KUALA LUMPUR: Malaysia witnessed a 326 per cent year-on-year (YoY) surge in green investments to US$1.03 billion last year, due to an increase in large-scale deals seen specifically under the building sector.

This accounted for 16 per cent of the total green investments in Southeast Asia, according to a report jointly published by Bain & Company, GenZero, Standard Chartered and Temasek.

The report highlighted that although power, especially renewables, continued to be the leading green investment focus in 2023, there was a notable rise in investments in green data centres, primarily driven by energy efficiency regulations implemented in Malaysia and Singapore.

Significant investments of US$280 million by GDS Holdings Bhd and US$250 million by YTL Power International Bhd were made in data centres in Nusajaya Tech Park and Kulai, both in Johor.

For Malaysia to accelerate the development of its green economy, the report recommended driving the deployment of blended finance, further developments in renewables regulations, and continuing the momentum within industrial parks.

It suggested that Malaysia enhance renewable targets beyond the existing 40 per cent to accelerate the scale of the energy transition, as well as facilitate the first successful cross-border renewable energy sale to demonstrate its feasibility.

Malaysia plans to invest roughly US$1.47 billion into increasing energy efficiency in government buildings, according to the National Energy Transition Roadmap (NETR) phase two.

In August 2023, the government announced an allocation of US$430 million in a catalytic fund for blended finance, with an emphasis on the growth of industrial clusters in the districts of Sarawak and Johor.

Malaysia also lifted bans on renewable energy exports in 2023.

The report suggested that the state governments of Sarawak and Johor should continue enabling policies to attract private investors.

"(They should) catalyse more eco-industrial park formation by identifying partners with a keen interest in decarbonising," it added.

Meanwhile, the report, which covers 10 markets - Malaysia, Brunei, Cambodia, Indonesia, Laos, Myanmar, the Philippines, Singapore, Thailand, and Vietnam - stated that Southeast Asia requires US$1.5 trillion in cumulative investment in the energy and nature sectors to reach nationally determined contribution targets by 2030. 

However, only 1.5 per cent has been invested to date.

Last year saw a notable 21 per cent YoY uptick in green investments in the region to US$6.3 billion, reversing the downward trend in previous years. 

"As a growing economy, Southeast Asia needs to balance economic growth and the costs of the energy transition, as the region has legacy dependencies on fossil fuels for power generation.

"There is a reality gap between what many believe is happening and true progress on the ground. Despite Southeast Asia's structural challenges, immense potential exists to accelerate the energy transition and build the green economy," it said.

https://www.nst.com.my/business/corporate/2024/04/1038100/malaysias-green-investments-surge-more-three-fold-over-us1bil