SE Asia Faces Clean Energy Investment Gap, Malaysia Needs RM1.3 Trillion For Sustainability Goals

The Securities Commission Malaysia (SC) Chairman, Dato’ Mohammad Faiz Azmi said that Southeast Asia faces investment gap in achieving clean energy goals.

During his opening speech today (June 20) at SIDC Sustainable and Responsible Investment Conference 2024 he highlighted that recent report from the International Energy Agency’s World Energy Investment 2024 has pointed out significant challenges in Southeast Asia’s pursuit of ambitious long-term clean energy objectives.

“…investments are not yet on track. There are significant  gaps between investment trends and the region’s long-term goals,” he said. 

Over the last three years, the average annual energy investment in Southeast Asia stood at USD 72 billion. However, he quoted the the report, saying this figure needs to more than double to USD 130 billion by the end of the decade to align with the Announced Pledges Scenario (APS) outlined by regional countries.

As Malaysia has committed to achieving net zero carbon emissions by 2050 under its 12th Malaysia Plan, and aimed to slash carbon intensity by 45% against GDP by 2030, Mohammad Faiz said that Malaysia needs RM1.3 trillion between now and 2050 in order to achieve the energy transition goals.

He added, “considering the huge financing requirement, the capital market in Malaysia must be  ready to facilitate fund raising and investments to support the Government’s priorities  in achieving its sustainability and climate goals.”

Sustainable Investment Growth in Malaysian Capital Market

Since embedding Sustainable and Responsible Investment (SRI) into the Capital Market Masterplan CMP2 in 2011, Mohammad Faiz said that SC has played a pivotal role in paving the way for sustainability initiatives. Under CMP3 and the SRI Roadmap, they continue to cultivate a robust SRI ecosystem in Malaysia. This includes the introduction of innovative capital market products tailored to meet diverse business and investor needs.

These efforts have already yielded early successes, notably with the issuance of RM27.61 billion in SRI Sukuk in Malaysia. The landmark issuance of the world’s first green sukuk for renewable projects underscores Malaysia’s leadership in financing sustainable development goals and climate ambitions. Projects encompassing renewable energy, sustainable agriculture, waste management, water conservation, affordable housing, green buildings, and education have benefited from these funds.

In November, the SC introduced the Maqasid al-Shariah Guidance Islamic Capital Market, enhancing Shariah-compliant standards to fortify positive societal and environmental contributions. Emphasising “Humanity” as its first aspiration, the guidance prioritises human well-being, including food security, healthcare accessibility, and quality education, through ethical financial practices and innovations that address societal needs.

Malaysia has experienced a significant surge in sustainable investments, with 68 SRI funds totaling RM7.7 billion in net asset value as of December 2023, up from just seven funds amounting to RM1.46 billion in 2020.

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