Malaysia
Tiger cub seeks green tech solutions
Note: The Tracker was initially designed and researched before the emergence of the COVID-19 pandemic. While we believe that the social, environmental and economic policies that the Tracker charts are more vital than ever in a post-COVID world, we welcome feedback on how the Tracker countries are stepping up - or stepping back - their ambition in these areas.
Since achieving colonial independence in 1957, Malaysia has been a South-East Asian success story; its wealth of natural resources, rapid industrialisation and booming tech sector have lead fifty years of strong economic growth. Now the 25th largest economy in the world by purchasing power parity, this "Asian Tiger cub" has innovated its way to prosperity. But can it meet the pressing environmental challenges ahead?
Malaysia's rise to upper-middle income status has brought prosperity to its 32 million inhabitants, who enjoy an unusual degree of affluence compared to the citizens of similarly-sized economies such as Mexico. This is thanks to relatively low cost of living and a comprehensive social welfare system with fully-subsidised universal healthcare and direct cash transfers for lower-income families.
As befits a thriving tech hub, Malaysia is strong on policies for innovation, research and technology – including cutting edge green technologies. Greentech Malaysia, a state-run body charged with “spearheading the development of green technology as an engine of socio-economic growth”, has been directing investment and regulation under the Ministry of Energy since 2010, and the Green Technology Master Plan 2017-2030was launched in 2016 to set out a detailed roadmap for tech-led sustainability in key sectors, including energy, manufacturing, transport and water.
Malaysia is also a centre for social enterprise innovation and green SMEs, with a Social Enterprise Blueprint and sectoral support bodies providing technical support, investment and legal assistance aiming for a “self-sustaining, equitable, and people-centric sustainable entrepreneurship ecosystem.”
Providing broader strategic vision is the 11thMalaysia Plan 2016-2020 (Rancangan Malaysia ke-11), the latest in the series of five-year plans which have guided economic development since independence. Although the 12th plan is currently under development, the existing strategy offers a good vision for green economy, with chapters on sustainable growth, climate resilient development, and sustainable energy – though little policy detail or targets.
Although undeniably strong on technology and social enterprise, Malaysia’s green economy transition is seriously lagging behind on environmental protection, energy transition and decarbonisation. Over 90% of Malaysia's electricity comes from fossil fuels, it is the world’s third-largest exporter of liquefied natural gas and the second-largest exporter of palm oil, and the government is currently considering plans to increase subsidies for fossil fuels.
With forest fires, flooding, serious urban air pollution and climate-related disasters all rising rapidly, Malaysia may already be starting to pay the price for unbalanced industrial development. Some pilot schemes are beginning to re-value Malaysia’s wealth of nature and biodiversity and try to address the country’s growing carbon emissions. But without more ambition and real commitment to economic reform, Malaysia is in danger of discovering that technology alone is not enough to confront the environmental challenges it faces.
Policy Scores
Last updated 10 Dec 2019
Governance
National green economy plan
The 11th Malaysia Plan 2016-2020 (2015) is the strategic document used. While it has a comprehensive chapter on GE it it will need to be updated soon in order to maintain this score.
The 11th Malaysia Plan 2016-2020 (2015) is the strategic document used. While it has a comprehensive chapter on GE it it will need to be updated soon in order to maintain this score.
Inclusive governance
There are several state-level community-based projects. However, a regular, NGO/community-based consultation on environmental, conservation issues is lacking, and occurs at the discretion of state authorities. There appears to be increasing recognition and efforts to include NGOs/community groups in policy (implication of local communities in conservation projects in the past).
There are several state-level community-based projects. However, a regular, NGO/community-based consultation on environmental, conservation issues is lacking, and occurs at the discretion of state authorities. There appears to be increasing recognition and efforts to include NGOs/community groups in policy (implication of local communities in conservation projects in the past).
SDG business strategy
Reporting tool exists, but does not mention SDGs especially,and it is limited to carbon reporting. Additional initiatives include national SDG Roadmap developed (applicable 2016-2030 and only finalised in 2017-2018), but reporting tools or follow-up absent.
Reporting tool exists, but does not mention SDGs especially,and it is limited to carbon reporting. Additional initiatives include national SDG Roadmap developed (applicable 2016-2030 and only finalised in 2017-2018), but reporting tools or follow-up absent.
Wealth accounting
Indicators will be implemented describing some if not all elements included in natural capital. Additional relevant initiatives include Project Chronos of the sovereign wealth fund for social and environmental impact measurement, but detail are not public. Work in progress to include indicators in national wealth accounts.
