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] SME Corporation Malaysia. (2016). Retrieved 15 June 2017. https://www.smecorp.gov.my/index.php/en/policies/2015-12-21-09-09-49/profile-and-importance-to-the-economy

[2] Small is the New Big” – Malaysian SMEs Help Energize, Drive Economy. (2016). World Bank. Retrieved from http://www.worldbank.org/en/news/feature/2016/07/05/small-is-the-new-big---malaysian-smes-help-energize-drive-economy

[3] Fintechnews Singapore. (2015). SMEs in ASEAN Still Lack Access to FinancingFintech Singapore. Retrieved from http://fintechnews.sg/697/lending/smes-limited-access-financing-untapped-opportunity-banks-says-deloitte-visa/

[4] Deloitte. Digital banking for small and medium sized enterprises - improving access to finance for the underserved. Retrieved from 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] SME Corporation Malaysia. (2016). BUDGET 2017 COMMENT SME Corp MalaysiaSmecorp.gov.my. Retrieved from 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] Tangau, M. (2016). Green Innovation: Eco-innovation can create environmentally friendly industries to take advantage of the opportunities opened up by sustainable economies. Unep.org. Retrieved from http://www.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

Challenges

  • Deficiencies in overall financial infrastructure
  • Weak legal and regulatory framework
  • Lack of skilled workers (human capital)
  • Little knowledge of environmental management
  • Perception of higher risk due to lack of in-country ex­amples of technology application, as well as lack of tech­nical and policy analytical evaluation constrain banks from lending to SMEs for green projects
  • Higher transaction costs, long turnaround time due to additional (environmen­tal) assessments, and longer tenor required (hence higher risk) to achieve environmental and financial savings.
  • Limited access to finance
  • Limited economies of scale
  • See environmental responsibility as too costly
  • Lack understanding of the benefits of SCP

[1] Haslinda Musa, Muruga Chinniah 2016. Malaysian SMEs Development: Future and Challenges on Going Green. Procedia Social and Behavioral Sciences. Volume 224,pp. 254-262. Retrieved from http://www.sciencedirect.com/science/article/pii/S1877042816305584  

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[1]* (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] CO2 Emissions | Global Carbon Atlas. (2016). Globalcarbonatlas.org. Retrieved from http://www.globalcarbonatlas.org/en/CO2-emissions

*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

Oil, gas, and energy (OGE) industry:

 The OGE industry has played a central role in the Malaysian economy and in recent years contributes about 20% to Malaysia’s GDP. Malaysia is the third largest exporter of liquefied natural gas strategically located for seaborne energy trade.[3]Malaysia aims to become a top energy player in Asia by 2020 as well as an oil and natural gas trading hub.

 The sector has suffered due to the large drop in oil prices in recent years: In 2015 the national oil company (PETRONAS) registered RM 21 billion (EUR 4.65 billion) after tax profits, down from RM 48 (EUR 11.49 billion) after tax profits the previous year.[4]

Malaysia’s coal consumption has been increasing and has become economically competitive with natural gas for power generation. Malaysia’s limited coal reserves are located in Sarawak, only producing 10% of its coal consumption in 2015. Malysia has imported 27 million short tons of coal in 2016 mainly from Indonesia and Australia, up from 22 million short tons in 2014.[5]

Malaysia realizes the need to sustain its economic growth and meet energy demands, and has sought fuel diversification by investing in biomass, solar, hydro, and solid waste.


[1] The World Factbook — Central Intelligence Agency. (2017). Cia.gov. Retrieved 7 August 2017, from https://www.cia.gov/library/publications/the-world-factbook/geos/my.html

[2] Ibid.

[3] U.S.Energy Information Administration. (2017). Country Analysis Brief: Malaysia. Retrieved from http://www.ieee.es/Galerias/fichero/OtrasPublicaciones/Internacional/2017/EIA_Malasya_26abr2017.pdf26abr2017.pdf 

[4] PWC. (2016). The Malaysian Oil & Gas Industry: Challenging Times but Fundamentals Intact. Retrieved from https://www.pwc.com/my/en/assets/publications/2016-msian-oil-n-gas-industry.pdf

[5] U.S.Energy Information Administration. (2017). Country Analysis Brief: Malaysia. Retrieved from http://www.ieee.es/Galerias/fichero/OtrasPublicaciones/Internacional/2017/EIA_Malasya_26abr2017.pdf

Industries’ contribution to climate change

  • Unsustainable energy sector: Malaysia is the third largest energy consumer in Southeast Asia, which has shown in its increasing levels of GHG emissions. Energy consumed is mainly from petroleum, natural gas, and coal, with estimated shares of 37%, 43% and 17%, respectively.[1] Coal also accounted for 21% of total installed capacity and 41% of electricity generation in 2015.[2] Recent investments in coal-fired plants in Peninsula Malaysia in 2015 and 2016 could increase coal consumption in the next years, as domestic natural gas reserves are declining and the country’s energy needs is increasing. 
  • Malaysia is the second biggest palm oil producer in the world. Unsustainable palm oil production contributes to deforestation, loss of animal habitat, soil degradation and climate change. Logging for timber and unsustainable palm oil production has been reported in a study to have degraded 80% of Malaysian Borneo’s rainforests.[3]Cutting cycles are short, which does not leave sufficient time for forest to fully regenerate, causing further carbon loss.[4]


  • Malaysia is the third largest global producer of rubber. Tropical rainforest and land is cleared for plantations (palm oil, rubber), affecting biodiversity, climate change 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 or energy efficiency measures.

