Malaysia

Project title Sector SCP practice
AEMAS Utilities sector Product design for sustainability
Biomass SP Utilities sector Waste Management
Clean Batik Initiative Textile and leather industry Product design for sustainability, Sustainable Supply Chain Management
Efficient Air Conditioners / ASEAN SHINE Electrical equipment industry Eco-labels, Product design for sustainability
Sustainable Building Materials - SuBuMa Building materials industry Eco-labels, Product design for sustainability

Focal point

Ms. Fatimah Wati Bt. Che Abdullah

Resource consumption and production

Main Resource Consumption and Resource Efficiency Indicators (2010)

Subject Area

Total

Per person

Per USD$ of GDP

Domestic Material Consumption, DMC (tonnes, tonnes per capita, kgr per 1USD$)

390,788,896.00

13.82

0.001

GHG emissions (kilotonnes,tonnes per capita, kgr per 1USD$)

263,676.12

9.3

          9.16

Total Primary Energy Supply, TPES (Petajoules, Gigajoules per capita, Megajoules per 1USD$)

 3,167.59

112.02

1.1

 

Water Use (Trillion litres, Kilolitres per capita, Litres per 1USD$)

11.20

396.10

3.89

GDP (million USD) 287934 (2011)

Population (thousands) 28859 (2011)

 

GDP is in USD exchange rate based on year 2005 and deflated. Source: UNSD database. 

Subject Area

Indicator

Population density 2015 (UNESA 2012 revision), population per sq.km

93

GDP per capita (USD), 2013 WB)

10,538.10

HDI Rank (2013) UNDP

0.773

Arable land (hectares per person) WB 2012

0.003

Forest cover in % (2010), UNSTATS

62

Material intensity (2010)UNEP

2.19

Per-capita energy use (kg of oil equivalent per capita) 2011, WB

2,639

Energy intensity (total primary energy consumption per USD of GDP) 2011, EIA

17,489.19

GHG  intensity (2010) UNEP

1.48

CO2 emissions (metric tone per capita), 2010, WB

7.7

Number of Middle Class consumers % (2010), ADB

89

Number of people with income < 2USD/day (PPP, USD, %), 2010, ADB

7

Trends in Resource Consumption and Resource Efficiency Indicators (1970-2010)

DE: Domestic Extraction; MI: Material Intensity of the economy; MF: Material Footprint. All other abbreviations explained in the table above

In panel a) very rapid growth in Malaysia’s GDP closely parallels growth in TPES, with slower but still rapid growth in DMC, and much slower growth in GHG emissions and population, which parallel each other. Growth in DE in panel b) largely stops from the mid-1990s, with a marked but temporary decrease in the aftermath of the 1997 financial crisis. A decline in metal ores DE which begins around 1990 continues until the end of the period, to the point where DE of metals is negligible. Panel c) shows MF per capita conforming quite closely to the pattern seen for DE per capita, especially with regard to the impact of the 1997 financial crisis and recovery. Gross MF per capita indicates that Malaysia’s consumption requires somewhat higher resource inputs than are supplied through DE, this being most pronounced for metal ores. Panels d), e) and f) shows no consistent relationship between footprinting and conventional metrics, with DMC underestimating MI relative to adjusted MI, EI overestimating relative to adjusted EI, and GHGI not having a consistent relationship to adjusted GHGI. Both measures of MI do show some relative decoupling over time, and an even stronger relative decoupling from GHG emissions is displayed for both GHGI measures. (Source: UNEP CSIRO Indicators for a Resource Efficient and Green Asia and the Pacific, 2015).

Key references relevant to SCP

UNEP's relevant activities

The information in the country profiles herein have been obtained through research with firsthand and secondhand sources. The information presented herein cannot be considered as official policy of governments or other official bodies. The SWITCH-Asia Programme cannot be held responsible for the content of the sites to which it provides links or for the availability of servers or links. Information is being continuously updated in order to maintain an up to date country profile. If you would like to contribute information for this profile or have any further comments, please send an email to: SWITCH-PSC@unep.org

Status

Introduction

Malaysia has more than 600,000 registered SMEs, with 90% in the services sector, 6% in manufacturing, and 3% in construction, with the remaining in agriculture, mining, and quarrying.[1]  SMEs are responsible for nearly 36% of the country’s GDP[2], en route to a 41% contribution by 2020. SMEs also provide 65% of the country’s employment, and nearly 18% of Malaysia’s exports.

