” Accessed July 21, 2013. http://www.
standardandpoors.com/ratings/sovereigns/ratings-list/en/us.

19

World Bank. “Doing Business Economy Rankings.” Accessed July 21, 2013. http://www.doingbusiness.org/
rankings.

20

Transparency International. “Corruption Perceptions Index 2011.” Accessed July 21, 2013. http://www.
transparency.org/cpi2011/results.

21

Adapted from:

World Bank Data Bank. “Foreign direct investment, net inflows (% of GDP).” Accessed July 23, 2013. http://
data.worldbank.org/indicator/BX.KLT.DINV.WD.GD.ZS.
World Bank Data Bank. “Foreign direct investment, net outflows (% of GDP).” Accessed July 23, 2013.
http://data.worldbank.org/indicator/BM.KLT.DINV.GD.ZS.
22

World Bank. “Private Participation in Infrastructure Database - Sector Data Snapshot.” Accessed July 21,
2013. http://ppi.worldbank.org/explore/ppi_exploreSector.aspx?sectorID=2.

23

World Bank Data Bank. “Lending interest rate (%).” Accessed July 23, 2013. http://data.worldbank.org/
indicator/FR.INR.LEND.

24

World Bank Data Bank. “Interest rate spread (lending rate minus deposit rate, %).” Accessed July 23, 2013.
http://data.worldbank.org/indicator/FR.INR.LNDP.

25

World Bank Data Bank. “Liquid assets to deposits and short term funding (%).” Accessed July 23, 2013.
http://data.worldbank.org/indicator/GFDD.SI.06.

26

Central Intelligence Agency Factbook. “Country: Malaysia.” Accessed August 16, 2013. https://www.cia.gov/
library/publications/the-world-factbook/geos/my.html.

27

International Energy Agency. “Share of total primary energy supply (2009): Malaysia.” Accessed August 23,
2013. http://www.iea.org/stats/pdf_graphs/MYTPESPI.pdf.

28

International Energy Agency. “Electricity generation by fuel (2009): Malaysia.” Accessed August 16, 2013.
http://www.iea.org/stats/pdf_graphs/MYELEC.pdf.

29

International Energy Agency. “2009 Energy Balance for Malaysia.” Accessed August 16, 2013. http://www.
iea.org/stats/balancetable.asp?COUNTRY_CODE=MY.

30

Ministry of Natural Resources and Environment of Malaysia. “Media and Publication.” Accessed August 19,
2013. http://www.nre.gov.my/English/MediaCentre/Pages/default.aspx.

Adapted from:

31

International Energy Agency. “CO2 Emissions from Fuel Combustion, 2012.” Accessed August 19, 2013.
http://www.iea.org/co2highlights/co2highlights.pdf.

Sustainable Energy Development Authority Malaysia. “Renewable Energy Development and FiT
Implementation in Malaysia.” Accessed August 23, 2013. http://eeas.europa.eu/delegations/malaysia/
documents/press_corner/all_news/2012/160512_fp7seda_en.pdf.

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Green Investment Climate Country Profile - Malaysia

Adapted from:

32

Central Bank of Malaysia. “Monthly Statistical Bulletin- July 2009.” Accessed August 19, 2013. http://www.
bnm.gov.my/index.php?ch=116&pg=352&ac=4.
Ministry of Energy, Green Technology and Water of Malaysia. “National Energy Balance 2007.” Accessed
August 19, 2013. http://www.kettha.gov.my/en.
Jalal, Thahirah Syed, and Pat Bodger. “National Energy Policies and the Electricity Sector in Malaysia.”
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researchgate.net/publication/224107968_National_Energy_Policies_and_the_electricity_sector_in_Malaysia/
file/9fcfd5092d8c6dc61f.pdf+malysia+National+Depletion+Policy&cd=2&hl=en&ct=clnk&gl=us.

33

Ministry of Energy, Green Technology and Water of Malaysia. “Energy Programs/ Projects.” Accessed August
19, 2013. http://www.kettha.gov.my/en.

