Green Infrastructure Investment Opportunities 2020 REPORT

Supported by Capital Markets Malaysia Malaysia GIIO Report Climate Bonds Initiative 1 1. Sponsor’s note

Malaysia has a long and successful history in advocating the use of Islamic finance and Islamic capital market instruments. As one of the largest issuers of Sukuk (Islamic bonds) globally, the country’s financial regulators and industry players have been at the forefront of innovation in Islamic finance. This is exemplified by the leadership role it has played in leveraging the collective Islamic finance expertise of its market players to create Shariah- compliant green and sustainable finance instruments. The issuance of the Sustainable and Responsible Investment (SRI) Sukuk Framework in 2014 by the Securities Commission Malaysia (SC) marked a pivotal milestone in Malaysia’s journey in building a sustainable finance and investing ecosystem – one that would be intertwined with and facilitated by the country’s significant leadership in the Islamic capital market. This report details the green investment opportunities in renewable energy, green buildings, low carbon transport and water management, available in Malaysia. In addition, it highlights how green Sukuk has been leveraged on, to fund green projects. Since the world’s first green Sukuk issuance in 2017 by Tadau Energy in Malaysia, Malaysian issuers have issued a total of 13 green Sukuk and bonds to finance a range of projects including large-scale solar farms, green buildings and a mini-hydropower plant. Malaysia’s development in this space is due in no small part to our financial sector intermediaries who have demonstrated a strong commitment to building a holistic sustainable finance ecosystem and have displayed innovation in structures and breadth of product offerings. For its part, Malaysia’s financial regulators have endeavoured to create an enabling ecosystem for green finance transactions, including the introduction of tax incentives, grants and capacity building to strengthen and support its financial sector intermediaries. Capital Markets Malaysia, as an affiliate of the SC, plays a unique role in supporting the country’s sustainable finance ecosystem. With a mandate to position and profile, whilst also supporting development in this space, it is our hope that this Green Infrastructure Investment Opportunities Report conveys the noteworthy green investment opportunities available in Malaysia.

Sincerely,

Zalina Shamsudin General Manager, Capital Markets Malaysia

About Capital Markets Malaysia

As part of its developmental mandate, participation and enhance opportunities for CMM also continuously engages with the Securities Commission Malaysia Malaysian capital market intermediaries. the capital market regulator, providing (SC) set up Capital Markets Malaysia market insights, business development CMM engages with a wide range of (CMM) to spearhead both the local and stakeholder engagement support to international and domestic stakeholders, and international positioning and market development initiatives. connecting local capital market profiling of the Malaysian capital intermediaries to foreign stakeholders and market. CMM profiles the providing a global platform to position competitiveness and attractiveness Malaysia’s unique capital market offerings of the various segments of the capital and expertise. As an affiliate of the SC, market to increase international

Malaysia GIIO Report Climate Bonds Initiative 2 2. Introduction

This report highlights green infrastructure investment opportunities in Malaysia. It has been prepared to help meet the growing demand for green investment opportunities and to support the country’s transition to a low carbon economy. It aims to facilitate greater engagement on this topic between project owners and developers, and institutional investors. Green infrastructure and corresponding green finance instruments are explored in the report, with sector-by-sector investment options presented. The report is intended for a wide range of stakeholders, including domestic superannuation funds and asset managers and their global counterparts, potential issuers, infrastructure owners and developers, as well as relevant government ministries. In developing this report, the Climate Bonds Initiative consulted with key Government bodies, industry, the financial sector, peak bodies, NGOs and think tanks – in partnership with Capital Markets Malaysia. We would like to thank these partners along with the other organisations that contributed to the report:

Report highlights

• Malaysia needs a cumulative • SRI Sukuk and Bond Grant Scheme • There is growing momentum on infrastructure investment of roughly was one of the first global examples of green infrastructure and the sample USD460bn from 2016-2040. incentive structures to support green pipeline demonstrates that most of bond issuance. the technology required is not new to • To meet its Paris Agreement targets, Malaysia - in particular public transport much of this investments needs to be • Malaysia is the global leader in green and solar energy. directed at green infrastructure. sukuk issuance with 13 deals from 11 different issuers out of a global total of 23 • The post-COVID recovery represents • Green finance including green bonds deals and 16 issuers. an opportunity to focus recovery on and sukuk will be essential to finance green stimulus to meet Malaysia’s Paris the transition to a low carbon economy • There is already a pipeline of green Agreement targets. investments in Malaysia across transport, • Malaysia has shown global leadership energy, water and waste infrastructure. on sustainable finance, implementing a range of policy support and requirements since 2011.

Malaysia GIIO Report Climate Bonds Initiative 3 Green Infrastructure Investment Opportunities (GIIO) Table of contents Report Series 2 1. Foreword Green infrastructure presents a huge investment opportunity globally, with an 3 2. Introduction estimated USD100tn worth of climate compatible infrastructure required between now and 2030, in order to meet Paris Agreement emissions reduction targets. However, 4 3. Malaysia context there remains limited identifiable, investment-ready and bankable projects, particularly • Country facts in emerging markets. There is also a lack of understanding of what types of assets and

projects qualify for green financing. • Malaysia’s macroeconomic outlook In response to this challenge, CBI is developing a series of reports that aim to identify

and demonstrate green infrastructure investment opportunities around the world. By • Infrastructure spending so doing, it aims to raise awareness of what is green and where to invest, as well as to • Malaysia’s climate policy promote green bond issuance as a tool to finance green infrastructure. 10 4. Malaysia green finance trends The report series commenced with the GIIO Indonesia report, launched in May 2018 and opportunities and now includes Australia & New Zealand, Philippines, Vietnam and Brazil report. The pipeline of GIIO reports being developed includes further exploration of opportunities • Malaysian green bond and sukuk in Asia-Pacific as well as opportunities in Latin America. marketg

• Financing credible transitions in Malaysia

• The role of Development Finance

Institutions (DFIs)

18 5. Deep Dive: Green sukuk opportunities Green Infrastructure Green Infrastructure Investment Opportunities Investment Opportunities • Green Sukuk in Malaysia AUSTRALIA 2019 VIETNAM 2019 REPORT • Trends in global green sukuk issuance

• Potential for growth of the global sukuk market

23 6. Green infrastructure investment opportunities

Supported by European Climate Foundation Sponsors • Renewable energy

• Sustainable water management

• Sustainable waste management Green Infrastructure Green Infrastructure Investment Opportunities Investment Opportunities AUSTRALIA & NEW ZEALAND INDONESIA • Other green opportunities UPDATE REPORT 43 7. Measures for growing green infrastructure 44 Appendices • Appendix 1: Green standards in Malaysia

Sponsors Appendix 2: Sample Green Pipeline Supported by European Climate Foundation •

• Endnotes

Climate Bonds Initiative The Climate Bonds Initiative (CBI) is an the cost of capital for large-scale climate and certification scheme. CBI screens international investor-focused not-for- and infrastructure projects and to support green finance instruments against its profit organisation working to mobilise governments seeking increased capital markets Climate Bonds Taxonomy to determine the USD100tn bond market for climate investment to meet climate and greenhouse alignment and uses sector specific criteria change solutions. gas (GHG) emission reduction goals. for certification. It promotes investment in projects and The CBI carries out market analysis, The Climate Bonds Taxonomy is on the assets needed for a rapid transition to a policy research, market development; back cover. Please see p. xx for information low carbon and climate resilient economy. advises governments and regulators; and on the Climate Bonds Standard and The mission focus is to help drive down administers a global green bond standard Certification Scheme.

Malaysia GIIO Report Climate Bonds Initiative 4 Green infrastructure: an opportunity for growth

Malaysia has been one of the fastest growing performs well on overall infrastructure quality (Islamic bond) issued by a Malaysian economies in ASEAN with the third largest globally, ranking 27th out of 141 countries entity was in July 2017, by Tadau Energy, economy in Southeast Asia and the 35th in the 2019-2020 Global Competitiveness for MYR250m (USD62.1m) with use of largest economy in the world.1 The COVID-19 Report.6 Despite this, climate change and proceeds for renewable energy. As of 31 pandemic has put some pressure on the population growth will continue to put December 2020, green bond issuance from country’s prospects; however, economic pressure on this infrastructure. Malaysian entities amounted to USD1.36bn9 growth is expected to rebound gradually in and includes a large segment of green sukuk. Currently, much of the investment in 2021-2022, as global conditions improve.2 infrastructure in Malaysia is being carried In order to attract investors looking for The process of recovery from the COVID out through public funding and Public Private green, there needs to be a visible pipeline crisis needs to focus on building back better, Partnerships (PPP) ventures.7,8 However, of infrastructure investment opportunities by prioritising green infrastructure and public funding is not sufficient to meet the that align with internationally accepted nurturing a regulatory environment that growing demand for green infrastructure; definitions of green. A large and visible facilitates green and innovative investment. new channels will be necessary to Malaysian green infrastructure pipeline Climate change has already had significant mobilise private capital. Existing funding could also help investors to understand that adverse impacts on Malaysia, including commitments made by the government may there is a sufficiently large pool of financially increased annual surface temperature and also be challenged by the current COVID attractive investments that are also green. rainfall, sea level rise, and other extreme pandemic and ensuing economic crisis, The implication of this is that there are weather events.3 The country is also facing so access to capital markets will be key to viable alternatives to non-green assets and declining natural resources and increasing growing green pipelines. projects, and that investors can make their greenhouse gas (GHGs) emissions due to preferences for green heard, which will in Scaling up sustainable investment will intense energy consumption for its rapid turn spur the creation of a larger pool of depend on the Malaysian government’s level growth.4 green investments. of commitment to greening the economy. Scaling-up of investment in green Policies encouraging public investment in Globally, there has been limited awareness infrastructure is critical for Malaysia to green infrastructure have the power to set and appreciation of ‘what are green meet its climate commitments – including Malaysia on a sustainable course for the investments’ beyond solar and wind energy. the Paris Climate Change Agreement long run - sending an important signal to the This lack of understanding makes it difficult - and build resilience to the impacts of market and providing an opportunity for the for governments to develop pipelines of climate change as well as to achieve rapid country to access new capital. commercially viable, green infrastructure economic development. As a top priority investment opportunities that are able to Globally, there is significant demand for for the current Malaysia administration, support the nation’s transition to a low- green investments. Green debt instruments infrastructure development is being heavily carbon economy. (including green bonds and green loans) supported and promoted in government. that commit proceeds to climate and Improving the general investment Malaysia has some of the most well- environmental projects provide useful tools environment as well as promoting developed infrastructure among the newly for private investors looking to invest in more green finance will help to fund the industrialized countries in Asia.5 It also green ventures. The first ever green sukuk infrastructure necessary to meet climate targets. This means continuing to open up to investors looking for green and ensuring The post-COVID recovery: Building back better there is a pipeline of bankable, investment- ready projects. These measures will ensure The world is in the midst of a major crisis. could draw on green taxonomies such as that Malaysia is on the path to transitioning In ASEAN, the global COVID-19 pandemic those developed in the EU, ASEAN, and by to a low carbon economy and becoming has triggered economic recession that is the Climate Bonds Initiative, augmented more resilient to the impact of climate impacting the lives of millions across the to include assets that explicitly enhance change and other global shocks. region - with protective measures taken to resilience. Green infrastructure has positive prevent the virus’s transmission shutting As part of improving economic resilience, environmental and economic benefits. down large parts of the region’s economy. the programmes should exclude activities It can create prosperity by increasing Once this health crisis comes under which are at risk from future shocks. competitiveness, productivity and control, governments will need to For instance, assets that could become employment opportunities; extending the find ways to stimulate growth, to get stranded as a result of climate policy reach, reliability and efficiency of the national economies moving again. All future changes, or those that are not resilient to electricity grid, without creating air pollution; economic stimulus packages should aim climate physical risks. Investor confidence broadening the economic base; creating to contribute to building a healthier, more can be built by using available taxonomies new markets; and providing inclusion and resilient and more sustainable economy. with a high degree of international connectivity across Malaysia. recognition. This is a huge opportunity: to use green finance, to fund COVID-19 recovery efforts Governments simply need to focus on that also advance climate mitigation and investments that can be characterized as adaptation goals. Project inclusion for ‘building back better’, and greener. COVID-19 recovery bond programmes

Malaysia GIIO Report Climate Bonds Initiative 5 3. Malaysia context

Country facts Population: 32 million (early-2020)10 Population growth rate: 1.3% (early-2020)11 Urban population: 78.4% (early-2020)12 GDP: USD364.681bn (2019)13 GDP growth rate: 4.3% (2019)14 Interest rate (cash rate): 1.75% (as of Jan 2021)15 Inflation (consumer prices): 0.663% (2019)16 Net inflow FDI:USD7.5bn (Q1, March, 2020)17 Rating

Government 10Y Yield: 2.662% (daily, 9 Jan, 2021)18 A-, stable (S&P)36

Balance of trade: USD5.1bn (as of Dec, 2020)19 A3, stable (Moody’s)37 Government debt to GDP: 61% (latest, Sept 2020)20 A-, stable (Fitch)38

Malaysia’s macroeconomic outlook

Green finance presents an Annual GDP growth and Inflation rate in Malaysia 2000-2019 opportunity in promising 10 macroeconomic conditions. Inflation rate (annual %) GDP growth (annual %) Over the past decade, Malaysia’s economy 8 has grown rapidly while remaining resilient, but the pace of expansion has moderated. 6 In 2019, real GDP growth reached 4.5% (y-o-y), 0.2% lower than 2018 growth. 4 Private consumption has remained the largest contributor to output growth, 2 which is supported by stable labour market conditions, benign inflation and continued 0 growth in real income.21 The COVID-19 pandemic has meant that GDP is estimated

Percentage -2 to have contracted by 4.5% in 2020.22 2000 2005 2010 2015 2019 Despite this, in its Economic Outlook 2021, the Ministry of Finance states that it expects (Source: World Development Indicators, WB) a 6.5% -7.5% rebound in 2021.23 The ongoing fallout of the COVID-19 also be seen in manufacturing, construction, Malaysia has a sound and resilient pandemic, together with the sudden mining, and agriculture27 while the negative financial system with IMF financial enforcement of the Movement Control effects on credit markets and supply chains soundness indicators24 showing that the Order (MCO), has put various sectors of will dissipate only gradually28. Consequently, banking system is robust and orderly the economy under extreme stress. The Malaysia’s economy is estimated to have underpinned by ample liquidity and strong Malaysian tourism industry has been hardest contracted 4.5%.29 capital buffers. The capital market is hit, facing an estimated loss of MYR3.37bn The COVID response, alongside policies also effective, driven by well-developed (USD811m) in the first two months of 2020 to control and reduce the health impacts, infrastructure and instruments.25 alone.26 Indirect impacts of the virus can includes several measures to overcome the

Malaysia GIIO Report Climate Bonds Initiative 6 economic downturn. In February 2020, an Fiscal Deficit in Malaysia 2012-2019 (percentage of GDP) emergency stimulus package was announced worth USD4.8bn, of which, about USD453m 0 is allocated to the tourism industry, aiming to 2012 2013 2014 2015 2016 2017 2018 2019 counter the immediate impact of the outbreak -1 on vulnerable sectors and households.30 In March 2020, the PRIHATIN Rakyat Economic Stimulus Package valued at MYR250bn -2 (USD57bn), was announced, focusing on supporting businesses, especially SMEs, assisting low and middle-income households, -3 and providing fiscal injections to strengthen -2.9 -3.1 the national economy.31 In June 2020, the -3.2 -3.4 -3.4 government unveiled a new short-term -4 -3.7 -3.8 economic recovery plan named “National Economic Recovery Plan (Penjana)” worth -4.3

Percentage of GDP Percentage -5 MYR35bn (USD8.2bn).32,33 As part of the recovery plan, the Government of Malaysia (Source: WB56,57) launched ‘Sukuk Prihatin’ to raise finance for the Kumpulan Wang COVID-19 to finance Immediate policy responses have softened industries. There is yet to be a discussion measures announced in the economic the impact of the COVID-19 pandemic on on the possibility of longer-term green stimulus packages and recovery plan to the Malaysian economy and paved the path stimulus to support renewable energy, address the COVID-19 crisis34. The ‘Sukuk towards economic recovery.35 To date, the public transport or other types of green Prihatin’ has been likened to a war-bond, in stimulus has primarily focused on short term infrastructure covered in this report. that it carried patriotic elements. emergency funding for the most affected

Infrastructure spending

Infrastructure pipelines are Demand for energy and electricity, Water: 99% of the population should have growing, with more opportunities according to the International Energy access to clean and treated water by 2020. emerging for outside investment. Agency’s projections are expected to grow Energy: 7,626 MW of new generation by 2.2% and 4% per year respectively from Malaysia has some of the most well-developed capacity should be installed in Peninsular 2013 to 2040.47,48 Moreover, the urban infrastructure among the newly industrialized Malaysia by 2020. population is growing at an annual rate countries in Asia.39 The majority of Malaysians of 2.1%49 adding pressure to the current This implies that more infrastructure projects have access to essential facilities and services infrastructure capacity. This will also in various forms will be developed and huge such as public transport, communications, challenge Malaysia’s ability to generate investment will be needed. electricity and clean water, resulting from enough energy from cleaner sources, which heavy investment in infrastructure by the In 2019, approximately USD13bn was it has committed to increasing to 31% in its government over the past ten years.40 invested in infrastructure, accounting generation mix by 2025 and 40% by 2035.50 Some headline developments include two new With its mission of moving from an upper- major national ports (Port and the Port middle-income economy to an advanced of Tanjung Pelepas), which are categorized economy, the Eleventh Malaysia Plan 2016- in the world’s top 20 container ports;41 the 2020 has set up ambitious goals for each growth of the national road network by 68% sector as follows: between 2010 and 2015;42 and the expansion of seven international airports across the Transport: Public transport modal coverage country. Each of these developments has should be 40% in urban areas by 2030. helped to position Malaysia as the preferred Logistics: The transport and storage transfer and logistics gateway to Asia (after subsector should grow at 8.5% annually by ) for passengers and cargo. 2020 and be in the top 10 of the World Bank Despite this, locational disparities and Logistic Performance Index. political differences across regions pose several problems for infrastructure development43 particularly in reaching consensus on infrastructure policy, leaving the uneven infrastructure development across the country.44 For example, the transportation network in is less advanced compared to that in .45,46

Malaysia GIIO Report Climate Bonds Initiative 7 for 3.66% of Malaysia’s GDP, while the Infrastructure investment at current trend and need in Malaysia required investment would have been about USD15bn.51 If the current investment growth 30 rate continues, business-as-usual investment should meet up to 82% of the infrastructure Current trends Investment need development requirements up to 2040. 20 Among the different sectors, energy and road transport will be the two highest capital-incentive areas during the period of 10 2007-2040.

There is a need for greater private and

USD Billions 0 foreign investment. Various forms of funding and initiatives have been applied 2005 2010 2015 2020 2025 2030 2035 2040 to attract investment into infrastructure Source: The Global Infrastructure Outlook, 2020 projects.52 Traditionally, public budgets have been used to finance most infrastructure projects.53 However, government spending Infrastructure investment at current trend for each sector in Malaysia is constrained by a 55% public debt to GDP 10 ratio, and therefore other sources of funding have been promoted, such as foreign Energy Transport: Road investment or private investment PPPs.54 Telecommunication Water Malaysia has used PPPs to finance many Transport: Ports Airport of its infrastructure projects since 1983 5 Transport: Rail and will continue to adopt new PPP funding models. The major challenge of new PPP projects is the ability of users to pay for them. The presence of Chinese investment in Malaysia’s infrastructure, USD Billions 0 through soft loans by Chinese government 2005 2010 2015 2020 2025 2030 2035 2040 agencies or contractor-financing, is also a Source: The Global Infrastructure Outlook, 2020 notable feature.55

Malaysia’s climate policy

Climate change has already had Policy - on energy pricing, strategic supply The Renewable Energy Act came into effect significant adverse impacts on developments, end use energy efficiency, in 2011, and a feed-in-tariff (FiT) mechanism Malaysia, including increased energy governance and regulation as well as was introduced, benefiting renewable energy temperatures and rainfall, sea management of change and affordability.63 developers and expediting growth in the level rise, and other extreme The eleventh Malaysia Plan 2016-202064 renewable energy sector.66 weather events.58 further indicated green growth as one of the National Policy on the Environment (NPE)67 strategic thrusts enabling Malaysia to stay Malaysia’s key strategy to mitigate was launched in 2002 in recognition of the ahead of environmental challenges and build greenhouse gas emissions is in the energy, importance of integrating environmental issues a sustainably developed economy. waste and forestry sector. Mitigation in the into the overall framework of development. other sectors such as industrial processes The twelfth Malaysia Plan will run from 2021- The policy seeks to promote economic, social and product used (IPPU) and Agriculture 2025 and while there has been a delay in its and cultural development in harmony with have yet to be quantified. release, Environmental Sustainability will be environmental protection and enhancement. a key pillar with a focus on climate mitigation The Malaysia Plans have been central to In 2009, the National Policy on Climate and adaptation as well as green technology, climate response starting with the Eighth Change68 was introduced in an effort sustainable production and consumption.65 Malaysia Plan (2001 – 2005)59 which to develop specific national policies for introduced the Five Fuel Diversification In addition to the Malaysia Plans, other key strategies on climate change in Malaysia and Policy where renewable energy was first policy developments have included: respond to the United Nations Framework promoted as a source of energy, although Convention on Climate Change (UNFCCC). The National Renewable Energy Policy and hydropower was already used.60 In the In this policy, the Malaysian Government Action Plan (2010) set out the vision of Ninth Malaysia Plan (2006 – 2010)61 energy emphasizes sustainable development and enhancing renewable energy resources to efficiency was also included. The Tenth the conservation of the environment and contribute towards national energy supply Malaysia Plan (2011-2015)62 set further natural resources, ensuring that climate- security and sustainable socio-economic goals for renewable energy development resilient development fulfils national development. in Malaysia, introducing the New Energy aspirations for sustainability.

