As part of its continuing target of pursuing green growth for sustainability and resilience in accordance with the 11th Malaysia Plan and Budget 2016, the Government of Malaysia has increased the financing limit of the Green Technology Financing Scheme (GTFS) for green technology producers from RM50 million to RM100 million.
Initiated in 2010, under the purview of the Ministry of Energy, Green Technology and Water (KeTTHA) and Malaysian Green Technology Corporation (GreenTech Malaysia), the GTFS aims to catalyse Malaysia’s green technology sector by facilitating financing for green companies, with a target of financing approvals of RM3.5 billion.
The GTFS offers a rebate of 2 per cent per annum on interest or profit rates charged by financial institutions, while also providing a Government guarantee of 60 per cent for the green cost of the financed amount. The evaluation and certification of projects as well as the monitoring and auditing of the GTFS is undertaken by GreenTech Catalyst Sdn Bhd, a subsidiary of GreenTech Malaysia.
Commenting on the new financing limit, Syed Ahmad Syed Mustafa, Chief Executive Officer of GreenTech Catalyst said, “We applaud the Government for their foresight in increasing the financing limit for green technology producers. This is a clear sign of the Government’s commitment to enhance Malaysia’s green technology sector.”
“As the Malaysian green technology market expands, the number and scope of projects in green technology are growing in tandem which in turn is driving up the demand for financing. The raised limit will encourage companies to take on larger scale green projects providing a substantial boost for the local green market,” he added.
As Malaysia strives to meet its pledge to reduce up to 45 per cent in terms of emissions intensity of gross domestic product by the year 2030, compared to 2005 levels, domestic demand for green financing is expected to skyrocket with a study by GreenTech Malaysia indicating an increase of demand to RM76.2 billion by 2030 up from RM6.7 billion in 2013, representing a compound annual growth rate of 15.4 per cent.
As of July 2016, the GTFS has approved a total of 243 projects with financing amounting to RM2.79 billion. This financing has benefited green technology companies in the energy, transport, building as well as waste and water management sectors. It is anticipated that these projects would help avoid 3.14 million tonnes of carbon dioxide equivalent per year, while generating RM5.51 billion in green investments and creating over 4,000 jobs.
Speaking on the importance of the GTFS, Syed Ahmad said, “GTFS has been instrumental in growing green businesses and the green technology sector in Malaysia. It has helped hundreds of green companies gain access to financing that is vital in establishing their green ventures. It has also provided a hands-on opportunity for financial institutions to familiarise themselves with the intricacies of financing green businesses. The success of this is evidenced by the record number of approved financing for green projects we achieved in 2015.”
In 2015, GTFS helped 61 green projects obtain financing with a total loan approvals amounting to RM533.7 million. In light of this success, in Budget 2016, the Government announced the extension of the GTFS until 31st December 2017.
The GTFS is overseen by KeTTHA and, administered by GreenTech Malaysia and Credit Guarantee Corporation with regards to the Government guarantee. The GTFS has thus far, gained the support of26 participating private financial institutions, including Maybank, Malaysian Debt Ventures, OCBC Bank, UOB Bank, SME Bank, Bank Pembangunan, HSBC Bank, AmBank, Standard Charted, Affin Bank, Hong Leong Bank, RHB Bank, Public Bank, CIMB Bank, Kuwait FH, Alliance Bank, Agro Bank, Bank Rakyat and Bank Islam amongst others.
Publish your content with EB Publishing
It's about who you reach. Get your news, events, jobs and thought leadership seen by those who matter to you.
