Malaysia and China will engage in more collaborations in the field of technical and vocational education and training (TVET), said Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi.

He said this was discussed during his meeting with Liu Jianchao, Minister of the International Department of the Central Committee of the Communist Party of China on Thursday

“China has also expressed its willingness to provide more training series, share experiences and educational opportunities in technology and vocational fields, particularly to students and workers in Malaysia,” he said in a post on his Facebook page.

In addition, Ahmad Zahid said the meeting also discussed the celebration of the 50th anniversary of Malaysia-China diplomatic relations on May 31.

He said in recent months, he had met with many top Chinese leaders who visited Malaysia, and they were all confident that the relationship between the two countries would grow to greater heights.

Ahmad Zahid said they also requested for more cooperation at both party and governmental levels for the benefit of the people of both countries.

Also present at the meeting were Minister of Higher Education Datuk Seri Dr Zambry Abdul Kadir, Deputy Foreign Minister Datuk Mohamad Alamin, and Majilis Amanah Rakyat (Mara) chairman Datuk Dr Asyraf Wajdi Dusuki.

Ahmad Zahid said Liu was accompanied by China’s Ambassador to Malaysia, Ouyang Yujing; and embassy officials.

Source: Bernama

Malaysia, China to enhance TVET collaboration — Ahmad Zahid

BATTLES are won with tactics. Wars are won with logistics, Tesla chief executive officer Elon Musk said. Indeed, improving performance of logistics helps organisations and economies further engage in local and international trade. This makes logistics a powerful driver for growth and development.

According to the World Bank, performance of a country’s logistics industry is a great deal for its competitiveness on export markets, and its ability to reliably, affordably secure importation of goods needed for production and consumption.

Hence, the development of the Logistics Performance Index (LPI) to help economies identify areas where logistics could be improved. The LPI measures the ease of establishing reliable supply chain connections and the structural factors such as quality of logistics services, trade and transport-related infrastructure, as well as border controls.

Malaysia scored well in the LPI 2023. It climbed 15 notches to the 26th place – emerging as the second-best performing Asean country after Singapore. This is due to significant contributions from entities such as the Investment, Trade and Industry Ministry (Miti), Malaysia External Trade Development Corporation (Matrade), Malaysian Investment Development Authority (MIDA), and more, in driving the environmental, social, and governance (ESG) agenda and fostering sustainable export practices.

However, there is still much to be done in driving ESG adoption among small and medium enterprises (SMEs). The Organisation for Economic Cooperation and Development (OECD) suggests there is an ESG scoring bias in favour of large-cap companies, and against SMEs. OECD notes that this burden, may be due in part to the ability of large firms to dedicate more resources to reporting and poses a market inefficiency to the extent it affects both relative cost of capital and corporate reputation.

All is not doom and gloom for SMEs, which are likely hovering at the adoption crossroads amid whirlwinds of an uncertain business landscape that is rapidly changing based on the latest ESG strategies and practices. This is an opportunity for SMEs to kickstart their sustainable journey and up their game in the business arena — ultimately through transforming operational procedures, increasing brand exposure and boosting trade locally and intentionally. Tackling logistics can be a starting point towards the net zero path, while boosting business.

A trade requirement

Saloodo! – the Carrier Management Portal for DHL, defines trade logistics as the management process that includes the entire flow of goods and information between suppliers and companies and between customers and companies. Trade logistics also includes the internal flow of goods.For trade logistics to be as efficient as possible, the use of computer-based merchandise management systems is indispensable, as they enable item-specific inventory tracking and disposition. Trade logistics’ aim is to ensure availability of goods at the point of sale. By continually refining and strengthening its logistics capabilities, countries can solidify their positions as great players in the global trade arena.

Furthermore, cost efficiency is paramount in a globalised world. Robust logistics infrastructure, including well-developed ports, airports, road networks, keep transportation costs down, giving any exporting nations a competitive edge in international markets. It is crucial to explore the importance of logistics and how it helps SMEs to venture further into the global market.

Describing logistics as the lifeline of international trade, PKT Logistics Group Sdn Bhd managing director and chief executive officer Datuk Seri Michael Tio notes that the logistics sector is a major contributor of carbon emissions and urged the industry to reduce carbon emissions by aligning with ESG ideals.

Sharing the same sentiment, DHL Express (Malaysia and Brunei) managing director Julian Neo says: “Logistics is inextricably linked to trade. In its very essence, it is the engine that drives the movement of goods and services across borders.

