DFIs in Financing Green Technology:
The Malaysian Experience
Wan Azhar Wan Ahmad
Chief Executive Officer
Credit Guarantee Corporation Malaysia Berhad
26 April 2012
1
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
2
1.0 Introduction
GT Goals in 10th Malaysia Plan
Short-term Goals
Development &
Production
Marketing &
Promotion
Short-term
Goals
(2010-2015)
Increased public awareness &
commitment for adoption and
application of GT;
Widespread availability &
recognition of GT;
Expansion of research, development
& innovation activities on GT
Medium-term
Medium-term
Goals
Goals (2016-2020)
GT becomes preferred choice in
procurement of products and services;
Larger local market share against
other technologies.
Increased production of local GT
products;
Long-term Goals
Long-term
Goals
(Beyond 2020)
Widespread adoption of GT
reduces overall resource
consumption while sustaining
national economic growth;
Malaysia becomes major
producer of GT in global market
Expansion of local SMEs on GT into
global markets; and
FOCUS AREA OF DFI FINANCIAL SUPPORT
Investment
2020
2015
2010
Expansion of GT applications to most
economic sectors
Increase foreign & domestic direct investments (FDIs and DDIs) in GT
manufacturing and services sectors; and
Significant reduction in national
energy consumption;
2.0 Landscape of Green Economy in Malaysia
•
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
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Enhance
national
economic
development
through use of
technology
SOCIAL
Conserve and
minimize
impact on
environment
ECONOMY
Seek to attain
energy
independence
and promote
efficient
utilization
ENVIRONMENT
ENERGY
4 Pillars of
National Green Technology Policy
Improve
quality of
life for all
2.0 Landscape of Green Economy in Malaysia
•
Establishment of Implementing Agency
–
•
Formation of National Green Technology and Climate Change Council
–
•
Malaysia Green Building Confederation (MGBC) launched Green Building Index to
enable green grading & certification of Malaysian buildings.
Initiation of a Green Financing Scheme
–
•
Coordinate issues of green technology between Ministries, agencies, private sector &
other stakeholders in ways to implement policies.
Registration of a Green Building Association
–
•
Malaysian Green Technology Corporation
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.
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2.0 Landscape of Green Economy in Malaysia
Efforts on Green Economy
•
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)
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COP15 - 15th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change in Copenhagen
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.
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3.1 GTFS – Implementation Role
BNM
• Act as coordinator for GTFS
MGTC
• Verify technical feasibility of project prior to financing
processes by FIs.
• Upon approved, issue ‘Project Certification’ to applicant.
CGCMB
• To manage, administer & monitor GTFS on behalf of MOF
– include processing guarantee applications & claims.
•To submit monthly & quarterly reports on scheme
performance to GreenTech Malaysia, BNM & MOF
MOF
• To provide g’tee support & pay FIs claims on g’teed
loans according to risk sharing / g’tee cover through
CGC.
• To reimburse 2% interest subsidy to FIs for financing
granted under scheme
Malaysian Green Technology Corporation (MGTC)
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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
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4.0
Challenges
Issues 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.
5.0
Possible Solutions
Initiatives to Address Challenges
Green Procurement and IGEM
• Government will implement Green Procurement and PMS for Energy.
• IGEM helps business matching for green tech entrepreneurs.
Education and awareness at all levels
• Country-wide seminars/workshops are continuously held with key
stakeholders.
Training for FIs
• Address gap in bank officers’ skill sets and understanding.
• Program established by the Institute of Bankers Malaysia (professional &
education body for banking and finance industry in Malaysia).
Monitoring of all policies and initiatives
• By Green Technology and Climate Change Council.
IGEM - International Greentech & Eco Products Exhibition & Conference Malaysia
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Chaired by the Prime
Minister of Malaysia
and supported by 8
Working Committees
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
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