Malaysia GIIO Report Climate Bonds Initiative 8 The National Green Technology Policy69 Sustainable Finance policies was also introduced in 2009 to accelerate Capital Market Masterplan 2 (CMP2) the national economy and promote 2011- Securities Commission Malaysia sustainable development. The policy has 2020 five main strategic thrusts to encourage To create an advantageous environment to amplify the role of the private green technology application and expansion sector and the financing of entrepreneurial economic activities that are crucial to most sectors, in which four primary to the future of the Malaysian economy. pillars are renewable energy, environment, CMP2 outlines key strategies to foster a more innovative intermediation environment economy and social perspective.70 through the growth and governance of Malaysia’s capital markets. It positions the The Green Investment Tax Allowances capital markets to play a critical role in financing sustainable development needs. (GITA) and Green Income Tax Exemption Sustainable and Responsible Investment (SRI) Sukuk Framework (GITE) are two incentive schemes that 2014 Securities Commission Malaysia were introduced in 2014 to strengthen the development of green technology. SRI Sukuk Framework features guidelines and standards on issuances of Companies that acquire green technology green, social and sustainable sukuk to facilitate an ecosystem that promotes assets, undertake green technology projects sustainable and responsible investing for SRI investors and issuers. and green technology service providers are As of November 2020, 17 SRI Sukuk have been issued in Malaysia amounting eligible to apply for the incentives. Several to MYR5.38bn GHG mitigation related projects and services have been approved under both GITA and Sustainability Reporting GITE, most of which are renewable energy 2016 Bursa Malaysia and energy efficiency projects. All companies listed on Bursa Malaysia under the main market and ACE The evolution of these national policies market are required to issue a Sustainability Statement in respect of the shows the commitment from the company’s management of economic, environmental and social risks and government towards a successful transition opportunities in their annual report. to a more sustainable and low carbon A Sustainability Reporting Guide has also been published by Bursa Malaysia to economy. assist the companies in preparation of their report.

Value-Based Intermediation (VBI) “Malaysian intermediaries, over the 2017 Bank Negara Malaysia years, have been developing Shariah- compliant financial solutions that VBI serves as an intermediation function for Islamic banking institutions with provide investors the choice of climate- the purpose of delivering positive and sustainable impact to the economy, friendly investments that allow them community and environment through the intended outcomes of Shariah to participate in initiatives to green the practices, conduct and offerings, while being consistent with the shareholders’ economy and combat climate change. returns and long-term interests. The Securities Commission Malaysia is Islamic banks are required to premise their intent, strategy and performance on committed to facilitate and enable the the underlying thrust of VBI which include best conduct, good self-governance, collective efforts of market participants entrepreneurial mindset and community empowerment. who are investing in a low carbon future and will continuously strive Islamic Fund and Wealth Management Blueprint (IFWMB) to enhance our policy framework for 2017 Securities Commission Malaysia sustainable finance.” The IFWMB is a 5-year blueprint to plan the medium and long-term strategic Syed Zaid Albar, Chairman, Securities direction for Malaysia’s Islamic fund and wealth management industry. Commission Malaysia With a vision of establishing Malaysia as a leading international centre for Islamic fund and wealth management, the key thrusts are (1) to strengthen Malaysia’s positioning as a global hub for Islamic funds, (2) establish Malaysia as a regional centre for shariah-compliant sustainable and responsible Malaysia’s climate goals investment and (3) develop Malaysia as an international provider of Islamic wealth management services As part of its NDCs under the Paris Sustainable and Responsible Investment (SRI Roadmap) Agreement, Malaysia has defined the 2019- Securities Commission Malaysia following mitigation targets/ GHG 2025 reduction targets: To create a facilitative SRI ecosystem and map the role of the capital markets in driving Malaysia’s sustainable development • 35% reduction by 2030, compared to the business-as-usual scenario of 5 Key focus areas include: 2001-2030 • Widening the range of SRI instruments • 45% reduction by 2030, with the • Increasing SRI investor base receipt of climate finance, technology • Building a strong SRI issuer base transfer and capacity building from • Instilling strong internal governance culture developed countries. • Designing information architecture in the SRI ecosystem

Malaysia GIIO Report Climate Bonds Initiative 9 4. Malaysia green finance trends and opportunities

Global demand for green investments Global green bond and sukuk issuance 2015-2020 is growing with strong momentum 1.0 and significant growth potential. Green labelled products have become globally recognised as an effective means of directing Cumulative issuance 0.8 investment capital towards climate change mitigation and climate change resilience Yearly issuance and adaptation projects, including green 0.6 infrastructure. The growing level of interest from investors in green projects has resulted in the development and growth of innovative 0.4 financial products including green, social and sustainability bonds and loans; and green index products. 0.2 Green bonds are currently the most developed segment of thematic instruments, carrying greater recognition from the investor base. (USDtn) Amount issued 0 Globally, the volume of green bond and loan 2015 2016 2017 2018 2019 2020 issuance has risen sharply from USD171bn © Climate Bonds Initiative 2021 in 2018 to USD269.5bn in 2020, buoyed by strong interest from both investors and ASEAN green bond and sukuk issuance is growing issuers.71 Cumulative issuance of green bonds to date has now reached USD1tn, but there 800 is still a long way to go. To finance the goals Indonesia Philippines Thailand of the Paris Agreement, it is estimated that green bond issuance needs to reach USD1tn Malaysia Singapore Vietnam per annum by the early 2020s. For emerging 600 markets in particular, there is a large gap between green infrastructure requirements and the size of green bond markets. 400 Both Malaysia and the ASEAN region mirror the upward trend where, supported by new regulation, ASEAN issuance has grown both within Malaysia and across the region. 200 ASEAN is increasingly appealing to investors with several foreign entities, including development banks as well as foreign

USD Billions 0 commercial banks, issuing green bonds denominated in local ASEAN currencies 2016 2017 2018 2019 2020 demonstrating interest in these domestic markets. Other green bond issuers such as BNP Paribas, Société Générale, Bank of ASEAN Green Bond Standards America and NAB have issued vanilla bonds One of the key drivers of regional growth report, must be made publicly available in at least one of the local ASEAN currencies. is the ASEAN Green Bond Standards. The on a designated website; Issuance in local currency allows foreign ASEAN Green Bond Standards are based issuers to tap domestic investors for capital. • Recommendation to obtain an external on the ICMA Green Bond Principles and Interest in ASEAN markets continues to grow. review for the green bond framework, seek to enhance transparency, consistency and is particularly recommended for and uniformity to help reduce issuance the management of proceeds and and investment costs. Key elements of the annual reports; and “In recent years there has been standards include: significantly more engagement from • Recommendation for the external • The issuer or issuance of the green bond institutional investors for integrating review providers to disclose their must have a geographical or economic ESG in their investment process [in relevant credentials and expertise and connection to the region; ASEAN] and the wealth management the scope of the review conducted. industry is now following.” • Fossil fuel power generation projects are For more information on the ASEAN explicitly excluded; Valentin Laiseca, MSCI’s Head of ASEAN green bond market, please see the Index Sales72 • Information on the process for project Climate Bonds’ report: ASEAN Green selection and on the use of proceeds Finance State of the Market 2019. allocation, as well as the external review

Malaysia GIIO Report Climate Bonds Initiative 10 “As ASEAN grows and steadily fulfils Climate Bonds Green Bond European Investor Survey shows its economic potential, opportunities interest in investment in emerging markets exist across a wide range of industries. For example, ASEAN has over USD2tn Outstanding emerging markets (EM) worth of infrastructure investment green bonds, as of end 2020, amounted opportunities – not just traditional ports, to over USD204bn, or around 20% of roads, and bridges, but support in ICT, the green bond market. Meanwhile, EMs education, agriculture, and healthcare.” currently account for 63% of global GHG emissions.76 It is thus critical to determine Alexander Feldman, President & CEO, how investors can support the expansion US-ASEAN Business Council73 of EM green bonds. Respondents of CBI’s Green Bond European Investor Survey were asked to describe “We have some very long-term horizons. their appetite for EM green bonds and If you’re a long-term investor, you can to outline what they could be receptive focus on specific areas, like Southeast to buying. Most respondents (82%) can Asia funds... [where] there is a source of buy EM debt. Exposure limits at country growth.” and issuer level tended to apply more to respondents that have a greater degree Ted Lee, Senior Portfolio Manager of of integration of green bonds. However, Canadian Pension Plan Investment Board74 the most common restrictions are credit rating (69%), currency (65%) and deal market. Credit enhancements available size (58%). from multilaterals and/or public sector “European industry still overwhelmingly As most respondents can and would like entities was the most frequently selected sees ASEAN as an attractive region for to buy EM green bonds, EM issuers must option, with more than half considering it growth and investment, as our 2017 consider how these requirements can be important or very important. Business Sentiment Survey showed. But reconciled. Respondents expressed that When respondents were then asked which that survey also showed a strong call for they would like to increase their holdings features would give them more confidence more progress on government initiatives in EM sovereigns. Countries such as to invest in EM green bonds, they listed to reach trade agreements, reduce Indonesia (3 bonds in USD), Seychelles the following: barriers to trade, and realise the vision of (USD) and Lithuania (EUR) have issued the ASEAN Economic Community.” green bonds that were met with a positive 1. Transparency: e.g. adherence to GBP, reception from investors. reporting Use of Proceeds (65%), Donald Kanak, Chairman, EU-ASEAN Business Council75 Three-quarters of respondents able to 2. Reliability: e.g. external reviews (SPO, buy EM green bonds treat EMs differently audit, certification, etc) (48%), from developed markets, stating that they 3. Risk: e.g. insurance/CDS/guarantees, require more evidence of integrity to invest size of issuance, currency (25%). in green bonds from EMs. So, respondents were also asked to rank factors that More information on this topic can be could make investing in EM green bonds found in the Green Bond European Investor more attractive and bring scale to the Survey, on the CBI website.

Malaysia GIIO Report Climate Bonds Initiative 11 Malaysia’s green bond and sukuk market

Market overview Malaysian green bond and sukuk Finally, PNB Merdeka Ventures became market analysis Malaysia’s first repeat issuer with a total of 3 Malaysia is already a leader in green finance. deals issued in 2017 and 2019 amounting to There have already been several landmark A total of 14 green bond and sukuk deals USD382m. They are part of its programme deals out of Malaysia, including the world’s have been issued by Malaysian entities80 to finance the Merdeka PNB118 Tower. first green sukuk, issued June 2017, by Tadau with six occurring in 2019 and two in 2020. Energy Sdn Bhd. There has been only one repeat issuer to Among outstanding bonds, energy (49%) date - Permodalan Nasional Berhad has and buildings (48%) represent almost The Securities Commission Malaysia (SC) come to market three times. all the allocations. The remaining 3% are led the way by issuing its Sustainable spread across Water, Waste, Land use and and Responsible Investment (SRI) A green sukuk was issued by Pasukhas Adaptation funded predominantly by the Sukuk Framework in 2014 which features Group Bhd for MYR17m (USD3.9m) (out Pasukhas deal. The largest issuer in the guidelines and standards on issuances of a facility size of MYR200m) with a buildings sector is Permodalan Nasional of green, social and sustainable sukuk, 20-year term, with proceeds allocated to a Berhad (PNB Merdeka Ventures), while the followed by the SRI Roadmap for the hydropower plant. The sukuk is guaranteed largest related to energy is Quantum Solar Malaysian Capital Market77,78, which by Danajamin Nasional, the financial Park (Semenanjung Sdn Bhd). introduced a strategy for developing the guarantor co-owned by Bank Negara market for SRI investments. Malaysia and the Ministry of Finance. An All green bond and sukuk deals have been SPO and green rating were provided by RAM. issued in domestic currency, ranging in In 2018, Malaysia showed global leadership USD-equivalent size from about USD50m by establishing the Green SRI Sukuk Grant Another 2019 issuer was Telekosang Hydro to USD500m, and tending towards Scheme – one of the first global examples One Sdn Bhd with a MYR120m (USD42m) longer terms. This demonstrates that the of incentive structures to support green 20-year green junior bond and a MYR470m Malaysian bond market is sufficiently bond issuance. It provides tax exemption (USD166m) 18-year green sukuk, both mature to support the development of benefits for green sukuk issuers. In January allocated to a 24MW “run-of-river mini- a local green bond market. It is also a 2021, this Grant Scheme was renamed hydro” plant, the first of its kind. RAM also potential hub for green Islamic transactions, the SRI Sukuk and Bond Grant Scheme provided a green rating of Telekosang’s with 75% of outstanding green bonds and made applicable to all sukuk issued Green Sukuk Framework. offered in sukuk format. under the SC’s Sustainable and Responsible Two new deals came to market in Investment (SRI) Sukuk Framework or bonds October 2019. Edra Solar Sdn Bhd issued issued under the ASEAN Green, Social and an 8-tranche MYR245m (USD58m) “Malaysia has earned the recognition Sustainability Bond Standards (ASEAN Sustainability SRI sukuk, with maturities as the pioneer in driving the Green SRI Standards). The Securities Commission ranging from one to 18 years. While it will Sukuk agenda since 2014. The Green and Bank Negara Malaysia, in the newly- primarily refinance the Kuala Ketil solar SRI Sukuk stands out because of its formed Joint Committee on Climate Change farm, part of the proceeds will fund the strength in investor engagement which (JC3), are discussing the development of cultivation of pineapples and other crops requires the issuers to conduct robust a taxonomy for Malaysia. In a Discussion by the surrounding local community. and responsible reporting. We felt it Paper,79 Bank Negara Malaysia launched a Given its social angle, this is the country’s was inevitable for Telekosang Hydro to public consultation on the impact of climate first bond aligned with the requirements make use of this platform, not only as change on the financial system. By requiring of the Securities Commission Malaysia’s promoters of sustainable developments financial institutions to report data on their Sustainable and Responsible Investments for future generations, but also to climate exposure, this new taxonomy will (SRI) Sukuk Framework, the ASEAN Green attract international investors that support the issuance of green bonds and Bond Standards, the ASEAN Social Bond embrace sustainability. As Malaysians, the purchase of green bonds issued in the Standards and the globally recognised GBP, we are proud that Telekosang Hydro has Malaysian market by financial institutions. SBP and Sustainability Bond Guidelines. It is been given the highest recognition as So far Malaysia has been exploring also the first to carry three different types of the World’s First Green SRI Sukuk for green debt as well as equity instruments, rating from RAM: financial, green (Tier-1 GB) Mini Hydro.” supported by credit enhancement and social (Tier-3 SB). Beroz Nikmal bin Mirdin, CEO of mechanisms and other risk-sharing Cypark Red Sdn Bhd issued MYR550m Telekosang Hydro One Sdn Bhd approaches. This includes green bonds, (USD131m) under an SRI Sukuk Murabahah green sukuk, green loans, green funds for programme, also in October. The deal, green infrastructure and renewable energy which has 19 tranches with terms varying projects, and credit guarantees for green between three and 21 years, will finance projects. Green bonds and green sukuk three solar PV plants (with 30- MWAC remain the most dominant of these green capacity) in Malaysia. instruments and tools.

Malaysia GIIO Report Climate Bonds Initiative 12 Malaysian green bond and sukuk issuance

Issuer name Bond/Sukuk Amount issued* Issue date Issuer type Use of proceeds

Solar Management Sukuk MYR260m Sept-20 Non-financial Energy (Seremban) Sdn Bhd (USD64.4m) corporate

Leader Energy Sdn Bhd Sukuk MYR260m Jul-20 Non-financial Energy (USD61m) corporate

PNB Merdeka Ventures Sukuk MYR435m Dec-19 Government- Buildings Sdn Bhd (USD105m) backed entity

Cypark Ref Sdn Bhd Sukuk MYR550m Oct-19 Non-financial Energy (USD131m) corporate

Edra Solar Sdn Bhd Sukuk MYR245m Oct-19 Non-financial Energy, Land use (USD58m) corporate

Telekosang Hydro One Sdn Bond and Sukuk MYR590m Aug-19 Non-financial Energy Bhd (USD208m) corporate

PNB Merdeka Ventures Sdn Sukuk MYR445m Jun-19 Government- Buildings Bhd (USD108m) backed entity Pasukhas Green Assets Sdn Sukuk Issue size: Feb-19 Non-financial Energy, Buildings, Bhd MYR17m corporate Water, Waste, Land (USD3.9m) use, Unallocated A&R Facility size: MYR200m

UiTM Solar Power Sdn Bhd Sukuk MYR222m Apr-18 Government- Energy (USD57m) backed entity

Sinar Kamiri (Mudajaya Sukuk MYR245m Jan-18 Financial corporate Energy Group Berhad ) (USD63m)

SEGI Astana Sdn Bhd Bond MYR415m Jan-18 Non-financial Buildings (USD104m) corporate

PNB Merdeka Ventures Sdn Sukuk MYR690m Dec-17 Government- Buildings Bhd (USD170m) backed entity

Quantum Solar Park Sukuk MYR1,000m Oct-17 Non-financial Energy (Semenanjung) Sdn Bhd (USD236m) corporate

Tadau Energy Sdn Bhd Sukuk MYR250m Jul-17 Non-financial Energy (USD58m) corporate

(Source: CBI database), *Note currency conversion rates are taken on date of issue

Malaysian social and sustainability bonds

Issuer Amount* Issuer date Type, UoP

Khazanah Nasional Berhad MYR 100m (April 2015) Social, education (USD 28m)

HSBC Amanah Malaysia MYR500m (October 2018) Sustainability (USD121m)

CIMB Bank Berhad USD680m (October 2019) Sustainability

Edra Solar Sdn Bhd MYR30m (October 2019) Sustainability (USD7m)

Government of Malaysia, Sukuk Up to MYR500m September 2020 Social, COVID Prihatin (USD124.3m) response Cagamas (National Mortgage MYR100m October 2020 Social, Affordable Corporation of Malaysia) (USD24.8m) housing81

(Source: CBI database)

Malaysia GIIO Report Climate Bonds Initiative 13 Green Technology Financing GTFS performance by sector, 2010-2020 Scheme (GFTS) and Financial Institutions’ participation 500

The Green Technology Financing Scheme 400 491 (GTFS) was initially launched in 2010 by the Government with a total target 300 financing approval of MYR3.5bn to support 2014 the development of green technology in 200 Malaysia.82 In March 2019, the Ministry of 127 100 Finance approved an extension of GTFS, known as GTFS 2.0 with an allocation 21 16 Approved projects Approved 0 of MYR2bn until 2020.83 The scheme aimed to promote green investments in Energy Waste & Building Transportation water 96 eligible sectors such as energy, water, (Source: Green Tech Malaysia ) building and township, transport, waste and manufacturing by providing easier GTFS Projects financed access to financing and at lower financing 84 costs. GTFS provides green investors 30 UOB Bank with a 2% rebate on interest/profit rate 23 SMe Bank charged by financial institutions and a 7 Standard Chartered 60% Government Guarantee on financing provided by financial institutions.85 Credit 7 RHB Islamic Guarantee Corporation Malaysia Berhad 7 RHB Bank (CGC) also provides a guarantee of 60% 7 Public Bank on the approved financing amount. Upon 1 Others guarantee approval, CGC will issue a Letter 2 OCBCAI-Amin of Guarantee (LG). A guarantee fee of 0.5% 30 OCBC per annum on the total guarantee amount 45 MDV will be charged to the borrower.86 12 Maybank Islamic Since its introduction, GTFS has benefited 25 Maybank Berhad a number of green projects. In 2010, 3 Kuwait FH only 13 projects were granted soft loans 11 HSBC Amanah amounting to MYR164.3m87 By 2017, 6 HSBC Bank these figures had risen to 319 projects and MYR3.638bn to be allocated with 8 Hong Leong Bank significant social and environmental 1 Exim Bank impacts.88 About 5,000 green jobs were 3 CIMB Islamic created and 3,784 million tons of CO2 5 CIMB Bank 89 has been saved each year. The GTFS 2 Bank Islam 2.0 has granted soft loans to additional 2 Bank Rakyat 336 green technology producers and 12 Bank Pembangunan users with MYR1m to be drawn down.90 4 Amislamic Bank Berhad The latest version, GTFS 3.0 has a fund size of MYR2bn (USD500m) for 2 years 10 ArriBank until 2022 with a guarantee by Danjamin 2 Agro Bank Nasional to encourage issuances of SRI 7 Affin Bank sukuk. It is expected to generate MYR4bn 7 Affin Islamic Bank in revenue from green investments and 3 Alliance Bank create 2,500 job opportunities for the country.91,92 0 10 20 30 40 50 Approved projects The GTFS has resulted in the participation (Source: Green Tech Malaysia97) of 28 banks and financial institutions with approximately USD875m in loans as of July the full methodology for project selection is be eligible but require that the feedstock 2018.93 Of all projects financed, about 53% not available and while it appears broadly is sourced sustainably and that it has an came from conventional finance, with the aligned with the Climate Bonds Taxonomy 80% emission reduction compared to a rest funded by Islamic sources.94 and Climate Bonds Standard, there may be fossil fuel baseline95. Biofuels are included The GTFS is a unique example of how some areas where they are not in alignment. under the GTFS but a full assessment of the governments can support the growth of Within energy, for example, biofuels alignment between GTFS criteria and the green projects using tools like guarantees remain contentious. Under the Climate Climate Bonds sector criteria has not yet and incentives. We note here, however, that Bonds Bioenergy sector criteria, they may been undertaken.