“Local and international supply chains are dependent on the efficiency of transit amidst multiple stakeholder, tax, customs, and regulatory considerations. High performing logistics operations increase countries’ ability to compete on an international scale, connect sectors across geographies, and ensure continued trade flows.”

Noting that the concept of ESG has long been woven into the fabric of logistics, Neo explains that the first and arguably most scrutinised facet for companies is environmental impact. He emphasises that companies are under increasing pressure to report and mitigate emissions — and will soon be mandatory.

“Europe’s Non-Financial Reporting Directive and Corporate Sustainability Reporting Directive; United States’ SEC Climate Disclosure Rule; and Japan’s endorsement of the Task Force on Climate-related Financial Disclosures all point to a rapid shift towards greater environmental transparency.

“Most relevant to the logistics sector, Scope 3 emissions, refers to the indirect greenhouse gases produced in each company’s value chain, including downstream transportation and distribution.

“This has given rise to alternative energy and mobility solutions as logistics providers seek to decarbonise while balancing market demand. For DHL, we have invested in the use of sustainable aviation fuel through contracts with BP, Neste, and World Energy, and are allowing customers to benefit via our GoGreen Plus insetting service as well,” shares Neo.

Securing a future

Many remain sceptical about ESG, the most famous one being Tesla’s Musk, who called ESG a “scam”.

Tio and Neo beg to differ. Given that the world population is projected to increase from the current 8.1 billion to 10 billion by 2050, Tio notes that ESG can preserve and nuture the planet for future generations but suggests governing ESG bodies, like the United Nations and governments, to set differing net zero timelines for countries according to their level of development.“The Paris Agreement called for the Race to Net Zero by 2050. However, differing net zero targets should be set for different parts of the world as third world countries are still struggling with basic economic, social and political stability. Perhaps, the deadline for developed countries should be 2050, developing countries by 2060, third world countries by 2070 and beyond,” says Tio.

Neo says: “ESG is simply a natural extension of efforts to invest and give back to people and the planet. It should not be discounted because it has become a key differentiator in business today, and one that serves a very positive purpose.

“We recognise sustainability as a nonnegotiable requirement to ensure the long-term viability of our company. A person’s most basic moral obligation is to do the right thing. This is a core value for DHL, extending across our company and informing how we conduct our business, treat our employees, and serve our communities.”

Meanwhile, DHL’s recent Global Connectedness Report 2024 found that globalisation reached a record high in 2022 and remained close to that level in 2023.

“The growth of international trade flows is keeping pace with and in some cases exceeding domestic trade activity. In the face of geopolitical crises, flows of trade, capital, information, and people between countries have proven resilient. At the same time, we must ensure that this growth does not come at the expense of our environmental, social, and governance responsibilities,” says Neo.

Emulating the how-to’s

Neo recommends SMEs to familiarise themselves with established ESG frameworks such as the Global Reporting Initiative, Sustainability Accounting Standards Board, and Task Force on Climate-related Financial Disclosures as they provide guidance on ESG reporting and materiality assessment.“Armed with this knowledge, SMEs should then be able to determine ESG issues that are most relevant to their business, industry, and stakeholders. This will help companies pivot their efforts and prioritise areas that leave the greatest impact.”

Neo also advises startups and smaller organisations to take an incremental approach to ESG tracking and monitoring by utilising available resources.

“Gradually build capabilities over time. This allows for flexibility and ease in managing costs effectively. Engaging logistics partners can help to jointly address ESG challenges and share best practices.”

It might seem that a company’s ESG compliance is limited to reporting frameworks, transparency, target monitoring, regulatory adherence, but Neo says there is much more beyond that and companies can consider compliance partnerships as an enabler of sustainability goals.“A benefit is the sharing of ESG priorities, which drives greater innovations if aligned between two parties. Some examples include transport fleet electrification, further strides in eco packaging, or enhanced facility energy management.”

Leveraging on AI

Neo shares that there are multiple subsets of interactive Artificial Intelligence (AI) that have seen varying trade applications ranging from geolocation and navigation, optical character recognition (OCR), chatbots, digital assistants, speech-to-text dictation, and e-payment, to name a few.

“Within the supply chain, this brings greater operational efficiency. Among use cases, the deployment of AI algorithms for trade data analysis to identify patterns, predict demand, and optimise inventory is most widespread.”

