DFIs in Financing Green Technology The Malaysian Experience

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 Malaysia Plan Marketing & Promotion Short-term Goals Developmen t& Production 2020 2015 2010 Medium-term Short-term Goals (2010 -2015) Medium-term Goals (2016 -2020) Increased public awareness & commitment for adoption and application of GT; GT becomes preferred choice in procurement of products and services; Widespread availability & recognition of GT; Larger local market share against other technologies. Expansion of research, development & innovation activities on GT Increased production of local GT products; Expansion of local SMEs on GT into global markets; and Investment Expansion of GT applications to FOCUS AREA OF DFI FINANCIAL most economic sectors SUPPORT Increase foreign & domestic direct investments (FDIs and DDIs) in GT manufacturing and services sectors; and 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 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 – 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. 5

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 : • COP 15: 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 COP 15 - 15 th 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 : ü Minimises degradation of environment; ü Has zero or low green house gas (GHG) emission; ü Safe for use & promotes healthy and improved environment for all forms of life; ü Conserves use of energy & natural resources; or ü Promotes use of renewable resources. 7

3. 1 GTFS – Implementation Role BNM MGTC • Act as coordinator for GTFS • 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 Green. Tech 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) 8

3. 2 GTFS – Performance • Additional to GTFS, other financial assistance provided specifically for greentech companies in Malaysia are: – Malaysia Debt Ventures: • aims to disburse RM 300 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 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 11 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. 12

Thank you 13