Malaysia GIIO Report Climate Bonds Initiative 14 Financing credible transitions in Malaysia

The Climate Bonds Initiative has been active in promoting the creation of credible ENT: ZER transition strategies in GHG-emissions EM O intensive industries around the world. The E C concept of transition reflects the fact that, in R VELOPM A the short- to medium-term, large companies G E E R in many sectors will inevitably straddle D N A LIM B both brown and green assets, progressively E C AT T reducing exposure to brown assets and S L O I B E G practices as they increase capex towards, N R A and adoption of, greener modes of operation. A O

It also embodies a recognition that, both C A B A

globally and locally, the expectation of N T P I Y

institutional investors is that progress L

I

S

A

towards low or zero-carbon business models, O

2

is increasingly indicative of sound corporate T

N 0

performance, hedging of climate risks and S

0

long-term value accretion. 5 U

3 0

S

Global green investment opportunities 0

,

2 are growing and yet large GHG emitters 5

are still largely absent from the market. 0

Y

%

GHG-intensive segments of the real B

S

economy - such as cement and concrete, E

M N O I I S mining and metals, oil and gas transport and S manufacturing – offer significant emissions reductions potential –but are not yet following a transition pathway towards zero carbon by 2050. When such industry sectors start to align with a 1.5-degree emissions trajectory, new green financing opportunities Fossil fuel consumption in Malaysia could be created for assets and projects with 100 ambitious climate targets and an increased focus on low carbon production modes. A credible transition strategy requires 80 organisations to commit to strategic change, undertaking tangible and verifiably climate 60 relevant measures that relate to companies’ core business activities. They will need more than broad statements of strategy or intent 40 to disclosure climate risk as envisioned by compliance with the Task Force on Climate- Fossil fuel energy Electricity production from oil, related Financial Disclosures (TCFD). 20 consumption (% of total) gas and coal sources (% of total) They will need a visible reflection of green investment on balance sheets, in capex plans

Percentage 0 and borrowing programs. 1972 1978 1984 1990 1996 2002 2008 2014 Transition bonds are a highly visible means (Source: World Development Indicators) to support this transition from brown to green. Even a small initial share of green Malaysia’s economic growth is connected large share of energy supply comes from capital expenditure could be a credible with the availability and supply of fossil fuel these sources.100 Specifically, in Malaysia, indicator of more to come, if it is combined resources.98 Fossil fuel energy consumption more than 80% of electricity production is with a re-orientation and acknowledgment to (% of total) in Malaysia increased from generated from oil, gas and coal. investors that achieving low carbon targets about 75% in 1972 to a peak of 96.63% The dependence on fossil fuel is believed and then zero-carbon operating models are in 2014. This is because industrial and to put Malaysia under the threat of energy inevitable business destinations between transportation sectors in Malaysia have insecurity and environmental degradation now and 2050, backed up by green spending remained heavily dependent on oil and due to the short life expectancy of Malaysia’s and capex plans. Transitioning to a green, natural gas.99 In addition, as a result of fossil fuel reserves and high CO2 emissions. climate resilient economy is paramount to rapid industrialization and urbanization, Thus, the Malaysian government has taken ensure that the region can reduce its GHG the demand for energy is on the rise, which steps to decrease the reliance on fossil fuels emissions, better hedge against climate contributes to increasing consumption and green the economy. change risks and thrive in the long-run. and exploitation of fossil fuels since a

Malaysia GIIO Report Climate Bonds Initiative 15 Malaysia’s policy framework has evolved Examples of Malaysia’s policy instruments on green economy from a sole focus on fossil fuel supply in the 1970s to a diversification of supply sources, Year Policy instrument Functions of policy instruments including renewable energy, since 2001.101 Central to Malaysia’s transition strategy 2009 National Green The policy emphasizes the central role of green are policies to foster green technology Technology Policy104 technology in Malaysia’s green development, development in the country. In 2009, the overseeing greening in four sectors, including country announced its newly developed energy, buildings, water and waste management policy framework called the New Economic and transportation. Model (NEM) with three-pronged goals, 2009 Green Building The index helps to enable green grading and including inclusiveness, high income and Index105 certification of Malaysian buildings. sustainability.102 Green Technology is earmarked as an important driver for the 2010 National Renewable The policy aims to enhance the utilisation of twin goals of high income and sustainability. Energy Policy and indigenous renewable energy resources to Later, the National Transport Policy 2019- Action Plan106 contribute towards national electricity supply 2030 also accelerates the implementation of security and sustainable socio-economic low carbon mobility incentives by prioritizing development public transport development and adopting 2010 Green Technology The scheme was launched to create a policy green technology and cleaner fuels such as Financing Scheme107 environment that would attract innovators and biodiesel and electricity vehicles (EVs).103 users of green technology

2011 Renewable Energy The Feed-in Tariff is being implemented for biogas, Act108 biomass, mini hydro, solar PV and geothermal “Maybank Investment Bank plays an 2011 Low Carbon Cities The framework looks at addressing carbon important intermediary role in bridging Framework (LCCF)109 emissions in 4 main areas: urban environment, the financing gap between issuers and urban infrastructure, urban transportation and investors, in line with our aspiration to buildings build a more sustainable and inclusive ASEAN. 2013 Minimum Energy The standards specify the minimum level of Performance energy performance that appliances, lighting and Recently, we are seeing significant 2019 Standards (MEPS)110 electrical equipment (products) must meet or interest and greater level of exceed before they can be offered for sale or used awareness from investors and relevant for commercial purposes stakeholders on matters relating to ESG.” National Transport The policy has set forth targets and strategies Policy 2019-2030111 for enhancing the country’s economic Fad’l Mohamed, CEO of Maybank competitiveness, while reducing negative impact Investment Bank Bhd of the transport sector on the environment

(Source: Adopted from Hezri and Ghazali (2011) and authors’ compilation)

Malaysia GIIO Report Climate Bonds Initiative 16 The role of Development Finance Institutions (DFIs)

DFIs have a mandate to support developing seeking funding to build investor confidence ADB also played a role in developing countries and can achieve this through and catalyse investments from a wider pool and implementing the Green City Action blended finance and credit enhancement of private actors. So, they provide direct Plan117 for integrated urban management in mechanisms, reducing risk exposure and green financing, as anchor investors in debt Malaysia by providing a technical assistance enhancing market incentives for investors to issuance or in IPOs, DFIs can leverage their grant118 and help to implement the plan. This mobilize private capital. This is particularly support to attract other investors. included structuring bankable projects for relevant for large-scale projects such as solar energy and street lighting, setting up a They can help a company seeking funding infrastructure development, where the database to tack indicators in environment to build investor confidence and catalyse blended finance approach can generate and economic growth, and conducting investments from a wider pool of private more bankable project pipelines by training in urban development, environment actors (both international and domestic). providing technical support and facilitating planning, and knowledge sharing.119 For example, in early 2019, the ADB and access to funding. other development financiers launched the ASEAN Catalytic Green Finance Facility DFIs can act as market facilitators, which “ASEAN Catalytic Green Finance Facility”, (ACGF) is a newly introduced initiative to spur is beneficial to increasing liquidity and an initiative to mobilize USD1bn for green more than USD1bn in green infrastructure issuance in local economies. For example, infrastructure in Southeast Asia.112 investments across Southeast Asia.120 the IFC issued a green bond in June 2018 Launched in April 2019, the new facility The facility will provide loans and in Philippine peso (a Mabuhay bond) and provides loans and necessary technical technical assistance for sovereign green one in Indonesian rupiah (a Komodo bond) assistance for green infrastructure projects infrastructure projects such as sustainable in October 2018. Through deals like these, which actively contribute to environmental transport, clean energy, and resilient DFIs can support “market creation” by sustainability and climate goals. These water systems, which aims to catalyse participating in first-time issuances and projects include, but are not limited to, private capital by mitigating risks through helping new issuers get their names out to renewable energy, energy efficiency, innovative finance structures.113 investors. Effectively, this establishes pricing sustainable transport systems, green cities, points, the idea being that issuers return The Asian Development Bank is active and sustainable water supply and sanitation.121 to market publicly. So, the deals also act in Malaysia with recent support mostly in The new facility is co-funded by ADB, as demonstration issuance to spur market the form of technical assistance to several ASEAN Infrastructure Fund, AFD, European growth and can showcase how climate states to help develop green cities and Investment Bank, European Union, KfW solutions can be funded with green bonds. energy sector.114 The ADB interventions and the Republic of Korea. As of February in the Malaysian energy sector have 2020, the ACGF’s co-financing partners have DFIs in ASEAN, such as the International included the development of hydropower, committed USD1.42bn for sovereign loans Finance Corporation (IFC), Asian transmission links and renewable energy. and USD13.1m for technical assistance.122 This Development Bank (ADB), Asian One example is the – Kalimantan would be a great source of financing for future Infrastructure Investment Bank (AIIB) and Power Interconnection is a USD161m joint green projects in Malaysia. the World Bank, can also subscribe to private venture which included USD45m funding placements or be anchor investors in debt from ADB.115,116 issuance and IPOs to help the company

Malaysia GIIO Report Climate Bonds Initiative 17 5. Deep Dive: Green sukuk opportunities

The global Sukuk market is seeing rapid Global sukuk issuances 2010-2019) growth with the market reaching USD157bn in 2019 and Malaysia leading the way 200 accounting for 48% of the market.123,124

157.8 “As a global leader in the Islamic 150 Capital Market (ICM) and driven 131.2 by the commonalities between ICM 119.7 118.8 and sustainable finance, Securities 112.4 Commission Malaysia (SC) focused 100 99.5 on developing regulatory frameworks 85.1 72.3 to provide a natural broadening for 66.1 Malaysia to pursue the Sustainable and 50 Responsible Investment (SRI) agenda” 45.1

Sharifatul Hanizah Said Ali, Executive Director of Islamic Capital

USD Billions 0 Market Development of the Securities Commission Malaysia 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: MIFC estimates

A sukuk is an interest-free bond that Global sukuk outstanding by Global green sukuk: Use of generates returns to investors without domicile as at end-Sept 2020 Proceeds infringing upon the principles of Islamic law (Shariah). They are backed by a specific pool of assets and the purchaser receives Turkey 7.6% Waste 5% a certificate giving partial ownership in the underlying nominated assets or earnings Land use 5% from those assets. There is a growing demand in the Middle and Far East for Shari’ah-compliant or Islamic bonds, but a Others Unallocated shortage of product. An estimated 25-40% 11.6% 10% of institutional investors’ assets under Energy management are dedicated to fixed-income Indonesia 32% debt, including asset-backed securities. 40% Malaysia 44.8% UAE Water Green Sukuk are Shari’ah compliant 12% investments in renewable energy and other 8.3% environmental assets that meet the Green Low carbon Bond Principles, Climate Bonds Taxonomy or Saudi Arabia Transport 14% buildings other global or regional definitions of green. 23.3% 22% The emergence of green Islamic finance as a special segment of the green bond market is a promising development for attracting new interest from investors investing according Source: MIFC estimates Source: MIFC estimates to Shariah principles. The green feature fits well with the underlying principles of sukuk given that both green bonds and The world’s first green sukuk was issued in To date, the green sukuk market has sukuk instruments raise funds for a specific July 2017 by Tadau Energy for MYR250m primarily focused on financing projects purpose, and both have environmental, (USD62m) to finance solar projects in relating to renewable energy, low carbon ethical and social principles aims at their core. Malaysia. 126 Since then, global issuance has buildings and low carbon transport. This is Shariah principles include “environmental reached USD8.8bn from 16 different issuers. broadly in line with the global green bond stewardship”, such as the protection of air, While Malaysian issuers account for only market although there are some small water and land, as well as other ecosystems. 15% of deals by value, it is by far the most differences – transport, for example accounts An advantage of green sukuk is that it has diverse market with 13 deals from 11 different for 20% of global green bond market the potential to attract both green investors issuers (out of a global total of 23 deals spending while they account for 14% of the and those with Shariah-compliant mandates. and 16 issuers). Other countries have larger green sukuk market. The market has the potential to channel the deal sizes but much less diverse and active USD2tn Islamic finance market towards the markets – e.g. Indonesia has one issuer funding of green and sustainable projects. 125 (Republic of Indonesia) while UAE has two.

Malaysia GIIO Report Climate Bonds Initiative 18 Green Sukuk in Malaysia

Malaysia is already one of the region’s most Global green sukuk market Number of green sukuk issuers proactive countries in promoting the growth cumulative issuance per country of the green finance market including green sukuk. This includes:

• Guidelines for green sukuk - the UAE Sustainable and Responsible Investment Indonesia Sukuk Framework introduced by the 13% UAE 17% Securities Commission Malaysia. 29% Indonesia Saudi Arabia • Tax deduction of issuance costs for 40% 13% issuers and tax exemptions for investors for socially responsible sukuk and green sukuk. These were initially put in place in 2017 to last until 2020 and has since been Saudi Arabia extended to 2023 16% Malaysia Malaysia 57% • SRI Sukuk and Bond Grant Scheme exists 15% to cover the cost of external reviews up to a maximum of MYR300,000 (USD74,500) per issuance. • Financing incentives under the Green Malaysian Sustainable Finance Initiative Technology Financing Scheme (GTFS) with total funds allocation of MYR5bn In early 2019, the government- The Initiative will also provide a digital (USD1.2bn) until 2022127 commissioned Malaysian Green platform for the sharing of knowledge and Financing Taskforce (MGFT) put forth expertise on new financing trends, products Examples of issuers include: 21 recommendations to advance the and services that prioritise sustainability, Tadau Energy issued the world’s first green financing of renewable energy projects in and societal wellbeing whilst ensuring good sukuk in July 2017. The 16-year MYR250m Malaysia. A key recommendation from this governance practices. (USD62m) deal was issued to finance solar Taskforce was to build a centralised green The MSFI is funded by the Capital power assets. financing centre of excellence to support Market Development Fund and the UK and strengthen the capabilities of financial Permodalan Nasional Berhad, a Malaysian Government’s Prosperity Fund ASEAN sector participants. This recommendation state-backed investment entity, issued the Low Carbon Energy Programme. The led to the formation of the Malaysian first green sukuk with proceeds solely to Initiative is led by a Steering Committee Sustainable Finance Initiative. property financing in 2017. The proceeds chaired by the SC and includes members financed the Merdeka PNB118 Tower, which On 23 July 2020 Capital Markets representing stakeholder groups within aims to secure LEED certification.128 Malaysia launched the Malaysian Malaysia’s financial sector. Sustainable Finance Initiative (MSFI) to UiTM Solar Power Sdn Bhd issued a facilitate capacity building, knowledge MYR222m (USD55.9m) green SRI sukuk “The reality of the effects of climate and thought leadership on sustainable in April 2018 to finance the construction of change has made it imperative for financing catered to the needs of a 50MW solar power plant in Gambang, us globally to shift towards more Malaysia’s financial sector. Malaysia’s , Malaysia.129 It is the first university sustainable and responsible practices. Finance Minister, is Patron of the MSFI. worldwide to issue a green sukuk. CICERO The Malaysian Sustainable Finance provided the second party opinion on The MSFI supports capacity development Initiative aims to support efforts of the issuer’s green SRI sukuk framework. for financial sector intermediaries Malaysia’s financial sector to further Proceeds are used to finance construction, through workshops and training courses develop multiple financing avenues to to refinance construction debt, or to finance to foster a greater understanding of fund businesses and projects that are the payment of a government-granted green financing solutions through the lens of aligned to the sustainability agenda subsidy. They may involve securitizing future environmental, social and governance such as the UN SDGs.” income cash flows from ring-fenced projects factors, which take into account financial Zainal Izlan Zainal Abidin, Chairman, or assets with specific criteria attached. considerations as well as impact on the Capital Markets Malaysia environment and society. Across the ASEAN region, green sukuk remains a focus of green issuance regionally and represented 30% of the ASEAN green finance market as of September 2020. green sukuk.131 Eligible project categories bond as ministries and agencies usually The Republic of Indonesia issued the first are: renewable energy, energy efficiency, apply for funding of specific projects after green sovereign sukuk in 2018 (USD1.25bn) adaptation, transport, green buildings, the bond has been issued. The issuer’s which is the largest green sukuk to date130, sustainable agriculture, sustainable reporting on proceed allocation will be as well as the first green sovereign bond management of natural resources and green essential to determine the share of funds from Asia. It returned to the market in 2019 tourism.132 The wide range of eligibility allocated to each eligible category. and 2020 issuing a total of USD2.75bn in categories is not unusual for a sovereign

Malaysia GIIO Report Climate Bonds Initiative 19 Trends in global green sukuk issuance

Green sukuk are starting to find their place in the financial market. Since the first green Green sukuk issuances outside of ASEAN sukuk was issued in 2017, Southeast Asia Issuer name Amount Currency Size in Issuance Country hosted all green sukuk until May 2019, when Issued USD date MAF Sukuk LTD issued the first green sukuk of UAE.133 The table below provides details of Saudi Electricity USD1.3bn USD 650m 17/09/2020 Saudi Arabia green sukuk issuances outside of ASEAN. (2 equal (each) tranches) Examples of how green sukuk are being used to fund green infrastructure outside of the Islamic 1,000m EUR 1,102m 27/11/2019 Saudi Arabia ASEAN region Development Bank

Majid Al Futtaim (MAF) of UAE launched Majid Al Futtaim 600m USD 600m 30/10/2019 UAE the Middle East’s first corporate green Properties LLC sukuk134 in May 2019 valued at USD600m, Taweelah IWP 785m USD 785m 1/09/2019 UAE which was listed on the Nasdaq stock exchange in Dubai.135 The proceeds were Majid Al Futtaim 600m USD 600m 14/5/2019 UAE deposited in MAF’s general accounts and Properties LLC used to finance and refinance Majid Al Futtaim’s existing and future green projects, Source: Climate Bonds Initiative database including green buildings, renewable energy, While the specific projects financed by Global Guidance and frameworks specifically sustainable water management, and energy the bond have not yet been disclosed, one relating to sukuk include: efficiency.136 Eligible green projects must example of a green project being financed meet the criteria and objectives set out for In 2018 in the UAE, a framework for green by IsDB is DEWA (Dubai Electricity and each project category in its Green Finance bonds and sukuk was adopted within UAE Water Authority) 800MW Photovoltaic Framework, issued in April 2019.137 Federal Decree Law No. 9/2018 On Public Solar Power Plant – Phase III in UAE.143 The Debt (Public Debt Law). The law specifically The Green Finance Framework was based on power plant has a total cost of USD924m, states that public debt can be allocated ICMA’s Green Bond Principles (GBP) with an co-financed by Islamic Development Bank, for infrastructure projects. Many are of the external review to confirm its alignment with Abu Dhabi Islamic Bank, Natixis, National view that this legislation is the first step GBP.138 Majid Al Futtaim has committed to Bank of Abu Dhabi, Union National Bank and to a sovereign green issuance to support a publishing an annual report on the proceeds First Gulf Bank of which, IsDB’s participation renewable energy infrastructure project and allocation and environmental impact of its is USD110m144 The plant was started on 11th this is supported by Dubai and Abu Dhabi Green Eligible Project Portfolio. June 2017 and was expected to commence each having developed coalitions to further commercial operations in 2020. Once On November 7, 2019, the Islamic green finance in their jurisdiction.145 completed, the project can support the Development Bank (IsDB) issued its first economic growth of Dubai through the In January 2020, Abu Dhabi announced the EUR1bn green sukuk under its USD25bn addition of 800MW of clean and sustainable formation of a “Green Bond Accelerator” sukuk program.139,140 Proceeds from the electricity generation capacity to the grid. programme with the objective of debut green issuance were to be deposited “establishing Abu Dhabi as a regional hub for in the general funding accounts and used Policies, guidelines and incentives to grow the issuance of green bonds and green sukuk to finance and re-finance a range of climate green sukuk for sustainable projects in the Emirate as well change and green projects in its 57 member Policy guidance and incentives can be as across the Middle East and Africa”. countries.141 Eligible projects are those for essential in kickstarting new green finance renewable energy, clean transportation, Also in January 2020, The UAE published its markets to scale up. Green finance guidelines energy efficiency, pollution prevention “Guiding Principles on Sustainable Finance in have pivotal to kickstarting markets all and control, environmentally sustainable the UAE” which aims to facilitate the UAE’s over the world – within ASEAN, China and management of natural living resources transition to a more sustainable economy, beyond. and land use and sustainable water and diversify the economy, help mitigate risks of wastewater management.142 reduced global demand for oil, adapt to the physical risks of climate change and explore the new investment opportunities it presents.

Malaysia GIIO Report Climate Bonds Initiative 20 Global efforts toward harmonisation Widely acceptable green sukuk frameworks While the proliferation of regional and national green finance guidelines has been a Frameworks/Guidelines Convenor/developer Publication positive step in kickstarting the local market, year the lack of global market standardization Guiding Principles on Collaboration of financial services 2020 can be confusing for investors and can be a Sustainable Finance in authorities including: Ministry of Climate barrier to the overall market – particularly in the UAE Change and Environment, Central Bank of facilitating cross-border capital flows.153 the UAE, Insurance Authority of the UAE, Currently, in most jurisdictions, the green Abu Dhabi Global Market; the Securities bond and green sukuk markets employ a and Commodities Authority; the Dubai voluntary framework that establishes best Financial Services Authority; the Dubai practices for investors. There are a number Islamic Economy Development Centre; the of green bond frameworks that can apply Abu Dhabi Securities Exchange, the Dubai to green sukuk, as well as there being green Financial Market and Nasdaq Dubai sukuk specific frameworks and standards. Sustainable Finance Islamic Development Bank 2019 The table right presents some widely Framework146 acceptable green sukuk frameworks. Climate Bonds Standard Climate Bonds Initiative (CBI) 2019 version 3.0147

Indonesia’s Green Ministry of Finance Indonesia 2018 “ASEAN-wide regulatory support to Bond and Green Sukuk harmonize the definitions of “green”, Framework148 beyond just capturing green sectors or Climate Bonds Standard Climate Bonds Initiative (CBI) 2017 activities at a broad level (for instance, version 2.1149 emission intensity thresholds for geothermal and biomass sources) is ASEAN Green Bond ASEAN Capital Market Forum (ACMF) 2017 needed to avoid greenwashing among Standards150 financial institutions and corporations”.” Green Bond Principles151 International Capital Market Association 2014 Rafe Haneef, Group Chief Sustainability (ICMA) Officer, CIMB Group Sustainable and Securities Commission Malaysia 2014 Responsible Investment Sukuk Framework (SRI)152

(Source: Authors’ compilation)

The Green Sukuk and Working Party (GSWP)

The Green Sukuk and Working Party The GSWP will: (GSWP) has been established by the 1. Design Green Sukuk architecture, Clean Energy Business Council (MENA), so that product issuers can offer and the Climate Bonds Initiative and the Gulf investors can access products with Bond and Sukuk Association (GBSA), to confidence about their compliance with promote and develop Shari’ah-compliant Shari’ah law and ethical standards. financial products to invest in climate change solutions. 2. Promote the concept of Green Sukuk and other green Islamic finance products The Climate Bonds Initiative is part of a to governments, investors, product Green Sukuk Working Group, a Gulf-based originators and other interested parties. coalition developing finance models for renewable energy that meet the needs 3. Engage with Governments and of Islamic investors. The Working Group development banks about supporting has been set up with the Clean Energy appropriate project development and the Business Council of MENA and the Gulf growth of a Green Sukuk market. Bonds and Sukuk Council. 4. Inform the market by promoting best GSWP is a collaboration of experts in practice, convening industry forums and project development, environmental developing template models. standards, capital markets, actuarial compliance and Islamic finance.