He also notes that OCR is growing in sophistication as companies extract and digitise information from trade documents, reducing manual data entry errors and improving documentation accuracy.

“Used together, they can produce more efficient Natural Language Processing (NLP) for ESG disclosures. Through analysis of textual data like ESG reports and non-financial reporting directives, alignment of disclosures with current frameworks and guidelines can be quickly assessed,” he says.

In PKT’s experience, AI has been harnessed to enable Machine Learning where it uses it in conjunction with Optical Character Recognition (OCR) for data entry, storage, analytics and manipulation using Robotics Process Automation.

“This improved data capture capability and reduced paper usage, greatly helping us to perform logistics-related administrative processes such as customs declarations, trade-compliance, analytics, reporting and more.”

Pointing out that the business of logistics is to be efficient and lean, Tio says PKT’s GAP #1 of LEAN before MEAN pushes this ideal.

“This means opting for measures that reduce costs through efficient planning and efficient practices before we consider ESG initiatives that incur additional costs to roll out. However, if it is consciously chosen — for example to use only certified sustainably sourced packaging materials which are more costly — then this will be jointly undertaken with our customers,” says Tio.

Pains of non-compliance

The ultimate pain SMEs would and are facing for not adopting ESG is to lose their respective market segment share, in addition to hindering their own development. Research by Xiamen University Malaysia and Universiti Teknologi Brunei found that investors prefer companies that share information about their ESG.

Fndings by the Sustainable Finance Institute Asia 2022 estimates that Malaysian SMEs risk losing RM292bil in revenue due to non-ESG compliance. SMEs without incorporating ESG principles in their business operations are losing out in the eyes of investors, customers, government tax incentive, and financing bodies.

The United Nations Global Compact Network Malaysia and Brunei also mentions that when companies do not provide enough ESG information, it is seen as a sign of business risks, like issues specific to that company, not the overall market. These risks can negatively affect a company’s image and decrease its brand value.

Overall, small businesses that do not follow ESG rules are seen as having bad management and not caring about the environment or long-term sustainability.

Reiterating that “If there is no ESG, there is no MSG (Multinational Sales Growth)”, Tio says planning out a roadmap to achieve net zero emissions by 2050 is a good start that would assist SMEs’ competitiveness as they scale their business to another level or work with multinational companies.

“Aligning production processes with ESG will appeal to conscientious stakeholders – customers, investors and partners who are more inclined to do business with reputable companies who place sustainability at the core of their operations.

“Akin to PKT’s Green Action Plan (GAP) #1, LEAN before MEAN – we believe in embedding lean principles before managing our environmental agenda needs, optimising production processes resulting in minimising waste, resource consumption and emissions.

“In addition, positively impacting our social practices by prioritising workplace safety, and increased operational efficiency for better governance and transparency, all attractive on the global front for enhanced trade partnerships.”

Another challenge of ESG adoption for SMEs and large-cap companies is that the rules of the ESG game are still being developed and there is no one clear path or paths towards ESG compliance, says Tio.

“However, the logistics industry is already playing its part by helping shippers make their supply chains more efficient e.g. the setting up of Regional Distribution Centres (RDCs) that place products storage closer to their intended consumption locations while shortening lead times and improving reaction times.

“This RDC model in itself reduces the carbon footprint by reducing cross border shipping compared to a disaggregated, criss-cross supply chain. Therefore, enabling our customers to pursue a lean supply chain is already an ESG initiative on its own.”

A helping hand

Although the industry is lacking in ESG experts, it certainly makes up for it in terms of other types of aid to help Malaysian SMEs get into the ESG space. Miti Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz has urged businesses to “view ESG as an opportunity”, saying that ESG is not just as a risk management strategy against regulations and customer demand but also as an economic opportunity to tap new areas.

“Big companies are not in danger because they understand and they also have stakeholders who want them to meet ESG requirements. But targeting the whole supply chain means big companies also need their suppliers to be ESG-compliant.

“This is where SMEs in Malaysia need to realise the importance of ESG. There’s a timeline and they are not expected to adopt it overnight, but they need to start investing in knowledge and capacity building in both systems and processes,” said Zafrul on his social media platform.

The government and other entities have launched a slew of initiatives to ease businesses’ way towards sustainable development and trade.