[1]U.S.Energy Information Administration. (2017). Country Analysis Brief: Malaysia. Retrieved from http://www.ieee.es/Galerias/fichero/OtrasPublicaciones/Internacional/2017/EIA_Malasya_26abr2017.pdf

[2] Ibid.

[3] Yeo, S. (2013). 80% of Malaysian Borneo's rainforests destroyed by loggingClimate Home - climate change news. Retrieved from http://www.climatechangenews.com/2013/07/18/80-of-malaysian-borneos-rainforests-destroyed-by-logging/

[4] Ibid.

Climate change policies

National policies 

  1. National Policy on the Environment 2002
  2. National Biofuel Policy 2006
  3. National Green Technology Policy 2009
  4. National Policy on Climate Change 2009
  5. Renewable Energy Policy and Action Plan 2009
  6. he Renewable Energy Act 2011
  7. The Tenth Malaysia Plan (2011-2015)
  8. The Eleventh Malaysia Plan (2016-2020)
  9. National Biomass Strategy 2020

 

International mitigation targets

Ratified UNFCCC in 1994
Ratified Kyoto Protocol in 2002
Ratified Paris Agreement in 2016

Malaysia’s INDC to the UNFCCC:[1]

Malaysia intends to reduce its greenhouse gas (GHG) emissions intensity of GDP by 45% by 2030 relative to the emissions intensity of GDP in 2005. 

This consists of 35% on an unconditional basis and a further 10% is condition upon receipt of climate finance, technology transfer and capacity building from developed countries.

Government financing for climate change related initiatives

  • The National Conservation Trust Fund for Natural Resources (NCTF) established in 2014
  • The Renewable Energy Act (2011): improved Feed-in-Tariff (FiT) rates for renewable energy producers.
  • Green Technology Financing Scheme (GTFS): total amount of RM 3.5 billion allocated. With partners such as MDV, OCBC Bank, Maybank, and UOB. Can grant a maximum of RM 100 million per company for producers and maximum of RM 10 million per company for users of green technology.
  • CDM projects in renewable energy: biogas, biomass, hydro, and Land-use, land-use change and forestry (LULUCF) projects.

Mitigation efforts in Tenth and Eleventh Malaysia Plan:

  • Energy efficiency for buildings
  • Biofuel development
  • Demand side management (DSM) plan
  • Adopting the sustainable consumption and production concept
  • Land use, land-use change and forestry
  • Goal of 2080 MW renewable energy capacity by 2020

[1] INDCs - Intended Nationally Determined ContributionsUnfccc.int. 2017. Retrieved from http://unfccc.int/focus/indc_portal/items/8766.php

INTENDED NATIONALLY DETERMINED CONTRIBUTION OF THE GOVERNMENT OF MALAYSIA 2015. Retrieved from http://www4.unfccc.int/Submissions/INDC/Published%20Documents/Malaysia/1/INDC%20Malaysia%20Final%2027%20November%202015%20Revised%20Final%20UNFCCC.pdf

 

 

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 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] Economic Planning Unit, Prime Minister's Department. (2011). Climate resilient development Strategy Paper 11. Putrajaya.

[2] Economic Planning Unit, Prime Minister's Department. (2015). Eleventh Malaysia Plan 2016-2020 Anchoring Growth on People. Putrajaya. Retrieved from http://www.epu.gov.my/en/rmk/eleventh-malaysia-plan-2016-2020

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 palm oil, and rubber,[3] Malaysia has a high rate of deforestation, although in recent years sustainable forest management has been somewhat 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] The World Factbook — Central Intelligence Agency. (2017). Cia.gov. Retrieved 7 August 2017, from https://www.cia.gov/library/publications/the-world-factbook/geos/my.html

[2] Sharma, D. (2016). Letter to Editor: WWF-Malaysia supports concerted national efforts as well as regional and inteWWF.org.my. Retrieved from 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] The World Factbook — Central Intelligence Agency. (2017). Cia.gov. Retrieved 7 August 2017, from 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] Devendra, C. (2012). Climate Change Threats and Effects: Challenges for Agriculture and Food Security. ASM Series On Climate Change. Retrieved from https://agrilinks.org/sites/default/files/resource/files/climate_change_threats_effects_strategies.pdf

[1] World Health Organization Western Pacific Region. Climate Change Country Profile: Malaysia. Retrieved from 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