Malaysia GIIO Report Climate Bonds Initiative 21 Potential for growth of the global sukuk market

There remain some barriers to the growth of In Malaysia, the World Bank has helped The green sukuk market has the potential a large green sukuk market. These include: address these issues and grow green sukuk for scaling up significantly, particularly in by: identifying the complementarity between Indonesia and Malaysia. The green sukuk • a lack of knowledge at both the issuer Malaysia’s SRI sukuk guidelines and Green market has also demonstrated that it can and investor levels about the process and Bond Principles to enable potential issuers to be a valuable tool in facilitating cross border benefits of green sukuk issuance. issue green sukuk in the absence of national flows from the Middle East where there is a • perceptions about complexity and pricing green bond guidelines; providing guidance large investor base toward the ASEAN region on eligible green projects; advising on the where there is a large need for green finance. • lack of green definitions role of external reviews and facilitating the It is clear that markets that have seen growth • lack of consensus among government participation of local institutions to provide in green sukuk issuance have also received agencies on policy coordination, external reviews at low cost; identifying support from governments and regulators. potential issuers for demonstration • lack of bankable green projects Malaysia is a prime example of this where issuances and helping the first issuers the early success of the green sukuk market As the market grows, these barriers are navigate government policies and follow is likely due to Bank Negara Malaysia and also reducing. For example, as the number international best practices. the Securities Commission Malaysia working of green sukuk has increased, so too has As a demonstration of the potential for closely with the World Bank to foster top- investor awareness and comfort around investor participation, a Green Sukuk down engagement. Further, Indonesia’s these new products. Further, as such deals Programme has been announced by engagement with the UNDP led to their become more commonplace, the issuance Clarmondial, Amanie Advisors and Cenergi green bond framework and sovereign green process reduces in complexity as there SEA, an investment fund that is a subsidiary sukuk program. It is a logical conclusion are a number of green frameworks for of Khazanah Nasional Berhad, an investment that accelerated development and growth issuers to use as a starting point. As the fund owned by the government of Malaysia, in Islamic financial best practice is driven by expertise in the country increases, the cost with a focus on South East Asia, starting top-down engagement.154 of external review may reduce as issuers can with smaller, renewable energy and energy use local expertise rather than bringing in efficiency projects in Malaysia. international expertise.

Green Bonds A Bridge to the SDGs

Climate Climate Adaptation Mitigation

Climate mitigation and adaptation underpin Green meeting the UN Sustainable Development Goals sukuk All the goals are underpinned by a series of targets, some financial and some outcome Green Growth in based as part of the 2030 Investment Green Bond Agenda. Our analysis of Markets green bond investment has led Climate Bonds to identify six out of the seventeen SDGs where increased green investment and growth in green bond markets provides direct benefits, particularly in emerging economies. Six SDGs that receive the largest boost from green bonds: 6, 7, 9, 11, 13 & 15. SDGs that receive the largest boost from green bonds

Malaysia GIIO Report Climate Bonds Initiative 22 6. Green infrastructure investment opportunities

The Malaysian government aims to Methodology Climate Bonds Taxonomy and the Climate develop billions of dollars of new public- Bonds Standard and Certification Scheme The following section explores green works projects. There are already green infrastructure investment opportunities The Climate Bonds Taxonomy features infrastructure projects and assets of many across Malaysia in four key sectors: eight climate-aligned sectors (see back different sizes and technologies spread renewable energy, low carbon transport, cover). The purpose of the Taxonomy is to across the nation. These range from a sustainable water management and encourage common broad ‘green’ definitions USD10bn national railway project through to sustainable waste management. Although across global markets in a way that supports a USD72m waste infrastructure project. A not included here, Malaysia has some green the growth of a cohesive green bond market. list of 54 projects has been compiled into a projects across other sectors like green The Climate Bonds Standard & Certification sample pipeline (see Appendix 2). buildings, agriculture/ forestry, and tourism. Scheme is used to provide a labelling scheme This report uses the globally recognised for bonds and other debt instruments. There are various ways for an investor to Climate Bonds Taxonomy and Sector Criteria gain exposure to a specific project, asset or The Sector Criteria for the Climate Bonds to determine which projects and assets portfolio. The possible investment pathways Standard & Certification Scheme provide are green. However, there are many other will vary depending on the asset ownership eligibility conditions or thresholds which standards and schemes that can be used structure, the stage in the asset’s financing must be met for assets to be in line with a to measure the ‘greenness’ of projects in lifecycle, and the investor’s mandate. This rapid trajectory towards a 2050 zero-carbon Malaysia, including global standards and can vary between projects with public and future. The criteria are developed based on those from Southeast Asia and Malaysia. private funding. climate science by technical expert groups Most of these apply to either the development with input from industry. and retrofitting of buildings or a broad set of Accordingly, metrics were used to classify infrastructure projects and assets. the green infrastructure investment opportunities, by status: Investors currently have too few tools to ensure that their investments are making • Completed projects: high profile, recently a significant impact. Having common completed projects; definitions of ‘green’ across global markets, • Projects under construction: major allows investors, potential issuers and policy projects that are under construction; and makers to identify green assets and attract investment more easily. • Planned projects: major projects that have not yet begun construction but have Ideally, the Malaysian government could been announced and/or have undergone adopt a best practice standard to identify business case planning and/or have been green projects during infrastructure planning allocated budget. and collating these in a single list. Then it can prioritise projects that are in line Case studies and a sample pipeline have with international definitions for ‘green’ been developed for this report to show the and provide clear ‘green’ labelling, when different types of opportunities available preparing future infrastructure pipelines. in the short- and medium-term future in Malaysia. The case studies include both Providing this level of visibility for green greenfield and brownfield projects and assets infrastructure investment opportunities could that could have been or could potentially be facilitate increased access to private sector financed/ refinanced via green bonds. capital for Malaysia’s economic development, the acceleration of Malaysia’s transition to a low carbon economy and help meet global institutional investor demand for green assets.

Malaysia GIIO Report Climate Bonds Initiative 23 What’s green?

+ –

+ –

+ –

Geothermal: Solar: Hydropower: According to the The world installed a record Hydropower is the largest Geothermal Energy number of new solar power source of renewable Association, 39 countries projects in 2017, more than electricity in the world, could supply 100% of their electricity net additions of coal, gas and nuclear producing around 17% of the world’s needs from geothermal energy, yet plants put together.157 electricity from over 1 200 GW of installed only 6% to 7% of the world’s potential capacity, and is expected to remain UNFCCC geothermal power has been tapped.155 the world’s largest source of renewable electricity generation by 2022.156 Drawdown Agenda International Energy Agency

Malaysia GIIO Report Climate Bonds Initiative 24 Transport (rail): Water: Buildings: 75% of the world’s countries The UN says the planet Building-related emissions have established strategies is facing a 40% shortfall account for about one-third and targets to improve the in water supply by 2030, of global GHG emissions and environmental performance of their transport unless the world dramatically improves the could double by 2050, making building sector within their Intended Nationally management of this precious resource.159 efficiency a critical part of the COP21 Determined Contributions (INDCs). agenda.160 UNFCCC One-fifth of the transport-related (I)NDCs GreenBiz include measures in the railway sector.158

UNFCCC

Malaysia GIIO Report Climate Bonds Initiative 25 Renewable energy

Energy generation, transmission Primary energy consumption in Malaysia is on the rise or storage technology that has 100 99.3 low or zero-carbon emissions. 95.1 96.6 96.7 93.1 93.6 This can include solar energy, 89 wind energy, bioenergy, 80 80.1 82.9 hydropower, geothermal energy, 75 77.2 77.1 marine energy or any other 67.5 69.4 renewable energy source.

Sector overview 50 Malaysia is a fast-growing country with a rapid pace of industrialization and urbanization. The country has been heavily dependent on energy 25 to support and spur its development. Between 2005 and 2018, primary energy consumption in Malaysia rose from 67.5 million to 99.3

Million tonnes of oil equivalent Million tonnes 0 million tonnes of oil equivalent. According to the World Energy Markets Observatory 2010 2011 2010 2012 2011 2013 2012 2014 2013 2014 2015 2016 2017 2018

(WEMO) 2017 report, Malaysia’s energy usage (Source: Statistica.com195) is projected to increase by an annual rate of 4.8% up to 2030.161 Coal and hydro increase as a percentage of energy sources 1997 - 2018

Energy sources in Malaysia are diverse, Coal & coke 3.4% Hydropower Biodiesel <1% ranging from coal, gas, diesel and oil to 6% Solar <1% Hydropower 1.8% hydropower and other renewables. Among Biomass <1% them, the traditional source of power supply Biogas <1% has been natural gas and oil, accounting for about 80% of total primary energy supply in 2016. There has also been a significant boom in fired coal energy supply, with its share Crude oil 26% soaring from 4.40% to 20.20% in the energy Coal & coke mix over the period from 1996 to 2016. Crude oil, 22% These thermal power sources are predicted petroleum to remain the most significant sources during Natural 1997 products & 2018 2019-2030 with power capacity expected to Gas others 44.1% grow by 5 GW during this period to meet the 50.3% increasing consumption demand.162 Natural Despite its substantial fuel reserves, the Gas overdependence of thermal resources 41% for electricity generation poses a serious long-run impact on its environmental health Petroleum products 4% and energy security. The government had (Source: Energy Commission 2019196) considered developing nuclear power in order to achieve energy independence and Gas and coal dominate electricity generation capacity in Malaysia avoid GHG emissions; however, due to public resistance, the plan was suspended.163 This leaves renewable power as the only option 160 to generate electricity, while still preserving 14735 the environment and energy independence. Renewable sources in Malaysia include solar, 120 wind, biomass, mini hydro. 10489

The Fifth Fuel Policy under the Eight 80 Malaysian Plan (2001-2005), aimed to 6073 balance the utilization of oil, gas, coal, hydro and other renewable energy.164 However, 40 plans to develop RE did not achieve much success until 2012. By 2018, Malaysia 1268 783

Megawatts 282 71 sourced only 2% of its total electricity output 0 63 from renewable sources (excluding large Coal Gas Hydro Diesel Biomass Solar Biogas Mini hydro 165 hydro schemes). (Source: Statistia.com, January 2018197)

Malaysia GIIO Report Climate Bonds Initiative 26 In December 2020, the Ministry of Energy Ambitious targets for solar PV expansion to 2050 and Natural Resources increased its target for renewable energy to 31% of total 12000 generation capacity by 2025 and 40% by 2035. This will involve the installation of 1,178 MW of renewable energy by 2025 and 10000 2,414 MW by 2035.166 Since the Malaysian Solar PV 10th plan (2011-2015), the government has placed more emphasis on RE, giving special 8000 Wind 167 attention to solar energy. The figure right Mini-hydro shows the Malaysian government’s plans of expanding the use of solar energy during the 6000 Biogas period 2011-2050. Biomass

Solar energy has huge potential for 4000 development in Malaysia thanks to its location near the equator with monthly solar irradiation at 400-600 MJ/m2 and potential 2000 capacity up to 6500 MW. 168,169 Electricity generation from solar sources stood at only 282 MW as of January 2018.

MW 0 In 2016, to push the development of this 2011 2012 2015 2020 2025 2030 2035 2040 2045 2050 renewable source, the Energy Commission (EC) started competitive bidding for the (Source: Chua et al. 2011198) development of large-scale solar.170 The Biomass is a more established source of In Malaysia, small hydropower plants EC is a statutory body is responsible for energy in Malaysia, producing approximately are high on the agenda. 149 sites were regulating the energy sector, specifically the 168m tonnes of biomass each year.181 As identified to be suitable for mini hydropower electricity and piped gas supply industries, the largest palm oil producer and exporter development with an estimated capacity of in Peninsular Malaysia and . The first in the world, Malaysia has huge biomass 28.9 MW per year.189 In its Small Renewable round of their LSS bidding was released resources. At present, biomass is the biggest Energy Programme (SREP), the Malaysian with a total aggregate capacity of 250 source of electricity generation in the RE mix Government expressed a goal to increase MW and 19 projects being approved.171 The (excluding large hydropower). In its National electricity generation from small hydro second tender took place in 2017, with total Biomass strategy 2020, the Government schemes from 60 MW in 2011 to 490 MW aggregate capacity of 460 MW172 and 41 aimed to achieve 800 MW of installed by 2020.190 shortlisted projects.173 The third round of LSS capacity from biomass by 2020.182 By 2030, started in February 2019 with a total offered We note that not all such opportunities the biomass installed capacity is expected to capacity of 500 MW and up to 100 MW will be eligible under the Climate Bonds increase to 1340 MW.183 of capacity limitation for each of the five Standard. The complexity of hydropower selected developers.174,175 Mini-hydro is ripe for development means that the development of criteria given Malaysia’s high rainfall volume and under the Climate Bonds Standard has been Wind energy potential is moderate but not- abundant streams and rivers.184,185 While a long process and there are currently no utilised at present. Thanks to strong wind most small and medium-sized hydropower criteria available for certification. blown from the Indian Ocean and the South plants are located in Peninsular Malaysia, China Sea with mean wind speed of 1.5-4.5 the Sarawak state has the most potential m/s 176, onshore wind power in Malaysia could for large hydroelectric growth thanks to reach up to 1.5 MW177. There is currently its rainfall and geography.186 In 2016, the no wind energy in Malaysia. Support and installed hydropower capacity in Sarawak incentives from the Government are required was 6,094MW. Bakun plant developed by to encourage the deployment of wind power. Sarawak Hidro and with a registered capacity Biogas is a promising option to decreasing of 2,400MW is the largest hydropower plant Malaysia’s reliance on fossil fuels for power in Malaysia, followed by Baleh (1,285MW) generation. Potential feedstock for biogas and Murum (944MW) plant.187 generation includes municipal solid waste, In 2009, the Malaysian Government food waste, cattle manure, sewage and established the Sarawak Corridor of palm oil mill effluent.178 In 2018, Malaysians Renewable Energy (SCORE) program with an generated about 38,142 tonnes of waste per aim to take advantage of natural resources day, while the recycling rate still stood at a and provide reliable, low-cost electricity. low rate of 28%.179 Total potential energy SCORE looks to finance 51 potential generation from biogas is estimated at hydropower projects selected by the around 2.3 million MWh.180 Meanwhile, the Government with a potential hydroelectric total generation capacity from biogas in 2018 capacity of 20GW. A further 1700 MW of was only 63 MWh. These figures indicate hydropower projects are also at a planning or that there is a huge potential for biogas feasible studying in Peninsular Malaysia.188 generation in Malaysia.

Malaysia GIIO Report Climate Bonds Initiative 27 Financing options FIT rates under the Renewable Energy Act To achieve its national RE goals, it is estimated that Malaysia will need Renewable energy source Tariff Duration investments of MYR33bn (USD8.2bn) MYR/kWh (USD/kWh) in its renewable energy sector. This would Biogas Basic rates 0.28-0.32 (0.07-0.08) 21 years need to come from not only the government, but from public-private partnership and Bonus rates 0.0-0.02 (0.00-0.01) 21 years private financing.191 Biomass Basic rates 0.27-0.31 (0.07-0.08) 21 years The Government has already taken steps to Bonus rates 0.0-0.2 (0.00-0.02) 21 years unlock the private investment and encourage private participation in renewable energy Small hydropower Basic rates 0.23-0.26 (0.07) 21 years development. Apart from the adoption of Solar photovoltaic Basic rates 0.3-0.54 (0.7-0.14) 21 years government incentives, such as the Green Technology Financing Scheme, Green Bonus rates 0.05-0.1 (0.00-0.06) 21 years Investment Tax Allowance and Green Income Tax Exemption, some institutional reforms Note: exchange rate applicable is 1MYR = 0.24USD on 1 Jan 2021) have been implemented, including: (Source: SEDA204) • Feed-in-tariff (FIT) mechanism under Renewable Energy Act 2011.192 This • The aforementioned Large Scale Solar (LSS)194 energy projects or asset portfolios and can be mechanism allows electricity generated competitive bidding that started in 2016. structured as senior unsecured bonds, project from renewable sources to be sold to This program is applicable to large solar bonds, covered bonds or ABS. Tadau Energy national power utilities at a fixed premium photovoltaic projects with an aim to drive Sdn Bhd, a renewable energy and sustainable price during a specific duration. Full FIT down the cost of solar energy in Malaysia. technology company, issued a green sukuk in rates are proposed under the Renewable The government also introduced competitive June 2017, with use of proceeds for renewable Energy Act, as follows: bidding for biopower technologies in the last energy. More green bonds and green sukuk quarter of 2018 and small hydropower in 2019. issuances have since followed. • The Net Energy Metering (NEM) programme,193 which was introduced in Renewable energy project developers and Aggregation of smaller projects can be late 2018 to allow PV solar energy to be asset owners have access to a wide variety done through securitisation or by banks first consumed and then the excess to of funding options, including banks, project originating green loans and refinancing in the be sold to the national utility company financiers, debt clubs, investment funds, direct green bond market. Renewable energy funds Berhad (TNB) on a one- investors and the capital markets. Green are being used to support greenfield projects on-one offset basis. bonds are very well suited to large renewable and stimulate innovation.

65 MW (DC) Jasin plant199,200 Solar farm in South-West Malaysia

Proponent: Scatec Solar Location: Jasin, South-west of Peninsular Malaysia, Malaysia Status: It was completed in 2019 and is in commercial operation. Classification: Solar energy, Renewable Energy

Description: Jasin plant is one of three PV projects developed under an agreement between Scatec Solar and a local consortium 203 led by ITRAMAS. The partnership will produce 197 MW of electricity for Malaysia’s grid under a 21-year PPA, with Tenaga

Nasional Berhad, the country’s largest utility provider. Source:

Jasin plant has the registered capacity of 65 MW and was connected to the national grid in 2019. The two other plant are Gurun Plant (connected to the grid in 2018201) and Merchang plant (beginning operation in 2019202).

The completion of the Jasin project brings Scatec Solar’s global PV Cost: The total investment for three projects is MYR 1,235m project portfolio to 714 MW in operation. (USD307m)

Output: Jasin solar plant can provide 94,000MWh of electricity Financial structure: Private funding from Scatec Solar, of which MYR1bn each year, for more than 31,000 households. This large-scale solar (USD248m) was raised by green sukuk by Quantum Solar in October can also help to reduce 70,000 tonnes of CO2 per year. 2017 and MYR251m (USD62m) via preferential shares issuance.

Malaysia GIIO Report Climate Bonds Initiative 28 Sinar Kamiri Sdn Bhd’s power plant205,206,207

Proponent: Sinar Kamiri Sdn Bhd Location: , Malaysia Status: Completed Classification: Solar energy, Renewable Energy Description: Sinar Kamiri solar power plant is one of the first large-scale PV solar plants in Malaysia, which was awarded to the company under an open bidding. It is constructed to preserve the environmental features of the surrounding areas with minimum

disturbance to the ground and existing vegetation Source: The project was started in 2017 and completed in August 2018. It fully adopts Huawei Fusion Solar Smart PV Solution, including smart PV string inverters and advanced technologies, which deliver a simple system with safe and reliable energy transmission. Output: A 49MW solar PV plant. It will save approximately 50,000 tonnes of CO2. This project will make an important contribution towards Malaysia’s renewable energy commitments. With an installed Cost: MYR306m (USD76m) capacity of 49 MW, the Sinar Kamiri solar project will constitute Financial structure: Private funding from Sinar Kamiri Sdn Bhd, almost 4% of the total solar capacity targeted in the year 2020 by which was raised via Green Sukuk certified by Rating Agency the Government of Malaysia. Malaysia (RAM)

TSH Resources Berhad Biomass Power Generation Plant214

Proponent: TSH Resources Berhad Location: Kunak, Sabah Status: Completed Classification: Biomass energy, Renewable Energy Description: TSH Resources Berhad Biomass Power Generation Plant is part of the bio-integration projects developed by THS 213 Resources Berhad in Kunak to produce biomass power, biogas and pulp and paper from palm waste. The complex consists of a 14MW biomass power plant, a 4MW biogas power plant and a 30,000 Source: tonne pulp and paper plant.208

The biomass power plant was commissioned in July 2004 and is the first biomass power plant in the country. It is designed to supply 10MW of electricity to Sabah Electricity Sdn Bhd for 21 years.209 It has a renewable energy power purchase agreement (REPPA) with Sabah Electricity Sdn Bhd at 21.25 sen/MWh.210

Output: The bio integration complex will consist of a 14MW Cost: MYR150m (USD37).212 biomass power plant, a 4MW biogas power plant and a 30,000 tonne pulp and paper plant.211 Financial structure: Private funding from THS Resources Berhad

Malaysia GIIO Report Climate Bonds Initiative 29 BELL Eco Power’s Biomass Power Generation Plant217,218

Proponent: BELL Eco Power Sdn Bhd Location: Batu Pahat, Status: Completed Classification: Biomass energy, Renewable Energy Description: The project activity involves the installation of a new power plant consisting of a 52 ton per hour low pressure boiler and a turbine. It has the installed capacity of 11MW and export capacity of 10MW.

The plant harnesses the energy from palm oil mill biomass 216 residues such as palm shells, mesocarp fibres, empty fruit bunch

fibres, palm kernel shell and wood chips. Most of the raw material Source: requirements of the project activity would be met from its group company Bell Palm Industries Sdn. Bhd. The flue gas generated Cost: MYR54.576m (USD13.5m).215 from the combustion of biomass is treated and made harmless Financial structure: Private funding from BELL Eco Power Sdn Bhd prior to being released into the atmosphere.

Output: The project is designed to supply about 775,780 MWh of electricity generated from renewable energy source to the grid during the crediting period of 10 years.

