Impact POSITIVE

Measures

Investments

• GLCs and GLICs have committed investments up to RM50b for 2023 to drive the sustainability agenda by launching a sustainability framework and setting targets to achieve fully ESG-compliant portfolio and carbon neutrality.

• Khazanah Nasional to set up an RM150m impact fund to boost environmentally-friendly development, including carbon trading and forest restoration.

• The government to allocate RM70m to further improve the sustainability of the palm oil industry such as encouraging the recycling of palm waste and also intensify efforts to promote palm oil and counter international anti-palm oil campaigns.

• Petronas has set up GENTARI to drive clean energy initiatives. For a start, it will install solar panels in government and commercial facilities by 2024 with a cumulative PV capacity of 3MW, and also 500 units of EV chargers nationwide.

• Tenaga Nasional will invest RM165m until 2025 to install solar rooftops and EV charging stations.

• The government to set aside RM10m to promote the Green Campus Initiative where public universities are encouraged to adopt sustainable measures such as installing solar panels for renewable energy.

• To drive green investments, the government will extend the deadline for applications of the Green Investment Tax Allowance (GITA) dan Green Income Tax Exemption (GITE) to 31 Dec 2025, and further extend the incentive period to 5 years from 3 years for activities such as solar and battery energy storage systems.

Financing

• BNM to allocate RM1b under the High Tech and Green Financing Fund to support sustainable technology start up companies and another RM1b under the Low Carbon Transition Financing Fund to assist SMEs to adopt low-carbon practices.

• The Green Technology Financing Scheme will also be improved. Firstly, the guaranteed value will be raised to RM3b until 2025, secondly, the scope of financing will be widened, especially to the EV sector, of up to 60%, and thirdly, financing for the waste sector will be increased to 80%.

• The government to set up the Malaysia Coinvestment Fund (MyCIF) of RM30m in addition to equity crowdfunding (ECF) to support start-ups committed to the sustainable and social entrepreneurship agenda.

• The government to introduce carbon tax and study the mechanism of carbon pricing. A sum of RM10m will be allocated in matching grants for SMEs to help in the preparation of carbon valuation and other related products.

Others

• The government has passed the Environmental Quality (Amendment) Bill 2022 that will increase the penalty to not more than RM10m for offences such as water pollution and illegal disposal of scheduled waste.

• The government aims to achieve 25% of its procurement under Government Green Procurement by 2025 and this includes state governments and local authorities.

• Income tax rebate for those that contribute or sponsor smart AI-driven reserve vending machine to promote the collection of plastic waste.

• The Securities Commission to introduce training programmes to improve women's skills, identify and increase the number of female board members to further strengthen their leadership role in the corporate sector.

Comments

• The government has set a target to be a net zero greenhouse gas (GHG) emission nation by 2050 and it is now stepping up its efforts to advance the sustainability agenda.

• Some of these proposals are an extension from the previous budget as the government realised the need to do more to start reducing carbon emissions. This is especially true for small and micro businesses as many of them lack the resources to start their ESG journey.

• GLCs, which have more resources and better expertise, will play a leading role in these efforts while SMEs and start-ups will enjoy access to various financing to help them adopt and accelerate their ESG plan.

• Addressing ESG issues is a long-term commitment, and this budget is a concrete start.

Source: Kenanga Research - 8 Oct 2022