Impact: POSITIVE

Measures

• RM6b in strategic financing by Bank Pembangunan Malaysia to promote sustainable and automation agenda.

• RM100m allocation to support the automation and digitalisation for SMEs and micro traders. They will receive a matchinggrant of up to RM5,000 for the use of digital tools for systems such as point-of-sale (POS), accounting or for inventorymanagement.

• A separate RM1b facility under Bank Negara Malaysia to assist SMEs in automating and digitalising their businessprocesses and operations.

• RM80m allocation (from RM70m in previous budget) to improve sustainability of palm industry and intensify the fight againstanti-palm oil campaigns.

• RM50m in matching grants to encourage automation of plantation sector through use of robotics and artificial intelligence.

• RM3b of increased allocation for the implementation of the Green Technology Financing Scheme (GTFS) until 2025.

• Extension of the green incentive period for the Investment Tax Allowance (GITA) and Green Income Tax Exemption (GITE)schemes until 31 Dec 2025 for eligible green activities.

• RM2b financing by BNM to support green technology start-ups and help SMEs implement low-carbon practices (no changefrom previous budget).

• RM150m will be provided by Khazanah Nasional for environmentally-friendly project development, including supporting thecarbon market and reforestation (no change from the previous budget).

• RM150m, an increase from RM70m previously, in allocation to state governments for the Ecological Fiscal Transfer (EFT)for biodiversity conservation. The distribution of EFT to state governments would take account of the gazetting of the newprotected areas, including tiger habitats and increased replanting of trees in affected areas.

• RM38m for preservation of wildlife such as tigers, elephants, rhinoceros.

• RM50m allocation to Increase the number of forest rangers to 1,500, prioritising indigenous communities and police andmilitary veterans.

Comments

• The focus on SMEs is the right move as being the backbone of the economy, helping SMEs to digitalise and automate is acrucial step towards a stronger digital and green economy. The various allocations will give new impetus to digitalisationand automation efforts by SMEs, thus improving their business sustainability.

• The enhanced and additional allocations will also further drive initiatives to conserve wildlife and the environment whilekeeping the momentum on sustainable and low-carbon practices.

• Nevertheless, much remains to be done if Malaysia is to achieve its net-zero aspiration by 2050. More incentives are neededto accelerate decarbonisation, for example reducing GHG emissions, conserving and protecting the natural environmentand the development of carbon offset projects.

Source: Kenanga Research - 25 Feb 2023