Malaysia GIIO Report Climate Bonds Initiative 30 Low carbon transport

Transportation modes and ancillary Vehicle growth outstrips population growth in Malaysia (1990-2015) infrastructure that produce low or zero direct carbon emissions. This 35 35 can include national and urban passenger rail and freight rail 30 Population 30 networks; Bus (BRT) systems; electric vehicles; and, 25 25 bicycle transport systems. 20 20 Sector overview Transportation is the backbone of socio- 15 15 economic development in Malaysia, Number contributing 3.6% to GDP with a value of 10 of vehicles 10 MYR48.8bn in 2017.219 Since 2004, the transport sector has grown by leaps and 5 5 bounds, at an annual growth rate of over 220

5%. To support business and trade Million people 0 0 Million vehicles activities, the country has continuously built 1990 1995 2000 2005 2010 2015 and upgraded its transport networks. Until 2016, Malaysia constructed over 200,000 Source: Ministry of Transport and Department of Statistics Malaysia (2016)252 km of roads, 2,900 km of railways, 18 ports came from road transport.229 This is a worrying Transport accounts for 27% and 22 airports.221 The geographic position trend for the future in terms of energy security of CO emissions from fuel of Malaysia makes it a natural gateway to 2 and CO2 emissions. combustion Southeast Asia, which makes it an important transport hub in the region. Currently, Malaysia is among the countries Residential 1% Commercial & with the highest CO2 emissions per capita public services <1% However, increasing urbanisation, coupled in ASEAN, about 7.27 tonnes, doubling with rapid growth in mobility, has imposed that of Thailand’s 3.64 tonnes and even great pressure on Malaysia’s urban road higher than China’s 6.59 tonnes (data as of transport.222 Urbanisation in Malaysia is on 2015).230 As a result, low carbon mobility the rise, projected to reach 80% in 2030.223 Transport solutions are needed to push sustainable Malaysia’s population is also estimated to 27% urban transportation in Malaysia. The reach 41.5 million by 2040.224 These trends newly introduced National Transport Electricity put additional demands on transportation Policy 2019 – 2030 has set forth targets & heat infrastructure. It is estimated that Malaysian production and strategies for enhancing the country’s Manufacturing will make roughly 131 million daily trips 50% economic competitiveness, while reducing industries & via roads in 2030, a significant surge from the negative impact of the transport sector construction 40 million trips in 2010.225 Between 1990 on the environment.231 Accordingly, a 45% 50% and 2015, the number of motor vehicles reduction of GHG intensity of GDP is to be increased by more than fivefold, a higher achieved by 2030. growth rate than the population. Insufficient public transport facilities are a contributing The central strategy is to accelerate the Other energy industry factor to the ever-increasing motor vehicle implementation of low carbon transport own use 6% population in Malaysia. incentives by prioritizing public transport Source: IEA (2020)253 development and adopting green technology The great leap in private vehicle ownership and cleaner fuels such as biodiesel and Compared with more than 28.2 million has come with a cost to the environment and electricity vehicles (EVs).232 This is in line with vehicles registered in the country up to the the economy as a whole. In 2016, the cost three main objectives dictated in The Low beginning of 2019237, the figure represents of congestion in the Greater KL region was Carbon Mobility Blueprint and Action Plan233 only a fraction, showing the great potential around 1.1% to 2.2% of GDP, equivalent to announced in 2019, which are (i) increasing of this market. MYR6,144 per person per year.226 In addition, ridership of public transport; (ii) accelerating as the transport sector relies primarily on In 2018, the charge EV network in Malaysia the use of clean energy vehicles; and (iii) petroleum fuels, this sector accounted for used up 254,802 kWh of electricity, doubling improving vehicles technologies towards about 36.4% of total final energy consumption the figure of 2017.238 To push the domestic higher efficiency and lower emissions.234 as in 2018.227 As such, it is the second largest use of EVs and give the public easier contributor of Greenhouse Gas (GHG) The market for EVs started in Malaysia in access to EV charging stations, the Federal emissions in Malaysia, only after electricity 2013, with the country’s very first registered Government has aspired to have 125,000 power generation. Of the total 211 million electric car – Mitsubishi i-MiEV.235 The public chargers by 2030, up from only 400 tonnes of CO2 emitted from fuel combustion in demand for EVs has been on the rise since units at September 2018.239 This reveals 2017, the transport sector produced 28.86%, then - with the amount of listed EVs making a promising growth of the EV industry in equivalent to 60.9 million tonnes.228 The vast a leap from an estimated 100 units in 2013 Malaysia, which aims to become a regional majority, 96.72%, of transportation emissions to about 52,384 units as at March 2019.236 EV hub by 2030.240

Malaysia GIIO Report Climate Bonds Initiative 31 The country’s first solar electric vehicle 30% in 2019.247 This could be due to erratic There are also potential funding structures charging station was launched in 2018; and timing of buses which ferry people from available to encourage private sector more are being planned.241 At the moment, their resident zone to train stations and from involvement in the long-term financing Malaysia is in the middle of developing train stations to their destinations (and vice required for low-carbon transport projects autonomous and self-driving vehicles which versa), long distance to the nearest train including green bonds, outright asset are believed to enhance vehicle safety and station, and a lack of uniformity in signage acquisitions and the securitisation of green energy consumption.242 Semi-autonomous designs (different owners of rail public assets. Green bonds provide indirect exposure cars are already on road, 243 whilst fully- transport use different design schemes).248 for investors to specific projects and assets automated ones are expected to appear in Much still needs to be done to improve the and provide attractive credit and liquidity the market soon. In addition to improving rate of public transport use in Malaysia. credentials for institutional investors. No the sustainability of private transport, the green bonds have yet been issued in Malaysia, In terms of innovation in sustainable government is prioritizing the improvement where the use of proceeds is to be allocated transportation, Malaysia has had some of the efficiency of public transport to low carbon transport. important achievements. For example, its networks. Targets for which are set out in current BRT system is an all-electric bus Government-backed concessional loans the country’s National Transport Policy service and can serve up to 1000 passengers are a new structure that exists in ASEAN, 2019-2030.244 The existing National Land per hour. The integration between Rapid which provides greater leverage against the Public Transport Master Plan (NLPTMP),245 KL buses and MRT/LRT is working well, revenue streams of transport (i.e. fares). introduced in 2013, also aims to increase increasing the connectivity for inner-city Another innovative mechanism is ‘value the modal share of public transport. By transportation.249 The launch of MRT Phase capture’, which refers to the value that 2020, 40% of residents are One successfully removed 9.9 million cars is generated for private landowners from projected to use public transport services. in 2017, and is estimated to remove an infrastructure and surrounding business For other cities, the 40% target is to be additional 62-89 million cars between 2020 operations. As private sector appetite reached by the year 2030. and 2030.250,251 increases, funding sources will continue to The public transport system in Malaysia diversify, and investment will accelerate. has been much improved since the Funding Pathways implementation of the NLPTMP. Various Most funding for transport comes from the services are being provided, such as buses, government budget, ODA (i.e. from ADB, electric BRT, transit (LRT), , China, etc.), PPP arrangements, Build- mass rapid transit (MRT) or electric train Operate-Transfer or Build-Transfer contracts. service (ETS). The share of public transport Capital mobilisation for low-carbon transport in Klang Valley rose from 16% in 2010 to continues to be targeted towards encouraging 20% in 2015.246 However, although the the use of energy-efficient transportation overall train and rail services in Malaysia and the development of green infrastructure are almost complete, its usage only reached projects that reduce carbon emissions.

Malaysia GIIO Report Climate Bonds Initiative 32 East Coast Rail Link (ECRL) Project254,255

Proponent: Malaysia Rail Link (MRLSB) as the developer - jointly operated with China Communications Construction Company (CCCC)

Location: , Terengganu, Pahang, , WP Putrajaya, and

Status: Under Construction. It was started in 2017 and is expected to be complete in 2026.

Classification: Rail, Infrastructure

Description: The ECRL’s 640km line connects different parts of 257 the east coast region and the west coast region of Malaysia. The route consists of 14 passenger stations, five combined passenger Source: and freight stations and one freight station, providing both passenger and freight transport services. It passes through the Output: ECRL is expected to reduce the travel time from Kota states of Kelantan, Terengganu, Pahang, Negeri Sembilan, WP Bharu of Kelantan to WP Putrajaya to approximately four Putrajaya, and Selangor. hours. Upon completion, the link will welcome about 5.4 million passengers and 53 million tonnes of cargo each year by 2030. It is There are three interchange stations along the line, which will link also intended to be a catalyst for economic equality between the the ECRL with the International Airport (KLIA), west and east coast and boost economic growth in the region by Kuala Lumpur International Airport 2 (KLIA 2) (at Putrajaya 1-1.5%. Sentral); KTM Electric Train Service (ETS) and KTM Komuter service (at Bangi/); and KTM Intercity and KTM Kargo Cost: MYR44bn (USD10.9bn) service (at ). Financial structure: F85% of the project is financed with a soft When complete, the tracks allow passenger and freight trains to loan from the Chinese government and the rest 15% is funded by reach the speed of 160km/h and 80k/h respectively. the Malaysia Government.256

Putrajaya Line (formerly known as -Serdang-Putrajaya MRT)259,260

Proponent: Mass Rapid Transit Corporation Location: Kuala Lumpur Status: Under development. Classification: Rail, Infrastructure Description: is the second part of the Klang Valley Mass Rapid Transit (KVMT) project, after the Sungai Buloh-. The line began construction in 2016 and is expected to be fully completed by 2022 and operational by 2023.

It is about 52.25km long and will connect the townships of Sungai Buloh, Serdang and Putrajaya. The line will have 36 stations, 258 including 25 elevated stations and 11 underground ones. Source: The construction of the SSP line is divided into two phases. The first phase involves the construction of new stations between Kwasa Cost: MYR30.53bn (USD7.6bn) Damansara and Kampung Batu, which are expected to be operational Financial structure: It is fully funded by Mass Rapid Transit by July 2021. The second phase, which involves the construction of Corporation Sdn Bhd (MRT Corp) the stations, is expected to be completed by July 2022.

Output: The line will serve Sungai Buloh to Putrajaya corridor, which has a population of approximately two million. It will have a daily ridership of roughly 529,000 passengers upon its completion in July 2022.

Malaysia GIIO Report Climate Bonds Initiative 33 Sustainable water management

Assets that do not increase As the Government aims to have 99% of the technologies.276 To attract new sources of greenhouse gas emissions or population served by clean and treated water funding for these developments, as stated that aim at emission reductions by 2020, water supply systems will need to by the government, alternative financing over the operational lifetime of be expanded, especially in rural areas such methods based on privatisation concepts277 the asset, address adaptation, as Kelantan, Pahang, Sabah, and Sarawak. will be further promoted, and green financial and increase the resilience of Rainwater harvesting systems will need to be instruments such as green sukuk278 will be surrounding environments. This developed in remote areas with high rainfall deployed accordingly. covers built as well as nature- while the highland areas with limited access Due to its geographical location and weather based water infrastructure. will need more gravity feed systems.265 conditions, Malaysia is prone to seasonal Water management projects Despite having relatively plentiful water floods. The average annual loss from these could include water capture resources, Malaysia still faces water floods amounts to MYR915m.279 From 2004 and collection, water storage, shortages in several states, such as Negeri to 2014, Malaysia invested over MYR9.3bn water treatment (with methane Sembilan, Johor, Perak, Kedah, Pahang in flood mitigation programmes280, and emissions treatment), flood and Kelantan, due to global warming and over MYR51bn in climate change-resilient- defence, drought defence, unevenly rainfalls.266 The Government will infrastructure during the 2011-2015 period.281 stormwater management, need to ensure water supply sustainability, As the focus of the Eleventh Malaysia and ecological restoration/ especially in these stressed areas, by Plan (2016-2020) was on strengthening management. constructing new treatment plants or disaster risk management, the government upgrading existing ones. The focus will be pledged to spend more on flood mitigation Sector overview given to states which have water supply projects and maintenance of existing flood reserve margins of less than 10%, such as retention ponds, with an allocation of Climate change, rapid urbanization and Kedah (0%), Selangor (4.5%), and Negeri MYR443.9m and MYR150m in the 2020 strong population growth mean that Sembilan (7.5%).267 Budget, respectively.282 These infrastructure Malaysia needs to prioritise more resilient investments are necessary to reducing and sustainable water management. Another long-standing issue in Malaysia is flood risk in a changing climate as well as the high level of non-revenue water - with Malaysia is endowed with abundant water protecting other forms of infrastructure in a national average of 36.6% in 2013.268,269 resources. The country receives 907 billion the future. As the government aims to reduce the non- m3 of rainfall261 yearly, with renewable revenue water (NRW) to 25% by 2020270, a water resources (both surface water and Financing options holistic NRW reduction programme will need groundwater) being 630 billion m3 per year, to be implemented, including meter and Currently, the sector is mostly supported making an annual average water availability pipe replacement271, monitor installation272 by public finance, as the majority of water of about 28,400 m3 per capita262. As 97% and strict enforcement on illegal tapping.273 infrastructure in the Malaysia is publicly of the water supply in Malaysia is derived Hence, additional funding for research and owned. Green bonds could complement the from surface water, in rivers and reservoirs, development in water saving techniques and funding of public water infrastructure issued management of these water catchment improving water quality is needed.274 by the local governments (provinces, cities, areas is crucial to ensure a reliable source or utility companies owned by them). of water supply.263 However, changing Funding for expanding sewerage services weather patterns due to climate change, and upgrading sewage treatment plants One green sukuk has been issued in combined with irrational water use is also required. About six million tons of Malaysia where the use of proceeds is (water that is over-used, stolen or wasted) sewage is generated every year in Malaysia, allocated to water infrastructure. Pasukhas has put more challenges for water most of which is treated and released into Group (a non-financial corporate) issued sustainability in Malaysia. the rivers.275 Proper treatment of sewerage a MYR200m green bond in February 2019 is pivotal, as about 97% of the water supply with use of proceeds allocated for energy, Malaysia has made great achievements comes from surface water (including rivers). buildings, water, waste, and land use.283 in terms of clean water accessibility. According to WHO/Unicef Joint Monitoring According to the Eleventh Plan of Malaysia, Programme report in 2000-2017, in 2017, by 2020 around 3,000 small and inefficient 93% of the Malaysian population had access sewage treatment plants will be rationalised to safely managed water services and 87% through the construction of centralised to safely managed sanitation services.264 plants with larger capacities and advanced

Malaysia GIIO Report Climate Bonds Initiative 34 Non-revenue water (NRW) among states in Malaysia 2014-2015

State 2014 2015 System Input Billed NRW NRW (%) System Input Billed NRW NRW (%) Volume Authorised (MLD) Volume Authorised (MLD) (MLD) Consumption (MLD) Consumption (MLD) (MLD)

Johor 1,640 1,215 426 25.9 1,640 1,215 426 25.9 Kedah 1,294 697 596 46.1 1,294 697 596 46.1 Kelantan 445 225 220 49.4 445 225 220 49.4 Labuan 69 48 20 29.5 69 48 20 29.5 Melaka 478 376 102 21.4 478 376 102 21.4 N. Sembilan 744 476 267 35.9 744 476 267 35.9 Pulau Pinang 995 813 182 18.3 995 813 182 18.3 Pahang 1,108 520 588 53.1 1,108 520 588 53.1 Perak 1,237 858 379 30.6 1,237 858 379 30.6 Perlis 216 95 121 55.8 216 95 121 55.8 Sabah 1,196 577 618 51.7 1,196 577 618 51.7 Sarawak 1,192 810 381 32 1,192 810 381 32 Selangor 4,593 3,048 1,545 33.6 4,593 3,048 1,545 33.6 Terengganu 605 417 188 31 605 417 188 31 MALAYSIA 15,809 10,176 5,633 35.6 15,809 10,176 5,633 35.6

(Source: data.gov.my284)

Penang water supply projects289,290

Proponent: The Water Supply Corporation Sdn Bhd (PBAPP)

Location: Penang, Malaysia Status: Planned. The projects will be implemented between 2019 and 2021

Classification: Water treatment and distribution

Description: These five water supply projects are worth MYR501m. The project works include the development of the Butterworth-Penang island Twin Submarine Pipeline, Sungai

Perak Raw Water Transfer Scheme (SPRWTS); upgrade of all 291 existing water treatment plants, reservoirs and pumping stations; installation of new pipelines; and, replacement pipelines; and non- Source: revenue water management. Among them, SPRWTS will be the last for development, projected to finish by 2025285. Output: Upon completion, the SPRWTS treatment plant can pump Once implemented, the Butterworth-Penang island Twin 1000 million litres of water per day.287 The projects will reduce Submarine Pipeline will ensure more efficient delivery of treated Penang’s over-dependence on water supply from Sungai Muda and water from the Sungai Dua Water Treatment Plant in Seberang ensure the state’s water sufficiency and security towards 2050. Perai and serve as a back-up to the first submarine pipeline, Cost: MYR501m (USD124m)288 commissioned in 1973. Meanwhile, Sungai Perak Raw Water Transfer Scheme helps to tap the second major raw water Financial structure: The project is 100% funded by The Penang resources for Penang.286 Water Supply Corporation Sdn Bhd (PBAPP)

Malaysia GIIO Report Climate Bonds Initiative 35 Stormwater Management And Road (SMART) project

Proponent: Government of Malaysia, Malaysian Highway Authority (LLM), and Department of Irrigation and Drainage Malaysia (JPS)

Location: , Malaysia Status: Completed in 2007 Classification: Flood defences, water infrastructure, water Description: The Stormwater Management And Road Tunnel (SMART) is a multi-purpose tunnel that combines floodwater storage and diversion tunnel with a highway tunnel that will carry

traffic. This tunnel is 9.7 km long, and 13.2 m in diameter. The 294 tunnel has a combined capacity of 3 million m3. This tunnel is the longest stormwater tunnel in South East Asia.292 Source: Output: The construction of the makes the city more Cost: MYR1.89bn (USD4706m) resilient to flash flooding and mitigate recurring floods in the area. The tunnel is used to divert and store stormwater, whilst Financial structure: Public-Private Partnership (PPP), joint venture allowing traffic to flow when the tunnel was not being used for the pact between MMC Corp Berhad and Gamuda Berhad with the stormwater. In cases of severe storms, the traffic tunnel can be Department of Irrigation and Drainage Malaysia and the Malaysian evacuated and floodwater will fill the tunnel. Highway Authority293

Langat 2 Water Treatment Plant298,299

Proponent: Pengurusan Aset Air Berhad (PAAB) Location: Selangor, Malaysia Status: Completed Classification: Water distribution, water infrastructure, water Description: The Langat 2 Water Treatment Plant (Langat 2) is the country’s largest water facility. The plant is made up of two distribution channels, Stream A & B, each with a capacity of treating and distributing 565 million litres of water daily.295 The

channels will feed into the Northern and Western Corridors that

supply water to areas in , Jalan Klang Lama and Petaling 300 Jaya Selatan within Petaling, , Desa Tun Hussein

Onn, Ulu Kelang, and Ampang in Gombak, Jalan Hulu Langat and Source: Sungai Lui in Hulu Langat. In 2020, the plant is only one-third operational. The plant will be fully operational in 2023. Cost: MYR8bn (USD 1.99bn)

Output: The plant will process and distribute about 350 MLD a Financial structure: Malaysia State Budget and Soft Loan from day. When it is fully operational and at its maximum capacity, the Japan International Cooperation Agency (JICA)297 plant will deliver 1,130 MLD of treated water to millions of people in the Klang Valley.296

Malaysia GIIO Report Climate Bonds Initiative 36 Pantai 2 Sewage Treatment Plant

Proponent: Ministry of Energy, Green Technology & Water (KeTTHA) as owner and Sewerage Services Department (JPP) as implementor

Location: , Kuala Lumpur, Malaysia Status: Completed (operational) Classification: Water treatment, water infrastructure, water Description: Pantai 2 Sewage Treatment Plant was the largest sewage treatment plant and the first underground sewage treatment plant in Malaysia. With a treatment capacity of

320,000 tons per day, it could serve treatment needs for 1.43 304 million people.301

The Pantai catchment area covers 6,700 hectares in the central Source: and south-western parts of Kuala Lumpur—including , Sentul Raya, the Bukit Kiara central business district, This plant centralizes the sewage treatment, and closed 140 small Taman Botani and parts of . plants, reducing the pollution into the Klang River. This plant also Output: The bio-gas generator in this plant converts methane capitalizes renewable resources for energy and water to reduce produced during the sludge treatment to generate up to 700 pollution.302 kilowatts of auxiliary power. The rainwater harvesting system Cost: MYR983mn (USD244m) in the plant has a multi-stage filtration and reverse osmosis membrane system that recycles bio-effluent into 2,460 cubic Financial structure: PPP, Beijing Enterprise Water Group (BEWG) metres of treated water daily for plant operations. as the EPC Contractor303

Malaysia GIIO Report Climate Bonds Initiative 37 Sustainable waste management

The efficient use of resources to CO2 emissions in Malaysia continue to rise cut down on waste production, coupled with collection and 300000 disposal systems that promote reuse and recycle, thereby minimising residual waste going 200000 into energy from waste facilities. Where waste must go to landfill, there are gas capture systems 100000 installed to minimise emissions as

well as measures to minimise run- (kt) emissions off and other negative impacts on 2

CO 0 surrounding environments. 1990 1995 2000 2005 2010 2014 Sector overview Source: World bank, 2020321

CO2 emissions have been significantly Residential sector accounts for the largest proportion of waste increasing in Malaysia since 2000. Emissions generation in Kuala Lumpur amounted to 250.3 million tonnes in 2018, up from 241.6 million tonnes in 2017.305 10000 The waste sector was the third contributor Residential 9000 Institutional to CO2 emissions after energy (electricity consumption and transportation).306 8000 Street cleansing Construction & industry At the 2015 Paris Climate Conference and Commercial Landscape Conference of Parties (COP21), Malaysia 7000 made a commitment to reduce its CO2 6000 Total emissions per unit of GDP by 45% based on 2005 levels by 2030.307 This 45% target 5000 is also specified in the intended Nationally Determined Contribution (NDC), of which 4000 35% on an unconditional basis and a 308 further 10% is with international support. 3000 Accordingly, the country’s authorities acknowledge the importance of waste 2000 management to mitigate GHG emissions in its NDC to achieve this goal.309 1000

With regard to waste discharge, around 0

38,000 tonnes of waste was generated Ton/day each day in Malaysia in 2016, of which only 2009 2011 2013 2015 2017 2019 2021 2023 17.5% was recycled.310 Food waste is a major Source: Fauziah & Agamuthu, 2003322 component of generated waste (45%) and 311 contains high organic compounds. Due However, most landfills in the country are Method of waste disposal in to unseparated waste, more than 30% of small scale operations with varying designs Malaysia323 potentially recyclable materials such as and environmental and health conditions.316 paper, plastic, aluminium and glass are still According to the Solid Waste Management Treatment Percentage of Waste directly disposed of in landfills.312 With an and Public Cleansing Corporation (SWCorp Disposed estimated population of nearly 30 million Malaysia), there are 161 operational landfills Malaysians in 2020, it is expected that and 141 closed sites across the country.317 2002 2006 2020 the amount of waste will increase to 16.76 Among those operates, there are only 14 (target) million tonnes.313 Among different generation sanitary landfills.18 Recycling 5.0 5.5 22.0 sources, household disposal is the highest In addition to improving landfill conditions, contributor to waste discharge. Composting 0 1.0 8.0 the Malaysian government plans to reduce Regarding management methods for waste landfill waste disposed by 40%. They aim Incineration 0 0 16.8 disposal, the highest percentage flows to to reduce 22% through recycling and Inert landfill 0 3.2 9.1 ‘Other disposal sites’ (open dumpsites, where around 80% through intermediate waste is illegally disposed of) followed by treatment, such as waste-to-energy, Sanitary 5.0 30.9 44.1 sanitary landfill and then recycling (see table composting and material recovery.318 landfill right). The government aims to close all the Waste-to-energy (WTE) plants will be Other 90.0 59.4 0 illegal dumpsites by 2020,314 so it is expected part of this solution with projects under disposal sites that landfilling be the most common practice construction and planned in Ladang Tanah 315 319 followed by recycling and incineration. Merah, Negeri Sembilan and Sungai Udang. Source: A. Periathamby, et al. (2009)

Malaysia GIIO Report Climate Bonds Initiative 38 It is suggested that large-scale incineration Financing options Privately owned assets and projects, which technology in Malaysia is inevitable, could include recycling facilities and some Most of the major waste management assets due to the scarcity of spared land for waste-to-energy facilities, offer other and projects in Malaysia are publicly owned, new landfill areas in the future.320 The means of debt and equity investment. with public financing used primarily for challenge will be to develop facilities that Accordingly, investment pathways could waste treatment facilities, waste-to-energy use processes that produce low to no GHG include participation in green bonds and processing and sanitary refill infrastructure. emissions and have minimal impact on the consortium debt arrangements and/or Waste treatment facilities usually demand surrounding environment and the health equity stakes in individual projects via PPPs significant capital. Development via PPPs or of local populations. or other public-private or private ownership through the issuance of green bonds could and financing structures. offer options for municipalities to fund projects.