34

Government of Malaysia. “Act 327 - Promotion of Investment (1986).” Accessed August 19, 2013. http://
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35

Prime Minister of Malaysia. “Eighth Malaysia Plan, 2001-2005.” Accessed August 19, 2013. http://www.epu.
gov.my/en/eighth-malaysia-plan-2001-2005.

36

Nippon Koei Co., Ltd and ORIX Corporation. “Study on the Solar Photovoltaic Power Generation Projects
in the Federation of Malaysia.” Accessed September 12, 2013. http://www.jetro.go.jp/jetro/activities/
contribution/oda/model_study/earth_infra/pdf/h23_saitaku_15e.pdf.

37

Mustapa, S. I., L. Y. Peng, and A. H. Hashim. “Issues and Challenges of Renewable Energy Development: A
Malaysian Experience.” IEEE (2010): 1-6.

38

Chin, Melissa. “Biofuels in Malaysia: An analysis of the legal and institutional framework.” Center for
International Forestry Research, 2011. Accessed August 19, 2013. http://www.cifor.org/publications/pdf_files/
WPapers/WP64CIFOR.pdf.

39

Hashim, Haslenda, and Wai Shin Ho. “Renewable energy policies and initiatives for a sustainable energy
future in Malaysia.” Renewable and Sustainable Energy Reviews 15, no. 9 (December 2011): 4780-4787.

40

Sustainable Energy Authority Malaysia. “National Renewable Energy Policy and Action Plan (2009).”
Accessed August 19, 2013. http://seda.gov.my/go-home.
php?omaneg=00010100000001010101000100001000000000000000000000&s=31.

41

Adapted from:

42

Hashim, Haslenda, and Wai Shin Ho. “Renewable energy policies and initiatives for a sustainable energy
future in Malaysia.” Renewable and Sustainable Energy Reviews 15, no. 9 (December 2011): 4780-4787.
Accessed August 19, 2013. http://www.sciencedirect.com/science/article/pii/S1364032111003182.
Sustainable Energy Authority Malaysia. “National Renewable Energy Policy and Action Plan (2009).”
Accessed August 19, 2013. http://seda.gov.my/go-home.
php?omaneg=00010100000001010101000100001000000000000000000000&s=31.
Adapted from:

43

Maybank. “10th Malaysia Plan (2011-2015).” Accessed August 19, 2013. http://www.btimes.com.my/Current_
News/BTIMES/Econ2007_pdf/10th%20Malaysia%20Plan%202011-2015.

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Green Infrastructure Finance

PricewaterhouseCoopers. “Asia Pacific Tax Notes: Malaysia.” Accessed August 19, 2013. http://www.pwchk.
com/webmedia/doc/634747683539805077_aptn_jun2012_my.pdf.
Hasan, Ahmad Fauzi. “Issues, Challanges and Priorities in Malaysia.” Energy Commission of Malaysia, 2009.
Accessed September 12, 2013. http://www.erc.or.th/ERCWeb/Upload/Document/11.00-12.30%201Ahmad%20
Fauzi%20Hasan%20%28Malaysia%29.pdf.

44

Malek, Badriyah Abdul. “Renewable Energy Development in Malaysia: Overview of Renewable Energy
Policy.” Sustainable Energy Authority Malaysia, 2011. Accessed August 19, 2013. http://ensearch.org/wpcontent/uploads/2011/11/HERE1.pdf.

45

Sustainable Energy Authority Malaysia. “FiT Dashboard.” Accessed August 19, 2013. http://seda.gov.my/.

46

The Institute for Energy Economics Japan. “The 2nd ASEAN Energy Demand Outlook.” Accessed August 19,
2013. http://www.energycommunity.org/documents/SecondASEANEnergyOutlook.pdf.

47

Adapted from:

48

Asia-Pacific Economic Cooperation. “Peer Review on Energy Efficiency in Malaysia.” Accessed August 19,
2013. http://www.ewg.apec.org/documents/9b_Malaysia%20PREE%20Report_Final%20Draft.pdf.
Sustainable Energy Authority Malaysia. “National Renewable Energy Policy and
Action Plan (2009).” Accessed August 19, 2013. http://seda.gov.my/go-home.
php?omaneg=00010100000001010101000100001000000000000000000000&s=31.
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for Asia and the Pacific Fact Sheet.” Accessed August 19, 2013. http://www.unescap.org/esd/environment/
lcgg/documents/roadmap/case_study_fact_sheets/Fact%20Sheets/FS-Subsidy-reforms.pdf.

