Sustainability

A special report by the French Trade Commission - Business France Malaysia (June 2019)

GENERAL OVERVIEW

  • The environmental sector is relatively well structured and has a dynamic local industry. Since the change of government in May 2018, Malaysia has made an effort to become more involved in the fight against climate change. 
  • Strategic Plan 2019: "Own It, Do It, Ace It": 73 initiatives to ensure energy sustainability, including 20 initiatives for the environment and climate change. Malaysia is considering establishing a National Centre on Climate Change.
  • The Government of Malaysia stated that the engagement and support of local and international companies was essential to develop the environmental sector, with a special interest in foreign technologies and know-how.
     

Waste

  • Malaysia goals for sustainable waste management, which is a major challenge for the country: 
    • More than 25,000 T of waste generated per day (33,000 T by 2020). 
    • More than 30% of potentially recyclable materials such as paper, plastic, aluminium, and glass are still directly deposited in landfills. The recycling rate is 24% of the waste collected, with the remaining 76% ending up in landfills. 
  • New and more environmentally-friendly approaches are being sought by the Malaysian authorities to better manage waste, as nearly 80% of the country's 165 landfills have reached their maximum capacity.


Water 

  • Malaysia faces persistent difficulties in water management: lack of efficiency of its organisation, supply problems in the Selangor territory (90% of water interruptions in Malaysia are due to problems in this area), disparities in tariffs, etc.


Air quality

  • A developing market in the process of being structured that offers numerous opportunities for European actors. The market is also very well-supported by the objectives of the national policy on climate change.

 

BUSINESS OPPORTUNITIES


Waste

  • The "Towards Zero Single-Use Plastic Roadmap" (2018-2030) launched by the Government aims to reduce the use of non-recyclable single-use plastics and thereafter adopt new environmentally-friendly solutions.


Water

  • The government's main objective is to guarantee access to drinking water for 99% of the population by 2020.
  • National NRW Reduction Program: Malaysia aims to reduce the level of water leakage to 25% by 2025 and 15% by 2030.
  • The state of Sarawak in Malaysia has allocated EUR 600 million for treated water supply projects in rural Sarawak by 2020.


Air quality

  • In 2015, Malaysia updated its commitment to reduce CO2 emissions by announcing during COP21 in Paris that it would reduce its carbon footprint by 45% between 2005 and 2030 (initially set at 40% between 2005 and 2020).
  • Energy Efficient Vehicles: Malaysia's target is to achieve 85% use of energy efficient vehicles out of the total industry volume by 2020 and 100% by 2030.

 

Incentives and incentives

  • The 2019 budget provides EUR 436 million for the Green Technology Financing Scheme (GTFS): tax incentives and income tax exemptions for investments in, and the use of, green technologies.
  • Several Master Plans promote sustainable development (links to public consultations):
    • National Policy on The Environment (NPE)  
    • Green Technology Master Plan (GTMP) Malaysia 2017-2030  
    • National Policy on Climate Change (NPCC) 
    • National Energy Efficiency Action Plan (NEEAP) 2016-2025

 

ACCESS TO THE MARKET


Key players 

  • MESTECC: Ministry dedicated to Energy, Science, Technology, Environment and Climate Change (restructured in 2018).
  • Malaysian Green Technology Corporation: a public agency in charge of promoting the environment.

Waste 
Waste is currently collected by 6 companies in Malaysia (Alam Floral Sdn Bhd, Environment Idaman Sdn Bhd, Ekar Harum Sdn Bhd, SWM Sdn Bhd, etc). 
All waste management issues are handled by the National Solid Waste Management Department under the Ministry of Housing and Local Government, whose current strategy is to upgrade existing facilities and promote the waste recycling programme.


Water
•    SPAN: issues licenses to operators according to a quality charter ;
•    Indah Water Konsortium Sdn. Bhd: wastewater treatment ;
•    KATS: Ministry of Water, Land and Natural Resources.


Air quality

  • DoE (Department of Environment); and Puspakom Sdn Bhd for air quality and transport control.