Ladang Tanah Merah Waste-To-Energy (WTE) incinerator plant324,325 Waste-To-Energy (WTE) incinerator plant

Proponent: Cypark Resources Bhd Location: Ladang Tanah Merah, Port Dickson, Negri Sembilan Status: Completed Classification: Waste, Energy from Waste Description: Ladang Tanah Merah Waste-To-Energy (WTE) incinerator plant is known as a SMART (solid waste modular advanced recovery and treatment) WTE project, designed to sustainably convert solid waste into electricity.

The project covers an area of 4ha and includes a waste receiving and segregation facility with material recovery or recycling 326 technology, and Fully Anaerobic Bio-reactor System. Source: The project was put into commercial operation in 2019, being the first WTE incinerator project in Malaysia.

Output: When fully operational, the plant should be able to handle Cost: MYR300m (USD74m) 600 tonnes of solid waste per day and produce from 20 MW to 25 MW of energy, which is sufficient for about 25,000 households Financial structure: PPP arrangements under Build-Operate- within its vicinity. Manage-Transfer Contract for at least 25 years

Malaysia GIIO Report Climate Bonds Initiative 39 Kajang Waste-to-Energy Plant

Proponent: Core Competencies Sdn Bhd/Recycle Energy Sdn Bhd Location: , Malaysia Status: Completed Classification: Waste to energy plants, waste to energy, waste and pollution control

Description: The WTE plant consists of a refuse-derived fuel (RDF) facility, which prepares the fuel, and the steam power plant.

The facility has the capacity to process approximately 1100 tons of

municipal solid waste (MSW) daily into RDF in fluff form and then 329 use that fuel to produce approximately 8 MW of electricity daily.327

This plant enables waste recovery of recyclables in Kajang Source: municipality and enabling further digestion process to release MSW daily and produces 8 MW of electricity used in-house and methane-rich biogas for power generation. exported to the national grid.

It operates 16 hours a day, producing enough fuel for 24-hour Cost: MYR 1bn (USD 250m) operation of the power plant.328 Financial structure: Equity Output: Waste to Energy plant that processes 1100 tonnes of

Waste to Energy Worldwide Holdings/ Western Power Clean Energy Sdn Bhd WTE Project332

Proponent: Worldwide Holdings Berhad Location: Jeram, Selangor, Malaysia Status: Planned (first phase to be completed in 2022) Classification: Waste to energy plants, waste to energy, waste and pollution control

Description: The plant will be developed in two phases in a 15 acre of land in Jeram Sanitary Landfill in the state. The plant will have a capacity to process 1,200 tonne of waste per day.330 333 Output: The first phase of the facility will produce between 20 to 24 MW of green energy, delivering energy to 25,000 households331 Source: Cost: MYR 1bn (USD 250m) Financial structure: Joint venture between China Western Power Industrial Co. and China Western Power International; Western Power Clean Energy

Malaysia GIIO Report Climate Bonds Initiative 40 Other green opportunities

Green buildings Energy consumption by sector There are two leaders in Malaysia’s green building space – the current Ministry of Globally, the buildings and construction sector Entrepreneur Development and Cooperatives has been a large contributor of CO2 emissions, and the Malaysian Green Technology stubbornly remaining at around 39 percent of Corporation which are LEO and GEO buildings total carbon dioxide emissions.334 In Malaysia, respectively.343 In recent years, many other buildings consume almost the highest energy Transport Malaysian government buildings have also and the highest energy consumption comes 28% adopted green building standards and are from electricity335which is also the biggest Building labelled GBI.344 In 2010, Perdana Putra, the 336 32% CO2 emitter. Malaysian Prime Minister’s office building was refurbished following GBI’s inception, Thus, embracing low carbon development helping to reduce the building’s energy approaches for buildings is essential intensity by 38%, water usage by 40% and towards making Malaysia a low-carbon, 345 Industry CO2 emissions by 30%. The building was climate-resilient green economy. In its 2030 32% granted with Platinum GBI rating and set an Sustainable Goals, the country aims to reduce iconic example for the nation.346 25% of gross consumption of electricity from the building sector, while pledging to reduce Furthermore, in 2011, the then Ministry up to 40% of CO2 emission per GDP by (Source: Energy Malaysia, 2017351) of Energy, Green Technology and Water 2020.337 Among the first actions taken was introduced the Low Carbon Cities Framework the introduction of new building definitions (LCCF) which looks at addressing Buildings are awarded GBI based on six and concepts; for instance, Low Energy Office carbon emissions in 4 main areas: urban criteria, including Energy Efficiency, Indoor (LEO) in 2002 and Green Energy Office environment, urban infrastructure, urban Environment Quality, Sustainable Site (GEO) in 2007.338 While LEO’s designer transportation and buildings.347 One of the Planning and Management, Materials and target to achieve 50% of energy saving and pioneering and flagship green townships is the Resources, Water Efficiency and Innovation. reduce construction cost by 10% compared Federal Government Administrative Centre of Subsequently, a series of newly developed to conventional office buildings, a GEO Putrajaya.348 It is taking the lead with a goal to tools were introduced and can be applied to building strives to minimize energy demand reduce its GHG emissions intensity by 60% all types of buildings. Recently, the Malaysia and make full use of renewable energy from by 2025 compared with 2012 levels, making Carbon Reduction and Environment its own solar panels.339 the city cooler by two degrees Celcius.349 Sustainability Tool (MyCREST)341 was In addition, a number of green building introduced to quantify carbon emissions rating tools have developed in Malaysia. and sustainable impacts of the built The pioneer is Green Building Index (GBI) environment and is considered to be the which was introduced by Pertubuhan Akitek most comprehensive of all tools since it Malaysia (PAM) and the Association of takes into account both criteria check list Consulting Engineers Malaysia in 2009.340 and carbon calculation.342

Development of sustainability rating tools in Malaysia

Green Low PH Meterai Building Carbon JKR Hijau MyCREST Index Cities Melaka

2009 2010 2011 2012 2013 2014 2015 2016

Casbee SUSDEX GreenPASS GreenRE MyGHI Iskandar

(Source: Building and Investment, 2018350)

Malaysia GIIO Report Climate Bonds Initiative 41 Merdeka PNB 118 Tower353,354,355

Proponent: PNB Merdeka Ventures Sdn Bhd Location: Kuala Lumpur, Malaysia Status: Under construction Classification: Green building Description: Merdeka PNB 118 Tower (or ) is being built in the vicinity of Merdeka Stadium in Jalan Hang Jebat, Kuala Lumpur. It is a 118-storey building with a completed height of more than 635 meters. It will have 83 levels of office space, 16 levels of luxury hotel, while the remaining floors will accommodate the sky lobby, observation deck, restaurants, etc. Upon completion, it will be the tallest building in Malaysia and rank amongst the world’s ten tallest buildings. The construction of the Tower was proposed in 2010 and is divided 356 into 3 phases. Phase 1 and phase 2 are expected to be completed by the second quarter of 2022 while the Phase 3 is due for completion in 2024/2025. Source: Cost: MYR5bn (USD1.24bn)352 Output: The tower will serve as the next great icon of Kuala Lumpur. The development of Merdeka PNB 118 is also expected to create Financial structure: Private funding from PNB Merdeka Ventures about 10,000 jobs and business opportunities for over 100 skills. Sdn Bhd, which was partly raised via a MYR2bn green sukuk.

Sustainable land-use Malaysia with a forest cover loss of nearly sectors. The Government offers flexible 5Mha in 2011;365 however, plantation and repayment based on harvest cycles of Agriculture, including forestry and timber conservation efforts have been heavily agro-food commodities, and soft loans products, has long been a major sector of exercised to reverse the trend. Today, for certified farms through the Agrobank, Malaysia’s economy.357 According to a Food more than half the tree cover of peninsular while private investment comes from and Agriculture Organization (FAO) study Malaysia consists of tree plantations.366 Key individual farmers.368 The National in 2017, Malaysia was the world’s largest achievements of land use and sustainable Conservation Trust Fund for Natural producer and exporter of palm oil, and forest practices in Malaysia include the Resources was established in 2014 the third largest producer and exporter of gazettements of Permanent Reserved Forest dedicated for conservation efforts.369 natural rubber.358,359 In the 1970s, Malaysia in Pahang, Perak and Selangor, leading to Bonds are not commonly used as a tool to was a predominantly agriculture-based GHGs emission avoidance of 11.8 million raise finance within the agriculture sector economy.360 Today, agriculture is the third tCO2eq as of 2013.367 and the same applies to green bonds with largest contributor to the country’s economy, very few green bonds issued globally to accounting for approximately 7.8% of total Finance for sustainable agriculture finance land use and agriculture projects.370 GDP in 2020.361 comes from both public and private

Resilience in the agriculture sector is important to secure not only Malaysia’s food sources but Land use change in Malaysia also economic growth. The development of the agriculture sector was guided by the National 250000 Agro-food Policy, 2011-2020 and the National Commodity Policy, 2011-2020, which aimed 200000 to increase food production and exports of industrial commodities.362 The sector recorded Forest land (km2) an average growth of 2.4% during 2011-2015 150000 period, continued with 3.5% per annum during 2016-2020.363 100000 Both agricultural land and forest land have slightly increased over the past 10 years. Regarding agriculture, there was a diminishing 50000 rate of agricultural land use for rubber, cocoa, Agricultural land (km2) coconut and paddy while the corresponding 2

km 0 land use for oil palm, vegetables and fruits were on the increase due to the shift in food 2004 2006 2008 2010 2012 2014 2016 364 consumption. Deforestation happened in (Source: World Development Indicators, World Bank)

Malaysia GIIO Report Climate Bonds Initiative 42 7. Measures for growing green infrastructure

The growth of green infrastructure pipelines Development Finance Institutions Investors and associated green finance (including • Increase blended finance solutions to • Expand green mandates. Green mandates the green bond market) can be aided by channel capital to climate investments have been critical in driving the green key policy and institutional changes. Such and activities. This could include blended bond market by providing a ready source measures act to raise the profile of green finance facilities supported by development of capital to invest in the growing supply infrastructure, support critical finance banks and developed country governments, of investment opportunities. Expanded channels for infrastructure development risk mitigation measures, credit mandates should also consider better stakeholders, diversify risks and create more enhancement, guarantees and foreign capacity to assess emerging market options for investors. exchange hedging products. opportunities such as those in ASEAN. Malaysia has already shown leadership in this • Promote climate-related financial • Get involved in asset creation and regard by incentivising green bond issuance risks disclosure – e.g. supporting the mediation – talk to governments about through the Green SRI Sukuk Grant Scheme implementation of recommendations what they have to do to transition to a (now called the SRI Sukuk and Bond Grant of the Task Force for Climate-related low carbon economy and what is capital Scheme). Other measures could include: Financial Disclosure (TCFD) – to boost is needed. Governments/policymakers: investor confidence in the market. • Incorporate climate risk exposure into new Issuers infrastructure plans, accounting for future • Learn - Enhance capacity through training depreciation of assets due to change on green bond definitions and guidelines. in precipitation patterns, temperature A greater understanding of green increases and extreme weather events. definitions, taxonomies and concepts • Adopt international guidelines/best can allow for issuers to better consider practice on green. International consistency future climate risks thereby stimulating of definitions is critical for attracting green bond and sukuk issuances. Capacity international capital flows. Policymakers building efforts must focus on technical should therefore leverage ambitious skills development that is institutionalized internationally-accepted definitions of rather than technical assistance through green to avoid market fragmentation. external consultants

• Improve the visibility of green • Report and resilience investments. infrastructure investment pipelines to Accurate tracking of Green Bonds for help investors understand that there is Climate Resilience can help to identify a sufficiently large pool of financially opportunities available to investors attractive investments that are also green. and drive greater capital flows toward investments in resilience. It can support • Adjust regulatory requirements, including government agencies in developing policy the promotion of a standardized green and regulatory guidance around the tagging approach for project finance labelling, issuing and reporting on Green and integration of climate criteria. It could Bonds for Climate Resilience. Importantly, also include the use of regulation as well tracking and reporting on the adaptation- as the mandating of national development focused bonds within the green bond banks to support climate-related market will ensure the continued integrity infrastructure projects. of the market as a whole. It must be noted • Issue a sovereign or sub-sovereign green that A & R may be embedded within bond bond, to send a strong signal to the market. issuances which complicate the labelling and tracking of capital that is dedicated • Promote “COVID Recovery” bond to climate adaptation and resilience. To programmes, with the issuance of green, attract investors particularly interested in resilience and/or blue bonds that support A&R financing, the issuer should provide a more sustainable recovery, and which such transparency. exclude activities that are at risk from future shocks, for instance, assets that could become stranded as a result of climate policy changes, or which are not resilient to climate physical risks.

Malaysia GIIO Report Climate Bonds Initiative 43 Appendix 1: Green standards in Malaysia

Green Standard Description Sector(s) Applicability in Vietnam National

Green Building The index was introduced by Pertubuhan Building, Construction, As of end 2020, about 563 Index (GBI)382 Akitek Malaysia (PAM) and the Association Township projects have been awarded of Consulting Engineers Malaysia in 2009. It with GBI, covering a total gross provides guidance for certifying green buildings floor area of 24.7 million square based on six criteria, including Energy Efficiency, metres.375 Indoor Environment Quality, Sustainable Site Planning and Management, Materials and Resources, Water Efficiency and Innovation.371

Low Carbon The framework was introduced by the then Building, One of the pioneering and flagship Cities Framework Ministry of Energy, Green Technology and Water Infrastructure, City green townships is the Federal (LCCF)383 in 2011. It provides guidance for local authorities, Government Administrative residents and businesses on how to transition Centre of Putrajaya.376 It is taking their cities into low carbon cities; and looks at the lead with a goal to reduce its addressing carbon emissions in four main areas: GHG emissions intensity by 60% Urban Environment, Urban Infrastructure, Urban by 2025 compared with 2012 Transportation and Buildings. levels, making the city cooler by two degrees Celcius.377

Malaysia Carbon The tool was introduced in 2016 to quantify Building Kementerian Kerja Raya Tower Reduction and carbon emissions and sustainable impacts of (KKR Tower) is the first building Environment built environment. It is considered to be the to achieve a MyCREST rating of Sustainability Tool most comprehensive of all tools, as it takes into five.378 (MyCREST)384 account both a criteria checklist and a carbon

calculation.372MyCREST is focused on buildings

design, construction and operation and offers 4

rating tools: (i) MyCREST New Construction, (ii)

MyCREST Existing Building, (iii) MyCREST New

Construction for Non-Air Conditioned Buildings

and (iv) MyCREST New Construction( Healthcare)

Sustainable and The SRI Sukuk Framework was launched by Sukuk The first green sukuk issuances Responsible the Securities Commission Malaysian in 2014 under Malaysian SRI sukuk Investment Sukuk to facilitate the financing of sustainable and framework includes MYR250m Framework (SRI)385 responsible investment initiatives. It is considered by Tadau Energy Sdn Bhd; an extension of the existing sukuk framework. In MYR1bn by Quantum Solar Park addition to all requirements in the Guidelines on (Semenanjung) Sdn Bhd and Sukuk continued to be applied, this framework MYR245m by Sinar Kamiri Sdn addresses areas for the issuance of SRI Sukuk, Bhd.379

including: utilization of proceeds, eligible SRI projects, disclosure requirement, appointment of independent party and reporting requirement.373

Regional

ASEAN Green The standards were developed and launched in Energy, Transport, The standards can be applied in Bond Standards November 2017 by the ASEAN Capital Markets Water, Buildings, ICT, Malaysia. Issuers may opt to issue (AGBS)386 Forum. The standards also provide guidance Waste, Nature Based bonds/sukuks which adopt both on the classification of green projects in the Assets, Industry and the ASEAN Bond Standards and

region that are qualified for the AGBS label in the Commercial activities. SC’s Sustainable and Responsible

region. These projects specifically exclude fossil Investment (“SRI”) sukuk

fuel-related projects. Companies in Malaysia, framework.380

Singapore and Indonesia have already issued

bonds labelled as ASEAN Green Bonds.374

The standards provide the framework to finance or Energy, Transport, The standards can be applied in ASEAN re-finance a combination of both Green and Social Water, Buildings, ICT, Malaysia.381 Sustainability Bond Projects that respectively offer environmental and Waste, Nature Based Standards (ASEAN social benefits. It also provides guidance on the Assets, Industry and SUS)387 classification of sustainable projects. Commercial activities.

Malaysia GIIO Report Climate Bonds Initiative 44 Green Standard Description Sector(s) Applicability in Vietnam Global

National Standards The ISO 14001 standard specifies requirements Waste, commercial The standard can be applied in for Environmental for an effective environmental management activities Malaysia.389 Management system (EMS). It provides a framework that

Systems (ISO an organization can follow to better control its

14001)392 environmental impacts.

Effective energy The ISO 50001 standard establishes an Renewable energy, The standard can be applied in management international framework for the supply, use Energy efficiency Malaysia.390 systems (EnMS)/ and consumption of energy in industrial,

ISO 50001393 commercial and institutional organizations.

Implement an ISO 50001 compliant sustainable

energy management system and demonstrate

organization’s commitment to continuously

improving energy performance, leading to

economic benefits and reduced greenhouse gas

emissions.

Certified Emission Certified Emission Reduction (CERs) is a Clean Energy, Transport, CERs can be applied in Reduction (CERs) Development Mechanism (CDM) that allows a Water, Buildings, ICT, Malaysia.391 country with an emission-reduction or emission- Waste Treatment

limitation commitment under the Kyoto Protocol

(Annex B Party) to implement an emission-

reduction project in developing countries. CERs

is used to identify projects that can earn saleable

carbon credits.388

Climate Bonds Climate Bonds Taxonomy is used to identify Energy, Transport, Taxonomy394 green projects and assets which are aligned with Water, Buildings, ICT, The taxonomy can be applied in achieving the goals of the Paris Agreement. This Waste, Nature Based Malaysia

excludes fossil fuel power generation, internal Assets, Industry and

combustion engine personal vehicles and new Commercial activities.

roads and infrastructure that facilitate their

movement, and freight rail that is primarily used

for fossil fuel transportation.

SOURCE395 SOURCE is a global standard created by Infrastructure Sustainable Infrastructure Foundation (SIF). It This standard can be applied in

offers governments a global, reliable, secure, Malaysia

and user-friendly project preparation software to

maximize public sector users financing options

including PPPs by providing well-prepared

projects in a consistent and transparent way

to the international community of contractors,

investors, and lenders.

The Standard SuRe is a global voluntary standard that integrates Infrastructure for Sustainable key criteria of sustainability and resilience into This standard can be applied in and Resilient infrastructure development and upgrade, through Malaysia Infrastructure 14 themes covering 61 criteria across governance,

(SuRe)396 social and environmental factors.

Envision397 Envision is a framework that includes 64 Infrastructure sustainability and resilience indicators, called This standard can be applied in ‘credits’, organized around five categories: Malaysia Quality of Life, Leadership, Resource Allocation, Natural World, and Climate and Resilience. These collectively address areas of human wellbeing, mobility, community development, collaboration, planning, economy, materials, energy, water, sitting, conservation, ecology, emissions, and resilience.

Malaysia GIIO Report Climate Bonds Initiative 45 Appendix 2: Sample Green Pipeline

This sample pipeline includes a list of ‘green’ We note that for some sectors, the energy, sustainable water management and ‘potentially green’ projects taken from definitions of ‘green’ are more complex and sustainable waste management. The various publicly available sources. meaning that ‘potentially green’ is often assessment of the ‘greenness’ of each provided. For example, hydropower projects project was based on the Climate Bonds Projects are categorised as green when we are classified as ‘potentially green’ due to Taxonomy (see back cover). have a high degree of confidence, based on the lack of criteria for hydropower projects publicly available information that this project within the Climate Bonds Standard and aligns with the Climate Bonds Taxonomy. Criteria. Further, the Water criteria under the Projects are categorised as potentially Climate Bonds Standard require an in-depth green when there is a strong possibility that assessment which is not possible to make these are aligned with the Climate Bonds with publicly available information. Taxonomy, but it is difficult to confirm Four sectors are covered in the list, alignment without going through the full and including: low carbon transport, renewable in-depth certification process.