A Deloitte study in 2015 found that: 

  • 38% of Malaysian SMEs are underserved by banks and financial institutions.
  • 52% of SMEs are funded by bank loans, and 48% self-funded.[3]
  • 74% of SMEs said they would like to mitigate costs by increasing productivity and raising profit margins[4]

[1] https://www.smecorp.gov.my/index.php/en/policies/2015-12-21-09-09-49/profile-and-importance-to-the-economy
[2] http://www.worldbank.org/en/news/feature/2016/07/05/small-is-the-new-big---malaysian-smes-help-energize-drive-economy
[3] http://fintechnews.sg/697/lending/smes-limited-access-financing-untapped-opportunity-banks-says-deloitte-visa/
[4] https://www2.deloitte.com/content/dam/Deloitte/sg/Documents/financial-services/sea-fsi-digital-banking-small-medium-enterprises-noexp.pdf

SME financing development in Malaysia

  • Commercial bank and SME Corporation Malaysia remain the main sources of funding. 
  • In 2012, 200 RM billion (EUR 54 billion) or 15.5% of total bank loans outstanding were dedicated to SME finance, with a total of 177 RM billion (EUR 48 billion) coming from banking institutions alone (ADB, 2013).
  • The Malaysian government has allocated more than RM 1.3 billion (approx.. EUR 276 million) to SMEs in 2016. 

In 2017, SME Corporation Malaysia has allocated a total of RM 6.7 billion (approx. EUR 1.4 billion) for SME development to be implemented by the various Ministries and agencies; 2017 has been declared as the Start-up and SME Promotion Year. 

  • RM 70 billion (EUR 14.9 billion)  allocated to implement programs under the SME Masterplan (see below in policies)
  • RM 350 million (EUR 74.6 million) is allocated for export promotion of SMEs
  • RM 200 million (EUR 42.6 million) to support start-ups including the Working Capital Guarantee Scheme (WCGS)
  • RM 2 billion (EUR 426 million) for women entrepreneurs
  • RM 290 million (EUR 61.8 million) to stimulate development of B40 entrepreneurs[1]

[1] https://www.smecorp.gov.my/index.php/en/resources/2015-12-21-10-55-22/news/1793-budget-2017-comment-sme-corp-malaysia

Public support and related policies for SME development

  • Third Industrial Master Plan (2006-2015)
  • The Economic Transfor­mation Programme (2011-2020) identifies 12 National Key Economic Areas (NKEAs) to unleash the growth potential of SMEs, which the government hopes will trigger multiplier effects towards more inclusive growth.
  • The SME Master plan (2012-2020) has been introduced to significantly boost the contribution of SMEs to the national GDP by 2020. The plan also includes the SME Investment Programme, which aims at growing the early stage venture financing indus­try, including angel investment and risk capital (SME Bank, 2013).
  • Comprehensive SME Development Framework 2004: enabling en­vironment initiatives and public support schemes
  • Economic Transformation Program 2011-2020
  • Eleventh Malaysia Plan – focuses on SME growth, with a goal of 9.3% growth per annum and a contribution of RM 2,421 billion  (approx. EUR 515 million) or 38.4% to GDP with 9.5 million jobs across all sectors by 2020. Focus areas are enhancing productivity though innovation, and increasing access to finance and markets to improve SME competitiveness.
  • National Policy on Science, Technology and Innovation (NPSTI) 2013-2020 third strategic focus “Energizing Industry” is a prime enabler for companies to adopt innovative, green and environmentally friendly approaches.[1]
  • SME Technology Penetration and Upgrading Programme (STEP-UP)

[1] http://web.unep.org/ourplanet/may-2016/articles/green-innovation

Government institutions for cooperation

  • SME Corporation Malaysia
  • National SME Development Council
  • Malaysian Industrial Development Finance Berhad (MIDF)
  • The Ministry of Sci­ence, Technology and Innovation (MOSTI)
  • Malay­sia Debt Ventures (MDV)
  • Malaysian Green Tech Corporation

Main institutions providing Green Finance

Main institutions providing Green Finance

  • SME Bank
  • Maybank Berhad
  • OCBC Bank
  • Malaysia Debt Ventures
  • Bank Pembangunan
  • All commercial and Islamic banks
  • Bank Pembangunan
  • Agrobank
  • Bank Rakyat
  • Export Import Bank of Malaysia (EXIM Bank)
  • Bank Simpanan Nasional
  • United Overseas Bank Malaysia (UOB)
  • RHB Bank

In 2010, Malaysia’s MDV es­tablished the Green Technology Financing Scheme (GTFS), adding to its offerings, which include working capital, as­set acquisition, project financing, trade financing, guar­antees and venture capital financing schemes across both conventional and Islamic banking systems (MDV, 2013b). The GTFS was introduced to support the development of green technology, and encourage access to finance to­wards Malaysia’s sustainable growth objectives. The fund allows for a maximum tenor of 180 months, covering the lower of RM 50 million (EUR 13.97 million) or 80% of cost (CGC, 2010). As of June 2014, 21 projects were financed un­der the scheme totalling RM 346.3 million (EUR 94.06 mil­lion). (Shah, 2014; CGC, 2014a). It also extends guarantees for up to 60% of principal through the Credit Guarantee Corporation (Greentech Malaysia, 2012; National SME De­velopment Council, 2012; Greentech Malaysia, 2013).