 

Specific regulations

  • The government has indicated that it wants to impose a pollution tax on plastic bag manufacturers. 
  • Environmental Quality Act 1974: for the prevention, reduction, control of pollution and improvement of the environment. 
  • A new limit for dust and particulate concentration in air has been set at 150 mg/Nm3 (formerly set at 400 mg/Nm3).
  • National Water Services Commission Act 2006 (SPAN Act): a major restructuring of the water sector management.
  • Solid Waste and Public Cleansing Management Act 2007: waste management.
  • Sustainable Energy Development Authority Act 2011[Act 726]: creation of a Malaysian Sustainable Energy Development Authority (SEDA).
  • Renewable Energy Act 2011: implementation of a special pricing system to stimulate renewable energy production.

This article was first published by the Malaysian-German Chamber of Commerce and Industry (Issue 05/May-Jun 2019), and was translated and adapted from its original German.

29 November 2019

Malaysia is the second largest palm oil producer in the world after Indonesia with a share of 35.30% of the world's palm oil production. Together, the two countries produce 84.8% of the world's palm oil and account for 95% of total exports. Malaysia currently operates 447 palm oil mills. As one of the largest palm oil producers in the world, it is a miracle that Malaysia is not the leading producer of biomass and biogas in the region. Instead, a large amount of solid (empty fruit shrubs) and liquid waste (palm oil effluent) remains unused. For every ton of fresh fruit shrubs processed, about 0.6 cubic meters of POME (Palm Oil Mill Effluent) are produced. Malaysia produces around 95 million tonnes of fresh fruit shrubs annually. That would be the equivalent of around 60 million cubic metres of POME per year. This is a major environmental challenge because POME contains high amounts of organic charge, i.e. a high chemical oxygen demand (COD), and releases methane into the atmosphere during degradation.

The government has also recognized the importance of the palm oil sector and appointed it as one of the country's twelve most important economic sectors in 2010 as part of the Economic Transformation Program (ETP). For this sector, as for the other eleven industries, a special structural development program was designed. The Entry Point Project 5 (EPP5) "Build biogas facilities at mills across Malaysia", the fifth of a total of 8 key objectives, was formulated in the structural development programme for palm oil. By 2020, each palm oil mill is to be equipped with a biogas plant. The EPP5 was created to reduce greenhouse gas and wastewater emissions from palm oil mills and to use the mills' wastewater to generate renewable energy.

Image result for palm oil

The promised climate protection targets in Paris (reduce greenhouse gas emissions by 45% by 2030) and the national transposition into legislation (generate 5% of electricity from renewable energies by 2020) show Malaysia's efforts to move from fossil raw materials to renewable energies.4 Since the change of government in May 2018, the new Energy Minister Yeo Bee Yin has even said that she wants to increase renewable energy production capacity to 20% by 2025.6

Although the energy shift from fossil fuels to renewable energies in Malaysia's energy mix is still in its initial phase, there is great potential for European companies to enter the promising biogas market. The growing importance of biogas in Malaysia's future can be regarded as assured. In 2011, the government introduced the feed-in tariff system (FiT). This FiT mechanism allows renewable electricity producers to sell their electricity to Tenaga Nasional Berhad (TNB) or Sabah Electricity Sdn Bhd (SESB) in Sabah at a fixed price for 16 or 21 years, depending on the type of energy source.

145 new biogas plants are currently planned by 2019. With the financial incentives for the companies, these plants are to be completed on time and connected to the grid. In addition, many plants that have already been built are still relatively young, but prone to errors. The plants and plant components purchased mainly in the region are cheaper, but it can still be seen that the plants often do not meet expectations. This brings with it an interest in technology, service, know-how transfer and planning. Due to the new ambitious goal of Energy Minister Yeo Bee Yin to obtain 20% of the energy in Malaysia from renewable energy sources by 2025, the demand for and interest in alternative energy sources such as biogas is increasing. European entrepreneurs may consider becoming pioneers in this technology and marketing it in Malaysia.

 

by Thomas Brandt, General Manager, Malaysian-German Chamber of Commerce and Industry: https://www.malaysia.ahk.de/

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