Indicators will be implemented describing some if not all elements included in natural capital. Additional relevant initiatives include Project Chronos of the sovereign wealth fund for social and environmental impact measurement, but detail are not public. Work in progress to include indicators in national wealth accounts.
Finance
Green finance plan
Some public commitments made by government officials to sustainable finance, particularly impact investing on social issues; support programmes for green finance at the Securities Commission and the Central Bank; and a Green Technology Financing Scheme, providing guidance to companies seeking investment for green economy. However, the green finance landscape can be confusing for companies due to coordination issues between agencies.
Some public commitments made by government officials to sustainable finance, particularly impact investing on social issues; support programmes for green finance at the Securities Commission and the Central Bank; and a Green Technology Financing Scheme, providing guidance to companies seeking investment for green economy. However, the green finance landscape can be confusing for companies due to coordination issues between agencies.
Green fiscal & monetary policy
Limited information on fiscal reform or a sustainability evaluation of public spending, with the 11th plan outlining potential use of economic instruments like green tax, carbon tax, and REDD+ ‘where appropriate’, without funding or investment details. No particular green monetary policy in place, though systemic risks are recognised.
Limited information on fiscal reform or a sustainability evaluation of public spending, with the 11th plan outlining potential use of economic instruments like green tax, carbon tax, and REDD+ ‘where appropriate’, without funding or investment details. No particular green monetary policy in place, though systemic risks are recognised.
Safe & accountable banks
Banks are required to conduct regular systemic stress testing, but only against financial indicators. No mandated or voluntary environmental / social risk assessment.
Banks are required to conduct regular systemic stress testing, but only against financial indicators. No mandated or voluntary environmental / social risk assessment.
Pricing carbon
No carbon trading initiative, but a Clean Development Mechanism was launched in 2010 to benefit from Kyoto Protocol-era emission-reduction projects to earn certified emission reduction (CER) credits, but unclear impact to date. Carbon taxation mentioned in the 11th Malaysia Plan but no clarity on future plans.
No carbon trading initiative, but a Clean Development Mechanism was launched in 2010 to benefit from Kyoto Protocol-era emission-reduction projects to earn certified emission reduction (CER) credits, but unclear impact to date. Carbon taxation mentioned in the 11th Malaysia Plan but no clarity on future plans.
Sectors
Green sectoral policy plan
The Green Technology Master Plan outlines development plans for key sectors, including energy, manufacturing, transport, construction, waste, and water with key targets for 2010, 2020, and 2030, supported by the Green Technology Corporation within the Ministry of Energy, Environment, Technology and Climate Change. However, the master plan focuses almost exclusively on technology and thus ignores green finance, incentives, and other elements of the green economy (e.g. conservation, biodiversity etc.)
The Green Technology Master Plan outlines development plans for key sectors, including energy, manufacturing, transport, construction, waste, and water with key targets for 2010, 2020, and 2030, supported by the Green Technology Corporation within the Ministry of Energy, Environment, Technology and Climate Change. However, the master plan focuses almost exclusively on technology and thus ignores green finance, incentives, and other elements of the green economy (e.g. conservation, biodiversity etc.)
Small business support
The Malaysian Global Innovation and Creativity Agency (MaGIC) has launched a Social Enterprise Accelerator, with funding from the Ministry of Finance, to provide capacity building, legal assistance, and targets for a “sustainable entrepreneurship ecosystem.” The Malaysian Social Enterprise Blueprint, launched in 2015, sets out a strategy for achieving a “self-sustaining, equitable, and people-centric” social enterprise sector, but expired in 2018 and needs updating.
The Malaysian Global Innovation and Creativity Agency (MaGIC) has launched a Social Enterprise Accelerator, with funding from the Ministry of Finance, to provide capacity building, legal assistance, and targets for a “sustainable entrepreneurship ecosystem.” The Malaysian Social Enterprise Blueprint, launched in 2015, sets out a strategy for achieving a “self-sustaining, equitable, and people-centric” social enterprise sector, but expired in 2018 and needs updating.
Carbon budgeting
No specific carbon budget. Paris Agreement commitments target a 40% reduction in carbon by 2020, compared with 2005 levels. Target is conditional upon “receiving technology transfer and finance of adequate and effective levels from developed countries”.
