Positioning Malaysia as a Green Investment Destination - MIDA | Malaysian Investment Development Authority
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Positioning Malaysia as a Green Investment Destination

>Services>Positioning Malaysia as a Green Investment Destination

Positioning Malaysia as a Green Investment Destination

Malaysia’s dedication to green initiatives signals its emergence as a prominent destination for Green Investment in the region. This is apparent as the country is committed to reducing Greenhouse gases (also known as GHG) emissions by 2030 to 45 percent as a party to the Paris Agreement 2015.1 Under the Twelfth Malaysia Plan (2021-2025), Malaysia is pledged towards Net Zero GHG Emission aspiration by 2050. This commitment is further supported by various other master plans such as the New Industrial Master Plan (NIMP) 2030, National Renewable Energy Roadmap (NETR), and National Energy Policy 2022-2040.

 

Renewable Energy (RE) is a focal area under the NIMP, with Malaysia targeting a rise in installed RE capacity, from 40 percent in 2040 to an impressive 70 percent by 2050 through the NETR. This demonstrates a seamless synchronisation between master plans, aligning various ministries, and agencies as well as the cooperation of the private sector towards shared RE goals.

 

As of 2022, Malaysia’s installed RE capacity stood at 25 percent with 9,856 megawatt installed capacity – the Malaysian Government anticipates potential investment ranging from RM1.2 trillion to RM1.3 trillion by 2050, thereby contributing an estimated RM220 billion to the country’s GDP. The roadmap also anticipates the creation of 310,000 green jobs.2

 

The ambitious targets set by the NETR, coupled with MIDA’s insights into green investment trends, pave the way for Malaysia to offer new economic opportunities especially for RE100 companies, to operate within the country.

 

One of the primary considerations for RE100 investors involves selecting project locations dependent on access to RE (100 percent RE) in the country. Presently, over 400 large companies have pledged to fulfil the entirety of their electricity needs using RE sources. Hence, it becomes crucial to guarantee the availability and accessibility of RE for these corporations. Looking ahead, MIDA aims to engage with RE100 companies that are environmentally and socially committed. In alignment with this, the Government is actively undertaking efforts to meet the renewable energy requirements of these environmentally and socially committed companies.

 

Several programmes such as Feed-in Tariff (FiT) New Enhanced Dispatched Arrangement (NEDA), Large Scale Solar (LSS), Net Energy Metering (NEM), Self-Consumption (SelCo), Green Electricity Tariff (GET), and Corporate Green Power Programme (CGPP) have been introduced to promote RE in Malaysia.

 

All of these programmes together with the green incentives promoted by MIDA has attributed to the total approved investment in Green Technology amounting to RM39.3 billion with 4,150 approved projects as of September 2023 covering RE, Energy Efficiency, Integrated Waste Management, Electric Vehicle – Services, Green Building, and Green Services activities. Under RE, solar remained the main source in Malaysia with a total of 3,362 projects approved from 2001 to September 2023. This is due to the strategic location of Malaysia in the Sun Belt region, where solar radiation levels are twice as high as in other countries.

 

In October 2023, the green technology tax incentive was expanded to include new sub-sectors namely Green Hydrogen and Wind Energy, under the Budget 2024.3 Effective from 1 January 2024 until 31 December 2026, the Green Investment Tax Allowance (GITA) Project for Business Purposes underwent revision and reintroduction, now featuring a tiered mechanism as follows:

 

Tier -1: Green Hydrogen

100 percent Green Investment Tax Allowance (GITA) to be off-set against 100 percent or 70 percent of Statutory Income for the period of 10 years (5 +5)

 

Tier-2: Integrated Waste Management and Electric Vehicle Charging Station

100 percent GITA to be off-set against 100 percent Statutory Income for the period of five (5) years

 

Tier-3: Renewable Energy Projects (Biomass, Biogas, Mini Hydro, Geothermal, Solar, and Wind Energy)

100 percent GITA to be off-set against 70 percent of Statutory Income for the period of five years

 

Additionally, GITA Asset (Own Consumption) has undergone revision and reintroduction, encompassing verified qualifying expenditures for the purchase of green technology assets from 1 January 2024 to 31 December 2026. The reintroduction features a tiered mechanism, detailed as follows :-

 

Tier -1: Battery Energy Storage System, and Green Building

100 percent Green Investment Tax Allowance (GITA) to be off-set against 70 percent of Statutory Income

 

Tier-2: Renewable Energy System, and Energy Efficiency

60 percent Green Investment Tax Allowance (GITA) to be off-set against 70 percent of Statutory Income

 

Last but not least, the review also includes the Green Investment Tax Exemption (GITE) Solar Leasing for applications received between 1 January 2024 to 31 December 2026 as follows:

 

Projects with more than 3 megawatt installed capacity and less or equals to 10 megawatt of installed capacity

Tax exemption on Statutory Income will be given up to 70 percent for the period of five (5) years

 

Projects with more than 10 megawatt installed capacity and less or equals to 30 megawatt installed capacity

70 percent for the period of ten (10) years

To support these initiatives, applications for GITA project (Business Purpose) and GITE (Solar Leasing) can be submitted online to MIDA at URL https://investmalaysia.mida.gov.my. while submissions for GITA Asset for (Own-Consumption) can be made to the Malaysian Green Technology and Climate Change Corporation (MGTC) effective 1 January 2024. For more information visit https://www.mida.gov.my/.

 

As Malaysia continues to pave the way for sustainable investments, it stands as a testament to its commitment to future generations, acting as responsible stewards of the planet while promoting socio-economic goals for a better and more sustainable tomorrow.

 

To learn more about investment opportunities in green technology industry, please contact the Green Technology Division, MIDA at https://www.mida.gov.my/staffdirectory/green-technology-division/.

 

1 World on track to limiting temperature increase as agreed in Paris Agreement –  https://www.nst.com.my/news/nation/2023/10/963135/world-track-limiting-temperature-increase-agreed-%C2%A0paris-agreement

2 National Energy Transition Roadmap (NETR) – https://www.ekonomi.gov.my/sites/default/files/2023-09/National%20Energy%20Transition%20Roadmap_0.pdf

3 https://ringgitplus.com/en/blog/budget-2024/ev-and-solar-incentives-to-continue-under-budget-2024.html

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