Bank Negara Malaysia (BNM) regards its introduction of green Sukuks (Sharia-compliant finan­cial instruments) as a well-suited tool to finance green projects. A minimum issue of RM 200 million (EUR 54.39 million) is being targeted (Archibald, 2014) for the security that not only transfers debt ownership, like a traditional bond, but also asset ownership including inherent cash-flow payments and risks (Islamic Development Bank, 2010). 

It is reported that Malaysia’s Ministry of Energy, Green Technology and Water also plans to set-up an Is­lamic Green Bank. Funded through international invest­ments, initial proposals indicate that the bank may act as a venture capital fund (New Straits Times, 2014), support­ing investor-project matchmaking and financial advisory services for SMEs. Supporters also intend for the institu­tion to provide low cost capital for low-carbon projects (Archibald, 2014).

Status and policies

GHG emissions

2015 total territorial GHG emissions (excluding land use change and forestry): 249 MtCO2

2015 territorial GHG emissions per capita: 8.2 tCO2/person

2014 CO2 consumption emissions:[1] 238 MtCO2

*GHG territorial emissions are Carbon dioxide emissions from the use of coal, oil and gas (combustion and industrial processes), the process of gas flaring and the manufacture of cement.


[1] Carbon dioxide emissions occurring anywhere in the world attributed to the country in which goods and services are consumed. For more information see: Section 2.1.2, The global carbon budget 1959-2015, Le Quéré et al. 2016. 

GDP

2015 GDP: EUR 261.81 billion[1]

GDP contribution by sector:[2]

Agriculture: 8.9%
Industry: 35%
Services: 56.1%

Industry subsectors:

 

  • Peninsular Malaysia - rubber and palm oil processing and manufacturing, petroleum and natural gas, light manufacturing, pharmaceuticals, medical technology, electronics and semiconductors, timber processing.
  • Sabah - logging, petroleum and natural gas production
  • Sarawak - agriculture processing, petroleum and natural gas production, and logging

Agricultural products:

 

  • Peninsular Malaysia - palm oil, rubber, cocoa, and rice
  • Sabah - palm oil, subsistence crops; rubber, and timber
  • Sarawak - palm oil, rubber, timber, and pepper

[1] http://www.worldbank.org/en/country/malaysia
[2] http://www.indexmundi.com/malaysia/

Industries’ contribution to climate change

Malaysia is the second biggest palm oil producer in the world. Palm oil production contributes to deforestation, loss of animal habitat, soil degradation and climate change.

Logging for timber and palm oil production has degraded 80% of Malaysian Borneo’s rainforests.[1] Cutting cycles are short, which does not leave sufficient time for forest to fully regenerate, causing further carbon loss.[2]

Palm oil production contributes to deforestation, loss of animal habitat and biodiversity, degrades soil, and releases large amounts of GHG into the atmosphere.

  • Peat soils, which are very carbon rich, are destructed for palm plantations. Peat lands need to be drained and treated with chemicals to make the soil less acidic for palm cultivation; peat lands are also burned, creating dangerous air pollution.[3] Peat lands decay and release GHG emissions for years.[4]
  • Palm oil growers have been accused of using forced labor and seizing land, adversely impacting local and indigenous populations. [5]
  • Orangutans, tigers, rhinoceros, and elephants are all vulnerable to palm oil expansion.

Malaysia is the third largest global producer of rubber. Tropical rainforest and land is cleared for plantations, affecting biodiversity and soil ecology.

Many SMEs in the manufacturing sector use unsustainable and polluting production processes, since there are low tariffs for energy and water. This creates a disincentive to adopt cleaner technologies. Malaysia is focusing on Sustainable Consumption and Production in the Eleventh Malayisa Plan and is undertaking the SCP project under the SWITCH-Asia Program to help achieve green growth.


[1] www.climatechangenews.com/2013/07/18/80-of-malaysian-borneos-rainforests-destroyed-by-logging/[2] Ibid.[3] www.ucsusa.org/sites/default/files/legacy/assets/documents/global_warming/palm-oil-and-global-warming.pdf[4] www.ucsusa.org/global-warming/stop-deforestation/drivers-of-deforestation-2016-palm-oil] Ibid.