No specific carbon budget. Paris Agreement commitments target a 40% reduction in carbon by 2020, compared with 2005 levels. Target is conditional upon “receiving technology transfer and finance of adequate and effective levels from developed countries”.
Clean energy policy
Policy commitment to achieving 20% renewable energy capacity share by 2030, but no clear pathways for implementation and no legally binding measures. Reducing transport and buildings emissions is not a clear priority, though public transport planning offers electrification opportunities.
Policy commitment to achieving 20% renewable energy capacity share by 2030, but no clear pathways for implementation and no legally binding measures. Reducing transport and buildings emissions is not a clear priority, though public transport planning offers electrification opportunities.
People
Green jobs
Inclusivity mentioned as an essential element of the 11th Malaysia Plan, but ambition somewhat lacking on inequality, and no specifics on sustainable employment or green jobs.
Inclusivity mentioned as an essential element of the 11th Malaysia Plan, but ambition somewhat lacking on inequality, and no specifics on sustainable employment or green jobs.
Pro-poor policy
No significant policies found in relation to the inclusion of environmental issues in poverty reduction. Malaysia’s main social welfare strategy is the B40 programme, which includes cash grants, health screening and insurance, student loan supports etc; but no integration of environmental or green factors in social support.
No significant policies found in relation to the inclusion of environmental issues in poverty reduction. Malaysia’s main social welfare strategy is the B40 programme, which includes cash grants, health screening and insurance, student loan supports etc; but no integration of environmental or green factors in social support.
Participatory policymaking
Gender inequality is mentioned only briefly in the 11th Plan, and no mention given to gender-sensitive consultation. Planning for including Indigenous and local communities (ILCs) in biodiversity conservation and alternative livelihood opportunities is considered in the 11th plan, but little policy detail is available. No requirements for assessment of government policies for impacts on women and marginalised groups.
Gender inequality is mentioned only briefly in the 11th Plan, and no mention given to gender-sensitive consultation. Planning for including Indigenous and local communities (ILCs) in biodiversity conservation and alternative livelihood opportunities is considered in the 11th plan, but little policy detail is available. No requirements for assessment of government policies for impacts on women and marginalised groups.
Innovative social protection
Malaysia has a long history of innovative social policy, since the “New Economic Policy” of 1970. Land resettlement programmes have been successfully used to alleviate rural poverty, while an innovative unconditional cash transfer scheme, the BR1M, was launched in 2012. These policies are not explicitly linked to green economy, but they have had a notable impact.
Malaysia has a long history of innovative social policy, since the “New Economic Policy” of 1970. Land resettlement programmes have been successfully used to alleviate rural poverty, while an innovative unconditional cash transfer scheme, the BR1M, was launched in 2012. These policies are not explicitly linked to green economy, but they have had a notable impact.
Nature
Ocean & land conservation
Specific strategies in place for both SDG14 and 15, however targets are unclear and implementation remains limited. The 2017 Voluntary National Review identifies institutional capacity and monitoring as key areas for improvement.
Specific strategies in place for both SDG14 and 15, however targets are unclear and implementation remains limited. The 2017 Voluntary National Review identifies institutional capacity and monitoring as key areas for improvement.
Natural capital accounts
No national-level natural capital accounts, although the Ministry of Finance is currently preparing national wealth accounts with the support of UNDP. Environmental indicators across marine, land, aquaculture, forestry etc are included in the national Compendium of Environmental Statistics, and the Natural Resources Department has conducted a valuation of marine biodiversity based on Malaysia's Marine Parks.
No national-level natural capital accounts, although the Ministry of Finance is currently preparing national wealth accounts with the support of UNDP. Environmental indicators across marine, land, aquaculture, forestry etc are included in the national Compendium of Environmental Statistics, and the Natural Resources Department has conducted a valuation of marine biodiversity based on Malaysia's Marine Parks.
Natural capital committee
No mention of a commission to provide guidance on natural capital accounting. Current biodiversity valuations conducted by private, third-party consultants and civil services.
No mention of a commission to provide guidance on natural capital accounting. Current biodiversity valuations conducted by private, third-party consultants and civil services.
Nature-based fiscal reform
Some mention of payments for ecosystem services (PES) under the 11th Plan, but no follow up to date; some state-level PES programmes planned around forestry but yet to be implemented. Broad reform ambitions need to be met with clear policy.
Some mention of payments for ecosystem services (PES) under the 11th Plan, but no follow up to date; some state-level PES programmes planned around forestry but yet to be implemented. Broad reform ambitions need to be met with clear policy.