49

Adapted from:

50

Hashim, Haslenda, and Wai Shin Ho. “Renewable energy policies and initiatives for a sustainable energy
future in Malaysia.” Renewable and Sustainable Energy Reviews 15, no. 9 (December 2011): 4780-4787.
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51

Lim, C.H., E. Salleh, and P. Jones. “Renewable energy policy and initiatives in Malaysia.” International
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52

Green Tech Malaysia. “About us.” Accessed August 19, 2013. http://www.greentechmalaysia.my/Pages/
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53

Green Tech Malaysia. “Green Technology.” Accessed August 19, 2013. http://www.greentechmalaysia.my/
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54

Ministry of Energy, Green Technology and Water of Malaysia. “Handbook on the Malaysian FiT for the
Promotion of Renewable Energy.” Accessed August 19, 2013. http://www.mbipv.net.my/dload/FiT%20
Handbook%20English.pdf.

55

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Green Investment Climate Country Profile - Malaysia

Schwab, Klaus. “Global Competitiveness Index.” World Economic Forum, 2012. Accessed July 23, 2013.
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56

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btimes.com.my/articles/20120905161909/Article.

57

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58

Adapted from:

59

Bin Othman, Zainal Abidin. “The Future of Hydropower in Malaysia.” SMEC (Malaysia), 2005. Accessed
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org/publications/freepublications/publication/kwes.pdf.
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60

Strategy Coordination and Support Group. “Upfront Tax Planning.” Accessed August 20, 2013. http://www.
scsg.com.my/html/services_tax_advisory3.htm.

61

Ministry of National Resources and Environment of Malaysia. “Second National Communication to the
UNFCCC.” Accessed August 20, 2013. http://www.nre.gov.my/Malay/Alam-Sekitar/Documents/Penerbitan/
SECOND%20NATIONAL%20COMMUNICATION%20TO%20THE%20UNFCCC%20(NC2).pdf.

62

Chua, Shing Chyi. “Review on Malaysia’s national energy developments: Key policies, agencies, programmes
and international involvements.” Renewable and Sustainable Energy Reviews 14, no. 9 (December 2010):
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63

Green Building Index. “What and Why?.” Accessed August 21, 2013. http://www.greenbuildingindex.org/
why-green-buildings.html.

64

Cheok, Cheong Kee. “Missing the Point: Malaysia’s Debate on Fuel Price Subsidies.” Ekonomika, 2009.
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65

Green Technology Malaysia. “GTFS Guideline.” Accessed August 22, 2013. http://www.gtfs.my/page/gtfsguideline.

66

Ministry of National Resources and Environment of Malaysia. “Malaysia’s Strategic Green Initiatives.”
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2010%20Bil%203.pdf.

67

Green Technology Malaysia. “Green Technology Future Opportunities in Malaysia.” Accessed August 22,
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I

n July 2012, the Green Infrastructure Finance Framework Report was published to address the constraints in
financing green infrastructure and to develop a new PPP-based approach to accelerate investments in lowemission technologies. The approach calls for assessing the “Green Investment Climate” of a given country in
order to develop country-specific recommendations for policy and incentive programs as well as other measures
which can be introduced in order to further promote green growth in an economy.
This report includes one of the first Green Investment Country Profiles completed for the East Asia and Pacific
Region as part of bringing the approach closer to operational status. The initial countries include China,
Philippines, Vietnam, Malaysia, Indonesia, Singapore and South Korea. The assessment involves not only the
green policy and incentives environment, but also the country’s overall natural resource endowment of fossil
and renewable energy, its industrial development strategy in addition to general business indicators and other
considerations, such as electricity prices, the capacity of the financial sector to mobilize long-term domestic
financing, as well as their overall regulatory and legal capacity to implement PPPs. The country profiles provide
a general understanding of the attractiveness, prevailing trends, strengths, and other aspects affecting the ability of the country to leverage its green growth potential.

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