KUALA LUMPUR - The National Industry Environmental, Social and Governance framework (i-ESG) for the Manufacturing Sector, to be launched by September 2023, could tap into the growing green businesses in Southeast Asia estimated at US$200 billion (US$1=RM4.67) by 2030.
Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said the framework comprises four key components: standards, financial support and incentives, capacity building, and market mechanisms.
"What we are looking to do is also to promote and nurture green manufacturing. Note that green businesses in Southeast Asia present up to an estimated US$200 billion opportunity by 2030,” he said in keynote address at the Second Malaysian Banking Conference here, today.
The two-day conference is organised by the Asian Institute of Chartered Bankers (AICB) and Association of Banks in Malaysia (ABM).
He said the framework aims to encourage the manufacturing sector to embrace ESG practices by providing clear guidelines and enablers for companies, including small and medium enterprises (SMEs).
Financial institutions
Tengku Zafrul welcomed financial institutions to consider allocating resources to industries, manufacturers and exporters in areas such as sectoral decarbonisation, electric mobility, hydrogen energy, large-scale carbon capture, utilisation and storage, as well as technologies on circular economy and green infrastructure.
He said it is only when there is a concerted public-private push that a nation can mobilise serious financing or capital to move the needle towards effectively decarbonising of the economy and achieving ESG agenda, while nurturing broad-based growth.
"We can and must try to change potentially catastrophic climate-change effects on Malaysia. But the window for us to do so is getting smaller by the month."
"To that end, I sincerely hope that Malaysia’s financial industry will work closely with the Ministry of Investment, Trade and Industry (Miti) to ramp up our collaborative efforts by being bolder and more aggressive on ESG financing and investments, especially for SMEs in our manufacturing, investments and trade value chains."
The minister further said Malaysia is staunchly committed to its target to be net zero by 2050, and many other policies are aligned with the national targets related to the Sustainable Development Goals and ESG.
For instance, the government has introduced the Green Investment Tax Allowance, Green Income Tax Exemption, as well as the National Automotive Policy 2020 and Low Carbon Mobility Blueprint, wherein the government has also introduced a tax incentive for manufacturers of electric vehicle charging equipment.
SMEs
On SMEs, Tengku Zafrul said their role as a crucial future driver of inclusive, broad-based economic growth is at risk if they cannot comply with ESG requirements.
In 2021, he noted that there were 1.23 million SMEs, accounting for 97.4 per cent of all registered businesses in Malaysia.
Despite their sheer numbers, the micro enterprises and SMEs contributed just 37.4 per cent to gross domestic product, 11.7 per cent of total exports and 47.8 per cent of total employment in Malaysia. These are generally lower than the Southeast Asian average figures, he said.
"Unfortunately, Southeast Asia is confronted by major and interlinked ESG challenges, including a lack of policy alignment and coordination across countries in the region to address ESG risks and challenges.
Tengku Zafrul said Miti is aware of the key challenges facing SMEs in embracing ESG which are cost, complexity and capacity issues and competing priorities.
"FInancing to help these SMEs embrace ESG considerations will go a long way towards helping them remain in key supply chains that will only become more and more ESG-driven in the years to come."
Besides this, technology as well as consistent, transparent and reliable data play a key role not just in driving innovation, but also in making it easier and simpler for companies, including SMEs, to comply with ESG requirements, he explained. - BERNAMA