Miti released the i-ESG Framework, which includes a free assessment tool, after which companies are given a guide on how to begin the sustainability journey. Clinic sessions and outreach programmes called KenalESG are being conducted by Miti across the country.

There is also the New Industrial Master Plan (NIMP2030), whereby funding is a key enabler. Budget 2024 allocated RM200mil for NIMP2030 activities, a portion of which is dedicated to helping companies implement ESG initiatives. The process of identifying qualified export-oriented companies is being done by Matrade and the grant allocation is starting this year.

Other incentives include RM20bil in guarantee funding by Syarikat Jaminan Pembiayaan Perniagaan Bhd for SMEs involved in the green economy, technology and halal fields, as well as tax deductions of up to RM50,000 for each year of assessment on ESG-related expenditure from 2024 to 2027.

Mida supports the growth of companies undertaking integrated logistics services (ILS) by offering the ILS incentive and International ILS (IILS) status. As of 2022, Mida had approved 257 ILS projects, of which the majority of the applicants were Malaysian-based companies.

ILS incentives include the Pioneer Status incentive on statutory income of five years and 60 per cent investment tax allowance on qualifying capital expenditure incurred within five years, which can be offset against 70% of the investor’s statutory income for each assessment year.

Besides the government, external parties are also lending a hand. The United Nations Global Compact Network Malaysia and Brunei has developed the SME ESG Hub, to provide SMEs with fundamental understanding and free practical tools needed to kickstart their ESG journey and incorporate ESG practices into their businesses.

To sum up, adoption of ESG is a must for efficient supply chain management and logistics, improving the resilience of value chains and adjusting them to trade patterns reshaped by climate change and digital technology is crucial to boost trade.

Source: The Star

Logistics, a magic bullet for sustainable trade?

Malaysia’s digital investment soared to RM46.22 billion last year, surpassing the targeted amount of RM30 billion by 54 per cent.

Malaysia Digital Economy Corporation (MDEC) chief executive officer Mahadhir Aziz said this was contributed by 256 companies, with 53 per cent in the information technology cluster.

He said this was followed by global business services (26 per cent), data centres and cloud (13 per cent), and technology and creative content (eight per cent).

“A total of 22,258 high-value jobs were created last year, with the global business services cluster contributing 51 per cent of the total,” he said at a media briefing recently.

“The number of jobs created represents a growth of 36 per cent compared to 2021.”

Mahadir said local digital companies also achieved remarkable financial results, generating revenue of RM8.87 billion, surpassing the target of RM7.5 billion by 18 per cent.

Furthermore, he said, the export value surged to RM3.18 billion, an increase of 181 per cent from 2021.

“Malaysia’s digital footprint has expanded globally, with companies now operating in 17 countries. Indonesia, the Philippines, and Vietnam are the top three countries where Malaysian digital companies have a strong presence,” he said.

Moving forward, Mahadir said MDEC would be introducing a new tax incentive in May for Malaysian companies with digital status and existing Multimedia Super Corridor-status companies.

“We have an amended tax incentive that will be announced in May. This is something that we want to be able to take on, and we will announce it together with the Finance Ministry,” he added.

Source: NST

‘Digital investments hit RM46.22b in 2023’

The prospects for the local renewable energy (RE) sector is bright, thanks to the abundance of solar photovoltaic (PV) system engineering, procurement, construction and commissioning (EPCC) jobs, says Kenanga Research.

According to the research house, the outlook for solar EPCC jobs is strong, underpinned by new contracts under the Corporate Green Power Programme (CGPP) estimated to be worth RM2.4bil and the 2GW Large-Scale Solar 5 (LSS5) worth an additional RM5bil.

There is also an extra quota of 400MW under the net energy metering (NEM) scheme, the research house noted.

Under the National Energy Transition Roadmap, the government has set a target of RE making up 70% of total generation capacity by 2050 compared with 25% currently, with an aspiration to achieve net-zero GHG by 2050.

The targets entailed at least 20GW of new RE from now until 2050, of which more than 90% is expected to come from solar.

The government has introduced a list of initiatives to promote investment in solar power generation comprising the Feed-in Tariff programme, NEM mechanism, LSS and CGPP projects.

“Over the immediate term, the flow of PV system EPCC jobs will come from the CGPP with a completion deadline by end-2025, following the completion of LSS4 in end-2023.