Climate change adaptation efforts

Adaptation efforts in Tenth and Eleventh Malaysia Plan:[1]

 

  • Flood mitigation program: From 2004 to 2014, Malaysia has invested over RM 9.3 billion (EUR 1.9 billion) on flood mitigation, with 194 projects.
  • Coastal erosion program: rehabilitated 24.4 kilometers of coastal areas
  • Gazetted 23,264 hectares of forest as Permanent Reserved Forest under the Central Forest Spine initiative
  • Gazetting 17% of terrestrial areas and 10% of coastal areas as protected areas by 2020[2]

[1] http://rmk11.epu.gov.my/pdf/strategy-paper/Strategy%20Paper%2011.pdf

[2] The Eleventh Malaysia Plan

Climate change impacts

Malaysia has a population of 30.9 million.[1] Due to climate change, Malaysia has experienced changes in precipitation and adverse impacts of rising temperatures. Malaysia’s coastal zones are highly vulnerable to sea-level rise, especially low-lying areas such as Penang, Klang and Batu Pahat that are highly populated and have socio-economic activities. Malaysia has tropical forests and complex ecosystems and is ranked twelfth in the world on the National Biodiversity Index. Malaysia has a high forest cover of over 54% in 2014[2] with a large part of it consisting of production forests. Due to its production of electronics, oil, gas, palm oil, and rubber,[3] Malaysia has a high rate of deforestation, and in recent years sustainable forest management has been a priority. 

Main climate change impacts include: 

  • Rising temperatures
  • Floods
  • Changes in precipitation
  • Sea level rise
  • Water scarcity
  • Food security
  • Human health
  • Biodiversity loss 

[1] https://www.cia.gov/library/publications/the-world-factbook/geos/my.html
[2] http://www.wwf.org.my/?22026/Letter-to-Editor-WWF-Malaysia-supports-concerted-national-efforts-as-well-as-regional-and-international-cooperation-to-combat-haze-and-climate-change
[3] https://www.cia.gov/library/publications/the-world-factbook/geos/my.html

Economic, social, and environmental impacts of climate change

Small and Medium-sized Enterprises (SMEs):  

  • Extreme climatic events like floods and storms damage infrastructure and facilities.
  • Interruptions to business transactions.
  • Transport and logistics routes are damaged or disrupted.
  • Heightened price and market volatility.
  • Impacts on employees and consumers – lack of access to basic goods and services.
  • Lack of water and energy availability affect operations and productions.
  • Health issues from heat waves and increase of disease will cause decreases in labor and work production.

 

Agriculture

  • Flooding and changes in rainfall in causes crop loss and waterlogging.
  • Temperature rise and extreme rainfall reduces production for certain crops especially rice, which could decrease by 10% in yields for every 1°C degree increase in temperature.[1]
  • Increase of crops pests and disease.
  • Heat stress to animals and plants.

 

Water scarcity:

  • Reduces crop production, creates changes in crop growth, affects soil quality due to water imbalances, and increases food insecurity.
  • Adversely impacts production in palm oil and rubber industries

 

Sea level rise:

  • Loss of cultivatable land from seawater intrusion and inundation.
  • Displacement of people and loss of livelihoods.

 

Health:

  • Common communicable diseases in Malaysia such as malaria, dengue, and cholera will be exacerbated by climate change and rainfall patterns,[2] which affect ability to work.
  • Heat stress for workers who work outside or people with cardio-vascular conditions.

 

Loss of ecosystem services:

  • Ocean acidification from sea temperature rise leads to coral bleaching and loss of marine diversity, which also negatively impacts fisheries.

[1] https://agrilinks.org/sites/default/files/resource/files/climate_change_threats_effects_strategies.pdf
[2] http://www.wpro.who.int/environmental_health/documents/docs/MAA_3FB0.pdf

International cooperation on climate change

Status: 2017. Inclusive of grants and loans; not an exhaustible list.

Partner

No. of Projects

Program/ Areas of focus

Funding Amount

Duration

Funding Sources

Global Environment Facility

 

55

Biodiversity, Climate change, land degradation, chemicals and waste

€363.30

Million

 

Ongoing

GEF Trust Fund

 

USAID Global Climate Change Program

 

3

Adaptation, biodiversity, forestry, coastal areas

€14.16 Million

 

USAID

UN REDD Program: readiness activities in state of Sabah

 

5

Sustainable forest management, forest rehabilitation, REDD+ readiness

€5.2 + Million

 

Ongoing

UNDP, Government of Malaysia, WWF UK, EuropeAid