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DFIs in Financing Green Technology:

The Malaysian Experience

DFIs in Financing Green Technology:

The Malaysian Experience

Wan Azhar Wan AhmadChief Executive Officer

Credit Guarantee Corporation Malaysia Berhad26 April 2012

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1.0 Introduction Green Economy in Malaysia

• New Economic Model (NEM) - Malaysia aims to create a high income, inclusive and sustainable society for its citizens.

• Focus on:

– Sustainability from climate change

– Sustainability from environmental impact

– Growing acceptance that natural resources are limited

Current : 2% of GDP from green business & 95,000 green jobs By 2015 : 8% of GDP from green business & 500,000 green jobs

1.0 Introduction GT Goals in 10th Malaysia Plan

Increased public awareness & commitment for adoption and application of GT;

Widespread availability & recognition of GT;

GT becomes preferred choice in procurement of products and services;

Larger local market share against other technologies.

Widespread adoption of GT reduces overall resource consumption while sustaining national economic growth;

Expansion of research, development & innovation activities on GT

Increased production of local GT products;

Expansion of local SMEs on GT into global markets; and

Expansion of GT applications to most economic sectors

Malaysia becomes major producer of GT in global market

Increase foreign & domestic direct investments (FDIs and DDIs) in GT manufacturing and services sectors; and

Significant reduction in national energy consumption;

Short-term Goals Medium-term Goals Long-term Goals

2010 20202015

Mar

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Short-term Goals (2010-2015)

Medium-term Goals (2016-2020)

Long-term Goals (Beyond 2020)

FOCUS AREA OF DFI FINANCIAL SUPPORT

2.0 Landscape of Green Economy in Malaysia

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• Introduction of Ministerial Portfolio– Ministry of Energy, Green Technology and Water in 2009

• Formulation of National Policy Statement– National Green Technology Policy overseeing ‘greening’ in 4 sectors:

energy, buildings, water and waste management and transportation

ENERGY

ENVIRONMENT

ECONOMY

SOCIALSeek to attain

energy independence and promote efficient utilization

Conserve and minimize impact on environment

Enhance national economic development through use of technology

Improve quality of life for all

4 Pillars of National Green Technology Policy

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• Establishment of Implementing Agency– Malaysian Green Technology Corporation

• Formation of National Green Technology and Climate Change Council– Coordinate issues of green technology between Ministries, agencies, private sector &

other stakeholders in ways to implement policies.

• Registration of a Green Building Association– Malaysia Green Building Confederation (MGBC) launched Green Building Index to

enable green grading & certification of Malaysian buildings.

• Initiation of a Green Financing Scheme– Green Technology Financing Scheme to attract innovators and users of green

technology.

• Launching of Green Township Framework– Outline comprehensive guidelines for new and existing townships to go green by

incorporating environmental friendly technologies.

2.0 Landscape of Green Economy in Malaysia

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• Introduction of Green Procurement in all government agencies– Green procurement manual, procedures & standards are currently under development

• Formulation of Legislation to promote Renewable Energy– The Renewable Energy Act 2011 (Act 725) and Sustainable Energy Development Authority

(SEDA) Act 2011

• Formulation of Low Carbon Green Growth Act is currently underway

Examples of Govt support :

• COP15: Committed to reduce carbon emissions up to 40% by 2020

• Development of Putrajaya & Cyberjaya as green townships

• Priority to Environment-friendly goods in Govt procurement

• National Eco-labeling programme by SIRIM

• Annual International Greentech & Eco Products Exhibition & Conference Malaysia (IGEM)

2.0 Landscape of Green Economy in Malaysia Efforts on Green Economy

COP15 - 15th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change in Copenhagen

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3.0 Green Financing for SMEs Green Technology Financing Scheme (GTFS)

Objective - to promote investments in GT :

Minimises degradation of environment;

Has zero or low green house gas (GHG) emission;

Safe for use & promotes healthy and improved environment for all forms of life;

Conserves use of energy & natural resources; or

Promotes use of renewable resources.

3.1 GTFS – Implementation Role

8Malaysian Green Technology Corporation (MGTC)

3.2 GTFS – Performance

• Additional to GTFS, other financial assistance provided specifically for greentech companies in Malaysia are:

– Malaysia Debt Ventures: • aims to disburse RM300 mil. within a year from May 2011.• for startups and existing companies that produce green tech

products.

– Maybank MEACP Clean Energy Master Fund• aims to invest in diversified portfolio of clean energy projects

in Asia-Pacific region.• 10 year fund size of RM 1.6 bil. (effective Nov. 2011)

MEACP - Maybank Middle East & Asia Capital Partners Pte Ltd 9

4.0 ChallengesIssues hampering the take-up rate of GTFS

• Lack of familiarity in GT among local companies and banks as GT is still new.

• R&D is expensive and skills are difficult to obtain for local companies compared with MNCs.

• Lack of track record or entrepreneurs have not secured long term contracts with reputable buyers.

• Government guarantee of 60% still low for FIs.

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5.0 Possible Solutions Initiatives to Address Challenges

Chaired by the Prime Minister of Malaysia and supported by 8

Working CommitteesIGEM - International Greentech & Eco Products Exhibition & Conference

Malaysia

6.0 Conclusion

• GT still in infancy stage in Malaysia.

• Constantly seeking to improve and learn from experts in this field.

• CGC working closely with FIs and Government to avail access to GTFS.

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Thank you