“Based on our estimates, the 800 megawatt peak (MWp) capacity under the CGPP will translate to RM2.4bil in PV system EPCC jobs,” the brokerage firm said.

“Subsequently, the Energy Commission will embark on LSS5 with a capacity quota of 2GW, which allows developers to bid for up to 500MW from 50MW previously.

“We estimate that LSS5 will generate RM5bil worth of PV system EPCC jobs, which can keep PV system EPCC contractors busy until 2028.

“In addition, there is a new 400MW quota under the NEM scheme from February to December 2024 to further encourage investment in solar energy assets.

“Businesses, driven by commercial reasons (i.e. to save cost) and environmental, social and governance considerations, have voluntarily invested in solar energy generation assets following the recent hikes in electricity tariffs,” it said.

All in all, Kenanga Research said the prices of solar panels are at historic low while the supply of components is abundant. As solar panel makers struggle to make a profit, PV system EPCC contractors enjoy good margins and are poised for more jobs as cheap solar panel prices stimulate investment in PV systems, it added.

Source: The Star

Outlook for RE bright with more solar PV jobs

Independent power producer (IPP) Malakoff Corp Bhd is exploring combined-cycle gas turbine (CCGT) and solar photovoltaic (PV) plants in its Tanjung Bin site in Johor, to cater for electricity exports.

The group, which has 21% of generation capacity in Peninsular Malaysia, is “actively pursuing” a new CCGT project, it said in its 2023 annual report on Tuesday.

Malakoff has seen generation capacity declining in recent years following the expiry of power purchase agreements (PPAs), the latest being a 21-year PPA for the 640-megawatt (MW) GB3 gas-fired plant in Lumut, Perak in 2022.

Export opportunities abound led by Singapore, which is seeking to import up to 1,200MW of electricity by end-2027. Malaysia has expressed intention to participate, and lifted its renewable energy (RE) export ban to Singapore last year, although details of the mechanism have yet to be ironed out.

Malakoff’s effective thermal power generation capacity stood at 5,342MW, with RE capacity of 153MW, its annual report showed.

In Kukup, Johor, where Jalan Tanjung Bin is located, Malakoff owns 90% in the 2,100MW coal-fired Tanjung Bin power plant in Johor, the PPA of which expires in 2031. It also wholly owns the 1,000MW coal-fired Tanjung Bin Energy power plant that is contracted to operate until 2041.

Aside from looking for new CCGT capacity, Malakoff said it will continue to invest in expanding the proportion of its biomass co-fired project with coal.

“Presently, the co-firing rate is at 0.5% with encouraging initial results. From here, we will gradually increase this to 2% and execute progressively to safeguard the integrity of our equipment and machines,” it said.

On lookout for M&A

Aside from bidding for new RE projects, Malakoff said it is considering potential acquisitions in operational greenfield ventures “particularly large scale solar (LSS) projects and exploring opportunities in waste management and environmental solutions”.

This came as it acknowledged that some potential sellers, including LSS players, are hesitant to let go of their assets despite lucrative opportunities for monetisation and current market stability.

The group said it aims to leverage its established partnerships and focus on countries it is familiar with such as Malaysia, Saudi Arabia, Bahrain and Oman.

“By collaborating with local and international partners, these alliances will not only enhance our expertise and facilitate technology transfer but also create investment opportunities in Malaysia,” it said.

“We will take a prudent approach to M&A (merger and acquisition) activities, ensuring a balance between aggressiveness and selectivity. Armed with substantial reserves and a robust war chest, we have positioned ourselves to weather potential downturns, allowing us to acquire assets at favourable rates from sellers,” it said.

Earlier this year, Malakoff managing director and chief executive officer Anwar Syahrin Abdul Ajib told The Edge in an exclusive interview that the group has set aside RM500 million to RM1 billion for M&A.

Last month, Malakoff announced that it incurred a net loss of RM884.36 million for the financial year ended Dec 31, 2023 (FY2023) — the group’s first annual net loss since its listing in 2015 — versus a net profit of RM255.03 million in FY2022. Revenue fell 12.4% to RM9.07 billion from RM10.36 billion a year earlier.

The group also posted a net loss of RM357.1 million for its fourth quarter ended Dec 31, 2023 (4QFY2023) against a net profit of RM41.9 million in 4QFY2022, while revenue fell 23.89% to RM2.26 billion from RM2.97 billion a year earlier.

