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 10 th

2010

Malaysia Plan

2015

Short-term Goals Short-term Goals (2010-2015)

Increased public awareness &

commitment for adoption and application of GT;

Medium-term Medium-term Goals Goals (2016-2020)

GT becomes preferred choice in procurement of products and services;

Widespread availability &

recognition of GT; Expansion of research, development

& innovation activities on GT

Larger local market share against other technologies.

Increased production of local GT products; Expansion of local SMEs on GT into

global markets; and

FOCUS AREA OF DFI FINANCIAL SUPPORT

Expansion of GT applications to most

economic sectors

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

2020

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 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

4 Pillars of National Green Technology Policy

Seek to attain energy independence and promote efficient utilization Conserve and minimize impact on environment 4 Enhance national economic development through use of technology Improve quality of life for all

2.0 Landscape of Green Economy in Malaysia

• •

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.

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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) 6

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

Safe for use

;

green house gas (GHG) emission

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

Conserves

use of Promotes use of

energy & natural resources

; or

renewable resources

.

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3.1 GTFS – Implementation Role BNM MGTC CGCMB MOF

• Act as coordinator for GTFS • Verify technical feasibility of project prior to financing processes by FIs.

• Upon approved, issue ‘Project Certification’ to applicant. • 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 • 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.

Chaired by the Prime Minister of Malaysia and supported by 8 Working Committees

IGEM - International Greentech & Eco Products Exhibition & Conference Malaysia

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6.0 Conclusion

• GT still in

infancy stage

in Malaysia. • Constantly seeking to

improve

experts in this field.

and

learn

from • CGC working closely with FIs and Government to

avail access to GTFS

.

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Thank you

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