Green projects

Sector Project name Location Status Greenness

Low carbon East Coast Rail Link (ECRL) Project398 Kelantan, Terengganu, Pahang; Negeri Under Green transport Sembilan; WP Putrajaya; and Selangor development

Sungai Buloh-Serdang-Putrajaya MRT399,400 Kuala Lumpur Under Green development

Klang Valley Mass Rapid Transit Line 1401,402 Klang Valley Completed Green

Klang Valley Mass Rapid Transit Line 2403,404 Klang Valley Under Green development

Klang Valley Mass Rapid Transit Line 3405 Klang Valley Planned Green

Johor Baru-Singapore Rapid Transit System Woodlands, Singapore and Johor Planned Green (RTS) Link406 Bahru, Malaysia

Electrification and double tracking of - Gemar and Johor Under Green JB route407,408 development

Electrification of double tracking project Majlis Bandaraya ; Majlis Completed Green between and Terminal Skypark409 Bandaraya Petaling Jaya; Pejabat

Setiausaha Kerajaan Negeri Selangor;

Suruhanjaya Pengangkutan Awam

Darat; KL Sentra

Rehabilitation of tracks in the Klang Valley Klang Valley Under Green phase 1 + 2 (KVDT)410 development

Penang Sentral Phase 1411,412 Penang Completed Potentially green

Penang Sentral Phase 2413 Penang Under Potentially development green

Bandar Utama with Johan Setia LRT414 to Johan Setia, Klang Under Green development

Putrajaya monorail system415 Putrajaya Under Green development

Malaysian Institute of Economic Research EV Negeri Sembilan Planned Potentially manufacturing plant416,417 Green

Malaysia GIIO Report Climate Bonds Initiative 46 Green projects Sector Project name Location Status Greenness

Renewable Energy

Hydro- Green & Smart Holdings mini hydro, Lubuk Palm418 Lubuk Palm, Under Potentially power development Green

5 Kumpulan Powernet Bhd mini hydropower plants Perak Planned Potentially (total 32.47MW)419 Green

Batu Bor Hidro SDN. BHD. Small hydro power420 Peninsular Malaysia Under Potentially development Green

Lubuk Paku Hidro SDN. BHD. Small hydro power421 Peninsular Malaysia Under Potentially development Green

Geothermal Tawau Green Technology Sdn Bhd geothermal plant422,423 Apas Kiri, Sabah, Malaysia Development Potentially paused Green

Solar Majulia and Greencells solar project424 Mukim Bebar, Daerah Pekan Completed Green

Sinar Kamiri Sdn Bhd’s power plant425 Sungai Siput, Perak, Malaysia Completed Green

Kuala Ketil Photovoltaic Solar Farm426 Kuala Ketil, Kedah Completed Green TNB Solar plant427 Kuala Langat Completed Green

Leader Solar Energy plant428,429 Kuala Muda Completed Green

TNB Bukit Selambau Solar plant430 Bukit Selambau, Kedah Under Green development

Scatec solar’s solar power plant 1 Gurun, Kedah, Malaysia Completed Green (Gurun solar power plant)431 Scatec solar’s solar power plant 2 Jasin, Melaka, Malaysia Completed Green (Jasin solar power plant)432,433 Scatec solar’s solar power plant 3 Merchang, Terengganu, Completed Green (Merchang solar power plant)434 Malaysia

Kota Tinggi Solar PV Park435,436 , Johor, Malaysia Completed Green

Ib vogt GmbH and Coara Solar Sdn Bhd solar plant437 Marang, Terengganu Under Green development

Cypark Resources Berhad and Impian Bumiria Sdn Bhd Marang, Terengganu Under Green solar plant development JKH Renewables Sdn Bhd and Solarpack Asia Sdn Bhd Kuala Muda, Kedah Under Green solar plant438 development

ENGIE Energie Services SA and TTL Energy Sdn Bhd Kerian, Perak Under Green solar plant development

Konsortium Beseri Jaya Sdn Bhd and Hanwha Energy Pekan, Pahang Under Green Corp Singapore Pte Ltd solar plant development

Biomass Leaf Biorefinery facility439 , Johor Potential Potentially Green

BELL Eco Power’s Biomass Power Generation Plant440 Batu Pahat, Johor Completed Green

THS Resources Berhad Biomass Power Kunak, Sabah Completed Green Generation Plant441 Sungai Dingin Palm Oil Mill Biomass Power Sungai Dingin, Kedah Completed Green Generation Plant442

Titi Serong power plant, Parit Buntar (Perak)443 Parit Buntar, Perak Completed Green

Malaysia GIIO Report Climate Bonds Initiative 47 Green projects Sector Project name Location Status Greenness

Sustaina- Sayong 1 + 2 Water Treatment Plant444 Johor, Malaysia Completed Potentially ble Water (shut down) green Manage- Semangar Water Treatment Plant445 446 Kota Tinggi, Johor Completed Potentially ment green

Sungai Selangor Water Supply Scheme, Phase 2 + 3447 Bukit Badongunder, Selangor Completed Potentially green

Langat 2 Water Treatment Plant448,449 Hulu Langat, Selangor, Completed Potentially Malaysia green

Sri Gading Water Supply Scheme450,451 Batu Pahat, Johor Completed Potentially green

Stormwater Management and Road Tunnel (SMART)452 Kuala Lumpur, Malaysia Completed Potentially green

Klang River Basin Environmental Improvement and Klang river Completed Potentially Flood Mitigation Project453 green

Putrajaya Wetlands Park in Putrajaya454; Paya Indah Selangor Completed Potentially Wetlands Park in Dengkil455,456 green

Development of LKIM Fishing Complex457 Sarawak Completed Potentially green

Telibong water treatment plant upgrading458,459 Tamparuli, Tuaran, Sabah Under Potentially development green

Telibong II water treatment plant460 Tamparuli, Tuaran, Sabah Under Potentially

development green

Sustaina- Worldwide Holdings/ Western Power Clean Energy Sdn Jeram, Selangor Planned Potentially ble Waste Bhd WTE Project461 green Manage- Kajang Waste-to-Energy Plant462 Semenyih Completed Potentially ment green

Bukit Tagar Sanitary Landfill463,464 Hulu Selangor Completed Potentially green

Ladang Tanah Merah waste-to-energy plant465 Ladang Tanah Merah, Port Under Potentially Dickson development green

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Deals with a proportion of finance 27. https://www.theedgemarkets.com/article/covid19-place- 77. https://www.sc.com.my/api/documentms/download. raised for social projects/assets are not included at this stage. malaysian-economy-technical-recession-says-ambank ashx?id=89dea0ab-f671-4fce-b8e4-437a2606507c 132. https://www.thejakartapost.com/news/2019/02/18/ 28. https://blogs.worldbank.org/eastasiapacific/reopening- 78. https://www.sc.com.my/resources/publications-and-research/ indonesia-issues-us-2-27b-global-green-sukuk.html malaysias-economy-new-normal sri-roadmap 133. https://www.saturna.com/white-papers/green-sukuk-new- 29. Ministry of Finance, Economic Outlook 2021, https://www. 79. https://www.bnm.gov.my/index.php?ch=en_ legacy-green-sprouts treasury.gov.my/index.php/en/fiscal-economy/economic- announcement&pg=en_announcement&ac=767 134. https://gulfnews.com/business/uaes-majid-al-futtaim-issues- outlook-2021.html 80. Note: An entity is classified as Malaysian if Malaysia is its first-corporate-green-sukuk-1.63961628 30. https://www.aseanbriefing.com/news/malaysia-issues- ‘country of risk’ as determined by Bloomberg. 135. https://gulfnews.com/business/uaes-majid-al-futtaim-issues- stimulus-package-combat-covid-19-impact/ 81. https://www.cagamas.com.my/press-release/overwhelming- first-corporate-green-sukuk-1.63961628 31. https://www.aseanbriefing.com/news/malaysia-issues-second- response-cagamas-issuance-malaysias-first-asean-sustainability- 136. https://www.reuters.com/article/maafum-sukuk/update-1- stimulus-package-combat-covid-19-salient-features/ sri-sukuk uaes-majid-al-futtaim-markets-green-dollar-sukuk-idUSL5N22J12J 32. https://www.theedgemarkets.com/article/state-nation- 82. Malaysian Green Technology Corporation, “Green Technology 137. Majid Al Futtaim (2019). Green Finance Framework. Retrieved counting-patriotism-help-fund-covid19-recovery Financing Facility (GTFS & GTFS 2.0)”, 2018, https://www.myhijau. from: https://www.majidalfuttaim.com/en 33. https://www.imoney.my/articles/penjana-economic-recovery-plan my/wp-content/uploads/2019/04/Slide-Presentation-GTFSv2- 138. https://www.sustainalytics.com/sustainable-finance/wp- 34. https://www.cimb.com.my/en/business/promotions-events/ Business-Clinic-2019-compressed.pdf content/uploads/2019/04/Majid-Al-Futtaim-Green-Finance- campaigns/sukuk-prihatin1.html 83. https://www.msfi.com.my/incentives-green-technology- Framework-Second-Party-Opinion-29042019.pdf 35. https://www.theedgemarkets.com/article/malaysias-stimulus- financing-scheme-gtfs/ 139. https://www.isdb.org/news/islamic-development-bank- packages-have-softened-covid19-impact-economy-mustapa 84. https://www.greentechmalaysia.my/our-services/green- achieves-new-milestone-with-debut-green-sukuk-worth-eur-1- 36. https://www.spratings.com/sri/ technology-financing-scheme/ billion-for-green-financing-in-its-member-countries 37. https://www.nst.com.my/business/2020/01/558270/malaysias- 85. https://www.gtfs.my/news/green-technology-financing- 140. https://www.salaamgateway.com/story/islamic-development- a3-credit-rating-backed-competitive-economy-strong-growth scheme-gtfs bank-issues-1-bln-euros-in-debut-green-sukuk 38. https://www.thestar.com.my/business/business- 86. https://www.gtfs.my/page/application-process 141. https://www.isdb.org/sites/default/files/media/ news/2019/07/18/fitch-affirms-malaysia-rating-at-a-minus-with- 87. See Note 82 documents/2019-11/2.%20IsDB_SPO_final_051102019.pdf stable-outlook 88. See Note 82 142. https://www.isdb.org/news/islamic-development-bank- 39. Malaysia Investment Development Authority. Developed 89. See Note 82 achieves-new-milestone-with-debut-green-sukuk-worth-eur-1- Infrastructure. Retrieved from: https://www.mida.gov.my/home/ 90. https://gtfs.my/ billion-for-green-financing-in-its-member-countries developed-infrastructure/posts/ 91. https://www.thestar.com.my/news/nation/2020/11/08/govt- 143. https://www.isdb.org/projects/data/uid-pj0032539 40. https://www.austrade.gov.au/australian/export/export- committed-to-environment-with-allocation 144. https://www.isdb.org/sites/default/files/media/ markets/countries/malaysia/industries/infrastructure-and- 92. https://www.pressreader.com/malaysia/the-borneo- documents/2019-11/IsDB%20Sustainable%20Investor%20 transport-to-malaysia post/20201109/282316797559533 Presentation%20(November%202019).pdf 41. https://www.mida.gov.my/home/developed-infrastructure/posts/ 93. https://blogs.worldbank.org/climatechange/green-loans- 145. https://www.iifm.net/wp-content/uploads/2020/07/IIFM- 42. 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N. 2013. standard-v3-20191210.pdf D05DB73B819CA64AA49CCEA21436AA30 “Fossil Fuel Energy Scenario in Malaysia-Prospect of Indigenous 148. https://www.djppr.kemenkeu.go.id/uploads/files/dmodata/ 44. https://www.cambridge.org/core/books/malaysias- Renewable Biomass and Coal Resources”. 2013 IEEE Conference on in/6Publikasi/Offering%20Circular/ROI%20Green%20Bond%20 socio-economic-transformation/infrastructure-in- Clean Energy and Technology (CEAT) and%20Green%20Sukuk%20Framework.pdf malaysia-investment-growth-and-policy-challenges/ 99. Refer to renewable energy section 149. https://www.climatebonds.net/files/files/CBS%20 D05DB73B819CA64AA49CCEA21436AA30 100. Mushtaqa, F., Maqboolb, W., Mata, R. and Anic, F. N. 2013. Version%202_1%20-%20List%20of%20debt%20

Malaysia GIIO Report Climate Bonds Initiative 49 instruments%20-%20updated%20-%20Jan2017%281%29.pdf Networks_%20February%202019.PDF World-Energy-Markets-Observatory-2018v1.pdf 150. https://www.sc.com.my/api/documentms/download. 195. https://www.statista.com/statistics/613554/primary-energy- 251. https://www.miti.gov.my/miti/resources/Article_on_Malaysia_ ashx?id=75136194-3ce3-43a2-b562-3952b04b93f4 consumption-in-malaysia/ UNFCCC-_Paris_Agreement.pdf?mid=572 151. https://www.climatebonds.net/2014/05/12-thirteen-major- 196. https://meih.st.gov.my/documents/10620/c7e69704-6f80- 252. https://www.eria.org/uploads/media/11.ERIA_RPR_2017_10_ banks-issue-“green-bond-principles”-guide-development-green-bonds 40ae-a764-ad0acf4a844d Chapter_2.pdf 152. https://www.sc.com.my/news/media-releases-and- 197. https://www.statista.com/statistics/865614/malaysia-total- 253. See Note 228 announcements/sc-introduces-sustainable-and-responsible- electricity-generation-capacity-by-source/ 254. https://www.railway-technology.com/projects/east-coast-rail- investment-sukuk-framework 198. SC. Chua, TH. Oh, WW. Goh, Feed-in tariff outlook in Malaysia. link-ecrl-project/ 153. https://thesustainabilist.ae/developing-the-green-sukuk-market/ Renewable and Sustainable Energy Reviews. 15(2011) 705-712 255. https://www.therakyatpost.com/2020/02/20/ecrl-the- 154. https://www.iifm.net/wp-content/uploads/2020/07/IIFM- 199. https://www.offgridenergyindependence.com/ tracks-that-takes-you-from-coast-to-coast/ Sukuk-Report-9th-Edition.pdf articles/17251/65-mw-solar-plant-for-malaysia 256. https://www.aseantoday.com/2017/10/will-malaysias-east- 155. Project Drawdown (n/a). Electricity Generation Geothermal. 200.. https://www.pv-magazine.com/2019/05/14/65-mw-project- coast-rail-link-be-a-benefit-or-a-burden/ Retrieved from https://www.drawdown.org/solutions/electricity-gen- connects-to-the-grid-in-malaysia/ 257. http://www.mrl.com.my/en/transport-minister-ecrl-project- eration/geothermal 201. https://scatecsolar.com/2018/12/21/scatec-solars-first-solar- only-0-02pc-delayed-due-to-mco/ 156. International Energy Agency (2019). Hydropower. Retrieved plant-in-malaysia-in-commercial-operation/ 258. https://www.thestar.com.my/business/business- from https://www.iea.org/fuels-and-technologies/hydropower 202. https://renewablesnow.com/news/scatec-solar-commissions- news/2020/03/11/overall-construction-of-mrt-2-ssp-line-70- 157. UNFCCC (2018). Clean Energy Transition Needs to Accelerate. 66-mw-solar-park-in-malaysia-661669/ completed . 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The Government of Malaysia, “Intended Nationally ably. Retrieved from https://unfccc.int/news/world-needs-to-man- project-generate-recurring-income-21-years Determined Contribution Of The Government Of Malaysia”, age-water-more-sustainably 208. http://bepi.mpob.gov.my/news/detail.php?id=425 https://www4.unfccc.int/sites/submissions/INDC/Published%20 160. Greenbiz (2016). How the Paris Agreement sparked 209. https://www.thestar.com.my/business/business- Documents/Malaysia/1/INDC%20Malaysia%20Final%2027%20 green-building progress. Retrieved from https://www.greenbiz.com/ news/2004/04/01/tsh-expects-profits-of-up-to--rm10m-from- November%202015%20Revised%20Final%20UNFCCC.pdf article/how-paris-agreement-sparked-green-building-progress sabah-station 264. https://www.who.int/water_sanitation_health/publications/ 161. https://www.capgemini.com/wp-content/uploads/2017/11/ 210. See Note 111. jmp-2019-full-report.pdf wemo2017-vst27-web.pdf 211. See Note 111. 265. 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Energy Ecopower.pdf?t=VzJ8cW1sZWxofDCjfYAxLocOscMIvbg6k8rx contentms/img/publication/RMKe-11%20Book.pdf Policy 2012, 48, 88–92. 216. https://amptechengineering.com/2015/07/04/batu-pahat- 269. https://www.thestar.com.my/opinion/letters/2017/04/04/ 165. https://www.thestar.com.my/opinion/letters/2019/06/28/ 11mw-biomass-power-plant/#jp-carousel-445 manage-water-resources-better on-track-to-meet-renewable-energy-target 217. http://www.bell.com.my/projects/biomass-project/ 270. See Note 42 166. https://unfccc.int/sites/default/files/resource/MALAYSIA_ 218. https://cdm.unfccc.int/filestorage/m/d/ 271. https://stateofgreen.com/en/partners/envidan/solutions/ BUR3-UNFCCC_Submission.pdf JSFH8B0W3ZT24M9VAY7LDNE61PIOQU.pdf/PDD_Bell%20 reducing-non-revenue-water-in-malaysia/ 167. https://www.pmo.gov.my/dokumenattached/RMK/RMK10_E.pdf Ecopower.pdf?t=VzJ8cW1sZWxofDCjfYAxLocOscMIvbg6k8rx 272. https://www.waterworld.com/international/utilities/ 168. Abdullah, W.S., Osman M., Kadir, M.Z.A.A. and Verayiah, R. 219. See Note 111 article/14035593/malaysian-water-utility-cuts-nonrevenue-water- 2019. The Potential and Status of Renewable Energy Development 220. See Note 111 by-one-third-with-remote-monitoring in Malaysia. Energies, 12, 2437 221. See Note 111 273. See Note 42 169. Ahmad,S.;Kadir,M.Z.A.A.;Shafie,S.Current perspective of the 222. https://www.eria.org/uploads/media/!ERIA_RPR_2017_10.pdf 274. https://unfccc.int/sites/default/files/resource/MALBUR1.pdf renewable energy development in Malaysia. Renew. Sustain. Energy 223. See Note 111 275. http://egs.apec.org/more-articles/155-malaysia-water-a- Rev. 2011, 15, 897–904 224. https://www.dosm.gov.my/v1/index. wastewater-treatment 170. See Note 168 php?r=column/cthemeByCat&cat=118&bul_ 276. See Note 42 171. https://www.st.gov.my/contents/highlight/2016/ id=Y3kwU2tSNVFDOWp1YmtZYnhUeVBEdz09&menu_ 277. See Note 42 Announcement_RFP_Results.pdf id=L0pheU43NWJwRWVSZklWdzQ4TlhUUT09 278. https://link.springer.com/ 172. https://www.bakermckenzie.com/en/insight/ 225. See Note 111. chapter/10.1007/978-3-319-59342-5_2 publications/2019/02/energy-commission-of-malaysia 226. See Note 111 279. See Note 263 173. https://www.st.gov.my/contents/article/industry/2017/LSS/ 227. https://meih.st.gov.my/documents/10620/f2f4c39b-4748- 280. See Note 263 Announcement_of_Shortlisted_Bidder_For_The_Development_ 4c5d-b90a-fc36ba880264 281. See Note 263 LSSPV_Plants_2019-2020.pdf 228. “CO2 Emissions from Fuel Combustion”,IEA, last modified 16 282. https://www.nst.com.my/opinion/ 174. https://www.pv-magazine.com/2019/09/05/latest- Nov 2020, https://www.iea.org/subscribe-to-data-services/co2- columnists/2019/10/532457/managing-flood-problems malaysian-tender-attracts-bids-for-6-7-gw-of-capacity/ emissions-statistics 283. https://www.danajamin.com/wp-content/uploads/2019/02/ 175. https://www.st.gov.my/contents/2019/LSS/ 229. See Note 228 Press-Release-Danajamin-Pasukhas-Green-Asset_final.pdf Announcement%20of%20Shortlisted%20Bidder%20for%20 230. https://www.greentechmalaysia.my/malaysias-co2- 284. Data retrieved from: http://www.data.gov.my/data/en_US/ the%20Development%20of%20Large%20Scale%20So....pdf emissions-among-highest-in-asean-low-carbon-mobility-solutions- dataset/non-revenue-water/resource/ec67c80b-b088-4376- 176. Islam, M.R. Assessment of Wind Energy Potential Mapping for needed/ 90ba-aeb6c9eef70a PeninsularMalaysia; University of Malaya: Kuala Lumpur, Malaysia, 231. See Note 111 285. https://www.nst.com.my/news/nation/2019/04/482882/ 2011; pp. 89–95 232. https://www.nst.com.my/cbt/2019/10/531102/protecting- long-delayed-inter-state-raw-water-transfer-project-resume 177. Ibrahim, M.Z.; Hwang, Y.K.; Ismail, M.; Albani, A. Spatial environment-major-focus-national-transport-policy 286. https://www.nst.com.my/news/nation/2019/08/516736/ Analysis of Wind Potential for Malaysia. Int. J. Renew. Energy Res. 233. https://wedocs.unep.org/bitstream/ penang-needs-source-raw-water-sungai-perak-2025 2015, 5, 201–209. handle/20.500.11822/9994/A_toolkit_for_LCMP. 287. https://www.thestar.com.my/news/nation/2019/11/24/ 178. Ehsan,S.;Wahid,M.A.Feasibilitystudyofbiogasproductionandu- pdf?sequence=1&isAllowed=y penang-submits-rm14bil-plan-for-raw-water-transfer-scheme tilizationasasourceofrenewableenergy in Malaysia. Renew. Sustain. 234vhttps://www.greentechmalaysia.my/malaysias-co2- 288. https://pba.com.my/pdf/news/2019/14012019_ Energy Rev. 2013, 19, 454–462. emissions-among-highest-in-asean-low-carbon-mobility-solutions- PBAPP_501M_Water_Projects_v2_ENG.pdf 179. https://www.thestar.com.my/news/nation/2019/07/30/ needed/ 289. https://www.malaymail.com/news/malaysia/2019/01/14/ generating-more-waste-than-ever 235. https://paultan.org/2013/03/21/mitsubishi-i-miev-launched- rm501m-water-supply-project-in-penangs-pipeline/1712419 180. See Note 168 in-malaysia-for-rm136k-the-first-all-electric-vehicle-to-be-sold-in- 290. https://www.buletinmutiara.com/pbapp-to-invest-rm501mil- 181. Ozturk, M.; Saba, N.; Altay, V.; Iqbal, R.; Hakeem, K.R.; Jawaid, this-country/ in-water-supply-projects-over-three-years/ M.; Ibrahim, F.H. Biomass and bioenergy: An overview of the 236. https://themalaysianreserve.com/2019/07/03/ 291. https://www.nst.com.my/news/nation/2019/08/516736/ development potential in Turkey and Malaysia. Renew. Sustain. electric-vehicles-gain-momentum-in-malaysia-%EF%B- penang-needs-source-raw-water-sungai-perak-2025 Energy Rev. 2017, 79, 1285–1302 F%BC%EF%BF%BC%EF%BF%BC%EF%BF%BC%EF%B- 292. Geodata. Retrieved from https://www.geodata.it/en/ 182. https://51a3e851-5fde-44b7-997b-e0664b7ac40b.filesusr. F%BC%EF%BF%BC%EF%BF%BC%EF%BF%BC%EF%BF%B- sectors/portfolio-road/item/smart-tunnel-kuala-lumpur. com/ugd/43b4fe_00564483596c43d5a1619e82131f1832.pdf C%EF%BF%BC%EF%BF%BC%EF%BF%BC%EF%BF%BC%EF%B- html#:~:text=The%20%22Stormwater%20Management%20 183. Agensi Inovasi Malaysia. National Biomass Strategy 2020: F%BC%EF%BF%BC%EF%BF%BC%EF%BF%BC/ And%20Road,the%20second%20longest%20in%20Asia. New Wealth Creation for Malaysia’s Palm Oil Industry; Agensi 237. Ibid 293. Stormwater Management and Road Tunnel (SMART). Inovasi Malaysia: , Malaysia, 2011. 238. https://www.greentechmalaysia.my/the-era-of-electric-vehicles/ Retrieved from https://smarttunnel.com.my/smart/what-is-smart/ 184. See Note 168 239. https://www.greentechmalaysia.my/the-era-of-electric-vehicles/ 294. Floodlist. Retrieved from http://floodlist.com/asia/smart- 185. https://www.hydroreview.com/2016/07/01/exploring- 240. https://www.prnewswire.com/news-releases/malaysia- tunnel-kuala-lumpur-malaysia malaysia-s-small-hydro-potential/#gref electric-vehicle-ev-emobility-sector-report-2019-malaysia- 295. Malay Mail. 2020. Retrieved from https://www.malaymail. 186. https://www.eia.gov/international/content/analysis/ targets-to-become-a-regional-ev-hub-by-2030-in-south-east- com/news/malaysia/2020/11/10/langat-2-water-treatment-plant- countries_long/Malaysia/malaysia.pdf asia-300858287.html operating-at-1-3-capacity-expected-to-be-ful/1921212 187. https://www.hydropower.org/country-profiles/malaysia 241. https://www.nst.com.my/news/nation/2018/12/440340/ 296. The Malaysian Reserve. 2019. Retrieved from https:// 188. https://www.hydropower.org/country-profiles/malaysia plus-launches-countrys-first-solar-ev-charging-station www.mmc.com.my/211119%20-%20Megastructures%20-%20 189. Hussein, I., and N. Raman, “Reconnaissance Studies of Micro 242. https://www.malaysia.gov.my/portal/content/30713 Langat%202%20Water%20Treatment%20Plant.pdf Hydro Potential in Malaysia,” International Conference on Energy 243. See Note 111. 297. https://www.nst.com.my/news/nation/2020/01/559120/ and Sustainable Development: Issues and Strategies, Asian 244. See Note 111. japans-role-pahang-selangor-water-transfer-project-wins-praise Institute of Technology, Pathumthani, Thailand, 2010. 245. https://www.apad.gov.my/sites/default/files/nlptmp_bi_ 298. https://langat2.com/project-background/ 190. https://www.hydroreview.com/2016/07/01/exploring- version_8_nov_13.pdf 299. https://langat2.com/project-background/ malaysia-s-small-hydro-potential/#gref 246. https://www.greentechmalaysia.my/malaysias-co2-emissions- 300. https://www.freemalaysiatoday.com/category/ 191. https://www.power-technology.com/comment/malaysia- among-highest-in-asean-low-carbon-mobility-solutions-needed/ nation/2019/11/07/langat-2-water-treatment-plant-to-begin- needs-us8-billion-investment-to-achieve-20-renewable-energy- 247. https://www.thesundaily.my/local/improve-public-train- operations-in-january/ target-by-2025/ transportation-to-boost-ridership-analysts-BJ1308751 301. BEWG. 2015. BEWS Sustainability Report 2015. Retrieved from 192. http://ilo.org/dyn/natlex/docs/ 248. https://www.malaymail.com/news/what-you- https://doc.irasia.com/listco/hk/bewg/annual/2015/esr.pdf ELECTRONIC/106315/130368/F1381553130/MYS106315%20 think/2016/10/18/ideas-to-further-improve-public-transportation- 302. https://www.constructionplusasia.com/my/pantai-2-sewage- 2016.pdf ng-ming-yang/1230461 treatment-plant/ 193. http://www.seda.gov.my/reportal/nem/ 249. https://www.thesundaily.my/local/improve-public-train- 303. Shanghai Cooperation organization (SCO) Environment 194. https://www.st.gov.my/contents/2019/LSS/Guideline%20 transportation-to-boost-ridership-analysts-BJ1308751 Information Sharing Platform. Retrieved from http://www.scoei.org. on%20LSSPV%20for%20Connection%20to%20Electricity%20 250. https://www.capgemini.com/wp-content/uploads/2019/03/ cn:184/sjal/water-pollution/490247.shtml