It attributed the losses to substantial negative fuel margin at its Tanjung Bin Power and Tanjung Bin Energy coal plants, lower contribution from the GB3 gas plant following the expiry of its PPA, as well a substantial share of loss from its 40%-owned Al-Hidd independent water and power producer associate in Bahrain.

At 4pm on Tuesday, shares in Malakoff were one sen or 1.59% higher at 64 sen, valuing the group at RM3.17 billion.

Source: The Edge Malaysia

Malakoff eyes new gas, solar plants in Tanjung Bin for energy exports

The government will continue to focus on training in the fields of Science, Technology, Engineering, and Mathematics (STEM), especially at the highest levels, to boost foreign investments in the country.

Prime Minister Datuk Seri Anwar Ibrahim said Malaysia’s current weakness lies in training in mathematics, science, engineering, artificial intelligence (AI), and Technical and Vocational Education and Training (TVET) at the highest level.

“We can do it if we give full focus and additional allocation (to training in the STEM field),” he said during the Minister’s Question Time in the Dewan Rakyat today.

Anwar was responding to Tebrau MP Jimmy Puah, who asked about the government’s efforts to ensure the RM329.5 billion investment momentum obtained last year continues to increase in the years to come.

Anwar, who is also the Finance Minister, admitted the interest of students in STEM is also declining, which is a matter of great concern.

The Education Ministry and other educational groups have taken various steps to urge parents to encourage their children to engage in STEM education at the secondary level.

“This is being worked on more seriously,” said the Prime Minister.

He added that in all his meetings with foreign companies intent on investing in Malaysia, the emphasis was placed on the importance of these companies having their centre of excellence here in Malaysia to provide skills training to professionals and local students.

“There must be training here because we currently lack engineers. Although good and well-received, the engineers we produced are still considered to be lacking the highest level of skills or efficiency.

“So there is a gap about the required niche. Therefore, this focus on TVET and engineering needs to be given attention…I agree that if Malaysia does not do something immediately, we will be on the losing end.

“This is because the focus now is no longer on the low-end industry but on the high-end industry, which requires higher efficiency than what is available now,” Anwar said.

In that regard, he has asked local universities, starting with Universiti Teknologi Malaysia (UTM), to establish an AI Faculty which should coordinate their activities with all universities that conduct AI to meet some of the needs in the field.

Source: Bernama

Govt continues focus on STEM training to boost foreign investments — PM

Energy-related services provider Reservoir Link Bhd will form a joint venture (JV) company to undertake a 29.99 MWac ground mounted solar photovoltaic (PV) project in Kedah.

The group via its wholly-owned unit Reservoir Link Renewable Sdn Bhd (RLR) had on March 20 inked a shareholders’ agreement with Japan-based Sumitomo Corporation (SC), MAQO Engineering Sdn Bhd (MESB) and SRM Utama Selambau Sdn Bhd (SUS) to undertake the project, according to Reservoir Link’s bourse filing.

SC will hold 49% equity interest in the JV company, with RLR holding 29% and MESB the remaining 22% stake.

SC is a Fortune 500 global trading and business investment company with presence in 108 locations abroad and 20 locations in Japan. The company conducts commodity transactions in all industries utilising worldwide networks, provides related customers with various financing, and serves as an organiser and a coordinator for various projects.

MESB is a solar power company and solar panel installer in Malaysia that provides clean energy to residential home owners to full-scale commercial and industrial solar energy systems and solar farm projects.

At Monday’s noon break, shares of Reservoir Link stood at 31.5 sen, giving it a market value of RM98.24 million.

Source: The Edge Malaysia

Reservoir Link to form JV company to undertake solar PV project in Kedah

The data centre market in Asia is expanding rapidly, driven by the demand for cloud services, the Internet of Things (IoT) and the widespread adoption of other emerging technologies such as artificial intelligence.

When we think of data centre hubs in the region, leading “Tier 1” markets of Singapore, Japan, Taiwan and Hong Kong typically come to mind. However, the “Tier 2” markets are now showing exponential growth, propelled by a combination of growing population and internet penetration, which drives the expansion of infrastructure, government support and conducive business environments for data centre investment.

Malaysia is one of the Tier 2 markets with untapped potential to be a data centre hub. In terms of demand drivers, Asia-Pacific is expected to contribute 90% to global e-commerce growth between 2021 and 2026.

