Inve$t | Market Sentiments | 21 July 2023
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According to Economy Minister Rafizi Ramli, Malaysia has been recognised as the best country in Southeast Asia in the Energy Transition Index by the World Economic Forum (WEF). The index takes into account the system performance and the country’s readiness to switch to more environmentally friendly energy sources. This achievement shows that Malaysia is on the right track to manage a fast, safe and affordable energy transition.
Malaysia also has various strategic advantages, such as a strategic location, diverse renewable energy sources (RES) and a high level of skills to become a regional leader in the field of energy transition. The country is expected to be able to seize the opportunity to attract global investments in the clean technology sector, which has reached RM5 trillion in 2022 and this value is expected to continue to increase in the coming years.
Meanwhile, the Economy Ministry will launch the National Energy Transition Roadmap (NETR) Phase 1 during the Invest Malaysia KL 2023 Special Series programme, organised by Bursa Malaysia, in collaboration with CLSA and Maybank in Kuala Lumpur on July 27. The launch of NETR Phase 1 is the starting point in efforts to mainstream the energy transition of the national development narrative.
NETR will announce the implementation of 10 flagship pilot projects that are expected to generate investments amounting to RM25 billion, the creation of 23,000 high-quality job opportunities and the reduction of carbon dioxide equivalent emissions by more than 10,000 gigagrammes per year, cumulatively.
The NETR is a comprehensive follow-up to the current policy reforms related to renewable energy sources by the Economy Ministry and the Natural Resources, Environment and Climate Change Ministry, particularly the new target increase of renewable energy installed capacity from 40% in 2035 to 70% by 2050.
The Economy Ministry hopes that the NETR would drive a strategic agenda to create new high-paying job opportunities, boost domestic and foreign investment participation, ensure the continuity of the country’s energy supply and make Malaysia a regional leader in the clean energy industry in the long term.
SC’s Waqf-featured funds raised RM46.7m as of Dec 2022
According to Securities Commission Chairman Datuk Seri Awang Adek Hussin, Waqf-featured funds (WQ-FF) have raised aggregate funds totalling RM46.7 million as of December 2022. He said that although the amount might be a little small, it was undoubtedly a clear sign that the WQ-FF is moving in the right direction adding that six WQ-FFs have been issued following the launch of the WQ-FF framework in 2020.
In his welcoming remarks at the Waqf and Islamic Capital Market Conference on July 20, he explained that the WQ-FF allows investors to give a portion of their dividends from unit trusts or wholesale funds to charity or charitable projects in the form of cash. The framework was expanded last year to include Islamic Real Estate Investment Trusts (REITs) and Islamic exchange-traded funds to further deepen and broaden the choice of products. The WQ-FF framework has been able to promote greater collaboration between Islamic fund management companies and state Islamic religious councils.
He was pleased with the development to-date in that there has been an increase in efforts by all parties in exploring and identifying the potential of waqf asset development. Islamic social finance, especially waqf, has plenty of room for growth, benefitting from a wide range of Islamic capital market instruments available to support sustainability financing while addressing socio-economic imbalances and developments.
To optimise Islamic finance instruments, the SC and all stakeholders need to work towards a common goal with a common purpose, namely, putting Islamic social finance high on the national agenda, in line with the growing focus on environmental, social and corporate governance financing globally.
Energy Exchange in the works, to support country’s export of renewable energy – Nik Nazmi
According to Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad, Malaysia will launch an Energy Exchange to support the export of renewable energy (RE) to neighbouring countries. The Energy Commission (TEC) is currently drafting details to facilitate the exchange which will be announced this year and is preparing a working paper for approval at the government level.
The TEC will look at some of the available models and among the goals is to first secure enough RE to supply in the country and then ensure we get the best value for sales abroad and allow that value to be reinvested to boost the RE sector in Malaysia. He was speaking at the Malaysian Industrial Development Finance Bhd (MIDF) roundtable.
To support the country’s energy transition, Malaysia should look at other sources of energy generation such as mini-scale hydropower and not look at large-scale hydropower which is quite problematic because of the many trade-offs. Malaysia also needs to look at battery storage systems which will play an increasingly pivotal role to support cheaper RE prices.
On Malaysia imposing a carbon tax, he said that the country would need tax reforms to support the industry and the Ministry of Finance is taking the lead on that. When talking about achieving a net-zero carbon emission target by 2050, the tax has to play a role because there will be a price to pay for carbon.
Eye On The Markets
On Thursday (20July), the Ringgit closed at 4.5500 against the USD and 3.4390 to the Sing Dollar. On Monday (17July), the FBM KLCI opened at 1411.77. As at Thursday (20July) 5:00pm, the FBM KLCI was down 5.08 points for the week at 1406.69. Over in US, the overnight Dow Jones Industrial Average closed up 163.97 points (+0.47%) to 35,225.18 whilst the NASDAQ shed 294.71 points (-2.05%) to 14,063.31.