Malaysia GIIO Report Climate Bonds Initiative 50 304. https://www.constructionplusasia.com/my/pantai-2-sewage- sia+is+the+world%27s+largest+producer+and+exporter+of+natu- ft-minister-putrajaya-monorail-system-expected-to-complete- treatment-plant/ ral+rubber&source=bl&ots=--1YsskGKZ&sig=ACfU3U2JdZ3Rzlf6x- before-2025/1826383 305. https://www.bp.com/content/dam/bp/business-sites/en/ uUIjsMFJRgmjQAikg&hl=en&sa=X&ved=2ahUKEwii1ODTisTpAh- 416. https://www.nst.com.my/news/nation/2019/07/508314/ global/corporate/pdfs/energy-economics/statistical-review/bp- VmF6YKHVtUC_EQ6AEwEHoECAUQAQ#v=onepage&q=Ma- local-firm-invest-rm5-billion-electric-vehicle-project stats-review-2019-full-report.pdf laysia%20is%20the%20world’s%20largest%20producer%20 417. https://www.freemalaysiatoday.com/category/ 306. https://www.theedgemarkets.com/article/malaysia- and%20exporter%20of%20natural%20rubber&f=false highlight/2019/08/14/construction-of-electric-vehicle-plant-to- continues-efforts-reduce-carbon-footprint 359. https://insightalpha.com/news_details. proceed-as-planned-says-mier/ 307. See Note 263 php?cid=110&sid=75&nid=238 418. https://www.theedgemarkets.com/article/m%E2%80%99sia- 308. See Note 263 360. https://www.nap.edu/read/1985/chapter/14#446 get-first-low-head-mini-hydropower-project 309. See Note 263 361. See Note 42 419. https://www.theedgemarkets.com/article/kumpulan- 310. “Malaysia: Toward A Sustainable Waste Management”, Global 362. See Note 42 powernet-wins-rm354m-perak-hydropower-plant-project Recycling, https://global-recycling.info/archives/1451 363. See Note 42 420. https://themalaysianreserve.com/2019/12/24/malakoffs- 311. Malaysia: Biennial update report to the UNFCCC. Retrieved 364. https://www.agrojournal.org/19/01-08.pdf spvs-win-fit-for-hydro-projects/ from: https://unfccc.int/sites/default/files/resource/MALBUR1.pdf 365. https://www.sciencedirect.com/science/article/abs/pii/ 421. https://themalaysianreserve.com/2019/12/24/malakoffs- 312. See Note 310. S0264837710000633 spvs-win-fit-for-hydro-projects/ 313. See Note 310. 366vhttps://newclimateeconomy.report/2016/land-use-systems/ 422. https://www.thinkgeoenergy.com/malaysias-first-geothermal- 314. https://jpspn.kpkt.gov.my/resources/index/user_1/PSP/ 367. See Note 42 plant-set-to-start-operations-by-june-2018/ Ringkasan_Eksekutif/ExecSum-Final%20Report.pdf 368. See Note 42 423. https://www.nst.com.my/news/nation/2018/12/437953/ 315. See Note 310. 369. http://www.ketsa.gov.my/en-my/biodiversity/nctf/Pages/ govt-scraps-countrys-first-geothermal-power-plant-project 316. http://eprints.uthm.edu.my/id/eprint/5381/1/FPTP_Paper.pdf default.aspx 424. https://www.pv-tech.org/news/tnb-signs-30mw-solar-ppa- 317. See Note 310. 370. https://www.climatebonds.net/files/reports/asean_sotm_18_ with-majulia-and-greencells 318. See Note 310. final_03_web.pdf 425. https://solar.huawei.com/apac/news/apac_20190202 319. “First WTE incinerator to begin operation by June”, The 371. https://www.theedgemarkets.com/article/malaysias-green- 426. http://en.cgnpc.com.cn/encgn/c100035/2019-02/25/ Malaysian Reserve, March 18, 2019, https://themalaysianreserve. building-index-launch-may-21-0 content_ed6b790b2b71461c9a38f6c5b197fdab.shtml com/2019/03/18/first-wte-incinerator-to-begin-operation-by-june/ 372. https://www.researchgate.net/profile/Chee_Hung_Foo4/ 427. https://www.tnec.com.my/solar 320. https://www.sciencedirect.com/science/article/abs/pii/ publication/325987522_An_Overview_of_Green_Building_ 428. Ibid. S1364032113002001?via%3Dihub Rating_Tools_in_Malaysia/links/5b31d27b0f7e9b0df5cb9aa6/ 429. Ibid. 321. Date extracted from: https://data.worldbank.org/indicator/ An-Overview-of-Green-Building-Rating-Tools-in-Malaysia. 430. Ibid. EN.ATM.CO2E.KT?locations=MY pdf?origin=publication_detail 431. https://www.pv-magazine.com/2019/05/14/65-mw-project- 322. Fauziah S.H. and Agamuthu, P. (2003) Municipal Solid Waste 373. https://www.sc.com.my/api/documentms/download. connects-to-the-grid-in-malaysia/ Management: A Comparative Study in Selected Landfills in Selangor ashx?id=84491531-2b7e-4362-bafb-83bb33b07416 432. Ibid. In Proceedings of Environment 2003: Environmental Management 374. https://www.sc.com.my/api/documentms/download. 433. https://www.offgridenergyindependence.com/ and Sustainable Development for Better Future Growth, Penang, ashx?id=75136194-3ce3-43a2-b562-3952b04b93f4 articles/17251/65-mw-solar-plant-for-malaysia Malaysia, pp 434- 437. 375. https://www.greenbuildingindex.org/2020/05/04/ 434. https://www.pv-magazine.com/2019/07/16/scatec-solar- 323. A. Periathamby, et al. Evolution of solid waste management sustainability-still-far-from-peoples-minds/ finalizes-197-mw-portfolio-in-malaysia/ in Malaysia: impacts and implications of the solid waste bill, 2007. 376. See Note 348 435. https://asian-power.com/power-utility/news/malakoff-bags- Journal of material cycles and waste management. 2009. vol. 11(2): 377. See Note 348 29mw-kota-tinggi-solar-power-project pp. 96-103. 378. https://www.nst.com.my/business/2018/01/320769/ 436. https://ra.csis.org/database/projects/kota-tinggi-solar-pv- 324. See Note 319 mycrest-help-increase-number-green-buildings park/97fab83d-9497-4842-a4a9-b1a1c944bb52/ 325. https://www.nst.com.my/news/exclusive/2019/10/529785/ 379. https://www.sc.com.my/analytics/bonds-sukuk-market/list- 437. https://renewablesnow.com/news/malaysia-shortlists-491- waste-energy-facility-faces-another-delay of-corporate-bonds-and-sukuk-under-lodge-and-launch-framework mw-of-projects-in-3rd-solar-tender-682716/ 326. See Note 319 380. http://www.conventuslaw.com/report/sustainable-financing- 438. Ibid. 327. Power. Retrieved from https://www.powermag.com/top- in-the-asean-region/ 439. https://www.nbs2020.gov.my/ plantkajang-waste-to-energy-plant-semenyih-malaysia/ 381. https://www.globalethicalbanking.com/asean-launches-social- 440. http://www.bell.com.my/projects/biomass-project/ 328. MDPI. Sustainable Waste-to-Energy Development in Malaysia. sustainability-bond-standards/ 441. https://www.tsh.com.my/synergistic-integration/ Retrieved from https://www.mdpi.com/2227-9717/7/10/676/htm 382. https://www.greenbuildingindex.org/ 442. https://www.bioenergyconsult.com/tag/bioenergy-in-malaysia/ 329. https://www.powermag.com/top-plantkajang-waste-to- 383. See Note 348 443. Ibid. energy-plant-semenyih-malaysia/ 384. https://inis.iaea.org/collection/NCLCollectionStore/_ 444. https://www.thestar.com.my/news/nation/2019/04/07/ 330. https://www.nst.com.my/business/2018/12/439194/worldwide- Public/46/130/46130368.pdf ammonia-pollutes-sg-sayong/ holdings-allocates-rm1b-develop-wte-plant-jeram-selangor 385. https://www.sc.com.my/news/media-releases-and- 445. http://www.paab.my/project-highlights/semangar-water- 331. The Strait Times. Retrieved from https://www.nst.com.my/ announcements/sc-introduces-sustainable-and-responsible- treatment-plant-and-distribution-system/ business/2018/12/439194/worldwide-holdings-allocates-rm1b- investment-sukuk-framework 446. http://www.paab.my/project-highlights/semangar-water- develop-wte-plant-jeram-selangor 386. https://www.sc.com.my/api/documentms/download. treatment-plant-and-distribution-system/ 332. https://www.thestar.com.my/lifestyle/living/2018/12/21/ ashx?id=75136194-3ce3-43a2-b562-3952b04b93f4 447. https://www.puncakniaga.com.my/pnhbnew2/index.php/ waste-green-energy-worldwide-holdings/ 387. https://www.sc.com.my/api/documentms/download. completed-projects/97-ssp2-stage-1-2 333. https://www.thestar.com.my/lifestyle/living/2018/12/21/ ashx?id=3c4f768f-a290-4722-b9d1-ef55942fbfde 448. https://langat2.com/project-background/ waste-green-energy-worldwide-holdings/ 388. https://unfccc.int/process-and-meetings/the-kyoto-protocol/ 449. https://langat2.com/project-background/ 334. https://www.worldgbc.org/news-media/2019-global-status- mechanisms-under-the-kyoto-protocol/the-clean-development- 450. http://disclosure.bursamalaysia.com/FileAccess/apbursaweb/ report-buildings-and-construction mechanism download/?name=EA_GA_Attachments&id=11345 335. Hassan, J.S. Zin, R.M, Abd Majid, M.Z., Balubaid, S. and 389. http://www.jsm.gov.my/ms-iso-14001 451. https://ranhillbersekutu.com.my/water-resources-environmental/ Hainin, M.R. (2014). Building Energy Consumption in Malaysia: An 390. http://www.jsm.gov.my/ms-iso-14001 452. https://www.esc-pau.fr/ppp/documents/featured_projects/ Overview. Jurnal Teknologi. DOI: 10.11113/jt.v70.3574 391. http://www.kats.gov.my/ms-my/pustakamedia/Penerbitan/ malaysia_kuala_lumpur.pdf 336. See Note 228 CDM%20Handbook%202nd%20edition.pdf 453. https://www.adb.org/projects/documents/klang-river-basin- 337. Energy Malaysia, Vol 12, 2017, https://www.st.gov.my/ms/ 392. http://www.quacert.gov.vn/en/iso-14001.iso254.html environmental-improvement-and-flood-mitigation-project contents/publications/energyMalaysia/EM12%20Nov%20 393. http://www.quacert.gov.vn/en/iso-50001-energy- 454. Ahmad, C. B., Nasir R. A., Ahmad A. S., Abdullah J. (2016). 2017%20v2.pdf management-system-enms.iso259.html Visitors’ Perception towards Putrajaya Wetland, Malaysia. 338. See Note 337 394. https://www.adb.org/sites/default/files/publication/410326/ Environment-Behaviour Proceedings Journal. DOI: http://dx.doi. 339. See Note 337 green-lcy-bonds-infrastructure-development-asean3.pdf org/10.21834/e-bpj.v1i3.365 340. https://www.theedgemarkets.com/article/malaysias-green- 395. https://public.sif-source.org/source/ 455. https://www.nst.com.my/news/nation/2017/09/282704/ building-index-launch-may-21-0 396. https://sure-standard.org/#:~:text=SuRe%C2%AE%20 expert-gives-thumbs-malaysias-flood-mitigation-measures 341. https://www.cidb.gov.my/en/construction-info/sustainability/ %E2%80%93The%20Standard%20for,governance%2C%20 456. https://www.thestar.com.my/news/community/2008/06/11/ construction-sustainability/mycrest social%20and%20environmental%20factors. paya-indah-wetlands-to-reopen-next-month 342. https://www.cidb.gov.my/sites/default/files/2020- 397. https://sustainableinfrastructure.org/envision/use-envision/ 457. https://www.sarawak.gov.my/web/home/news_ 12/13.2018-built-it-green.pdf 398. https://www.railway-technology.com/projects/east-coast-rail- view/223/7329/ 343. link-ecrl-project/ 458. https://www.nst.com.my/news/nation/2017/10/297465/ 344. NST Online, “Positioning Malaysia at the forefront of low 399. https://www.railway-technology.com/projects/sungai-buloh- rm400m-telibong-water-treatment-plant-upgrading-kick-next-year carbon cities”, New Strait Times, August 7, 2017, https://www.nst. serdang-putrajaya-line-ssp-line/ 459. https://kotakinabaluinfo.com/telibong-water-treatment- com.my/news/nation/2017/08/264908/positioning-malaysia- 400. https://www.mymrt.com.my/public/putrajaya-line/ plant-upgrading-project/ forefront-low-carbon-cities 401. https://www.snclavalin.com/en/projects/klang-valley-mass- 460. https://www.theedgemarkets.com/article/salcon-bags- 345. https://cleanmalaysia.com/2015/08/28/the-rise-of-green- rapid-transit-line rm1247-mil-water-treatment-plant-contract building-in-malaysia/ 402. https://www.globalmasstransit.net/archive.php?id=28320 461. https://www.thestar.com.my/lifestyle/living/2018/12/21/ 346. https://cleanmalaysia.com/2015/08/28/the-rise-of-green- 403. https://www.snclavalin.com/en/projects/klang-valley-mass- waste-green-energy-worldwide-holdings/ building-in-malaysia/ rapid-transit-line 462. https://www.powermag.com/top-plantkajang-waste-to- 347. https://www.greentechmalaysia.my/our-services/low-carbon- 404. https://www.globalmasstransit.net/archive.php?id=28320 energy-plant-semenyih-malaysia/ cities-framework/ 405. https://www.thestar.com.my/business/business- 463. https://www.thestar.com.my/news/community/2014/08/06/ 348. See Note 344 news/2019/12/23/review-of-mrt3-under-way sanitary-landfill-with-zero-discharge-byproducts-of-waste- 349. See Note 344. 406. https://www.channelnewsasia.com/news/singapore/ decomposition-collected-for-energy-produ/ 350. https://www.researchgate.net/profile/Chee_Hung_Foo4/ singapore-malaysia-sign-bilateral-agreement-on-jb- 464. https://www.aayconstruction.com/bukit-tagar-sanitary-landfill publication/325987522_An_Overview_of_Green_Building_ singapore-9864584 465. See Note 319 Rating_Tools_in_Malaysia/links/5b31d27b0f7e9b0df5cb9aa6/ 407. http://www.mot.gov.my/en/lands/rail-transport/plbegjb An-Overview-of-Green-Building-Rating-Tools-in-Malaysia. 408. https://www.malaymail.com/news/malaysia/2019/04/18/ pdf?origin=publication_detail loke-gemas-johor-baru-electrified-double-tracking-project-at- 351. 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World Agriculture: Towards 2015/2030: An FAO 414. https://www.railway-technology.com/projects/light-rail- study. Retrieved from: https://books.google.com.vn/ transit-line-3-lrt-3/ books?id=6hw3DwAAQBAJ&pg=PT188&lpg=PT188&dq=Malay- 415. https://www.malaymail.com/news/malaysia/2020/01/09/

Malaysia GIIO Report Climate Bonds Initiative 51 Climate Bonds Taxonomy

The Climate Bonds Taxonomy identifies the assets and projects needed to deliver a low carbon economy and gives GHG emissions screening criteria consistent with the 2-degree global warming target set by the COP 21 Paris Agreement. More information is available at https://www.climatebonds.net/standard/taxonomy.

LAND USE & ENERGY TRANSPORT WATER BUILDINGS MARINE INDUSTRY WASTE ICT RESOURCES

Solar Private transport Water monitoring Residential Agriculture Cement Preparation Broadband production networks

Wind Public passenger Water storage Commercial Commercial Steel, iron & Reuse Telecommuting transport Forestry aluminium software and production service

Geothermal Freight rail Water treatment Products & Ecosystem Glass Recycling Data hubs systems for conservation production efficiency & restoration Bioenergy Aviation Water distribution Urban Fisheries & Chemical Biological Power development aquaculture production treatment management

Hydropower Water-borne Flood defence Supply chain Fuel production Waste to energy management

Marine Nature-based Landfill Renewables solutions

Transmission & Radioactive waste distribution Certification Criteria approved management

Criteria under development Storage Due to commence

Nuclear

© Climate Bonds initiative 10/2020

Supported by Capital Markets Malaysia We would like to thank the following people for their input Beroz Nikmal bin Mirdin, CEO of Telekosang Hydro One; Rafe Haneef, Group Chief Sustainability Officer, CIMB Islamic Bank; Sharifatul Hanizah, CEO, Islamic Capital Markets of the SC; Syed Zaid Albar, Chairman, Securities Commission Malaysia; Zainal Izlan Zainal Abidin, Chairman, Capital Markets Malaysia; Zalina Shamsudin, General Manager, Capital Markets Malaysia; Fad’l Mohamed, CEO of Maybank Investment Bank Bhd

With kind support from: Capital Markets Malaysia and Oak Foundation

Authors: Kristiane Davidson, Phí Thị Minh Nguy t, Nabilla Gunawan, ệ Bridget Boulle

Design: Godfrey Design © Climate Bonds Initiative, March 2021

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites. The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

Malaysia GIIO Report Climate Bonds Initiative 52