In line with this, Malaysia has one of the highest rates of internet penetration at 96.8%, with more than 33 million internet users as at January 2023. Johor is one of the fastest-growing data centre markets in the region, currently with 33mw of live and pipeline capacity and most facilities in the planning or construction phase.

Putting Malaysia’s data centre market into perspective

Malaysia’s data centre market is on the rise, with a growing market size, increasing demand and substantial investments pouring into the local sector. The country received RM76 billion (US$16 billion) worth of investments from its data centres between 2021 and March 2023, and its data centre market is expected to attract investments of US$2.25 billion by 2028.

It is well on track to achieve its vision of accelerating its digital economy and transforming into an “Asian Digital Tiger” by 2025. This acceleration has been reinforced by the active participation of international players in Malaysia’s two major data centre regions — Greater Kuala Lumpur and Johor.

NTT, a global infrastructure and services company, recently unveiled its new data centre facility in Cyberjaya, further solidifying its commitment to the region. Amazon Web Services also recently revealed plans to launch an infrastructure region in Malaysia, with an investment plan of RM25.5 billion in the country by 2037. Additionally, GDS, a developer and operator of high-performance data centres, recently announced its first data centre for Southeast Asia, located in Johor.

Linesight has seen this growth first-hand, noting a significant increase in client demand and project developments. A key consideration for the demand is the proximity to Singapore, a testament to Malaysia’s strategic geographical advantage as a spillover market.

Behind the appeal of Malaysia as a data centre destination

What makes Malaysia an attractive choice for data centre investment? First, Malaysia distinguishes itself with superior infrastructure, making it a highly conducive setting for seamless data centre operations.

Data centre providers are located around the undersea cable landing points, for decreased latency, and have received support from local utility suppliers in their requests for upgrading the local infrastructure to cope with the demands of their new developments.

The country also excels when compared with other nations, with its robust cybersecurity framework, skilled educated workforce and strategic positioning for undersea cabling initiatives. Some companies have sought Malaysia’s business reliability and its centralised location to expand their portfolio across Asia.

Beyond all of this, what sets Malaysia apart from other countries is its affordability in terms of land and energy. The availability of suitable land for development at competitive prices can significantly reduce the overall cost of setting up and operating data centres.

In response, some companies have acquired between 10ha and 20ha of land for future development, establishing a strategic base to continue to expand once future funding has been secured.

Carving out a competitive edge to elevate Malaysia from Tier 2 to Tier 1

To transition from a Tier 2 to a Tier 1 data centre destination, Malaysia must adopt innovative strategies. It is essential to recognise the competitive nature of the global data centre market and the lessons that can be learnt from Tier 1 markets like Singapore, which implemented a moratorium to refocus and put the industry on a sustainable path.

Malaysia must consider several key factors to stand out from the booming data centre space and foster continued market expansion. The nation has made significant headway in upgrading its infrastructure, complemented by the establishment of government incentives, including tax incentives and regulatory support for the sector.

Leveraging its expansive land mass, Malaysia can embark on new infrastructure projects that can generate further growth. Partnerships with international data centre operators and cloud service providers have also proved to be an effective approach to attracting investment.

Malaysia’s attractiveness is further enhanced by its commitment to green energy, with an estimated 40% of power generation coming from renewable sources by 2035.

Given the increased visibility of sustainability and net zero targets, Malaysia must now actively position itself as an environmentally conscious data centre hub, prioritising energy efficiency and embracing sustainable methodologies. This transformative process should be implemented in a manner that encourages a recalibration and the formulation of a well-defined sustainability strategy for the future development and operation of data centres.

The future

Malaysia’s data centre market shows positive future growth. With the right strategies, investments and support, the country has the potential to become a prominent leader in Asia. In the short term, Malaysia can expect a surge in data centre developments, both in terms of new facilities and expansions of existing ones.

The lessons learnt from the leaders in the data centre industry provide a roadmap for Malaysia’s ascent in the market. By embracing innovation, improving on the existing infrastructure, offering incentives and prioritising sustainability, the country can make its mark as a data centre hub and play a significant role in shaping the future of Asia’s data centre landscape.

Source: The Edge Malaysia

Data Centres: All eyes on Asia’s future ‘Digital Tiger’

The digital economy is one of the proposed sectors of focus for the Johor-Singapore Special Economic Zone (JS-SEZ), says state executive councillor Lee Ting Han (pic).

The Johor investment, trade, consumer affairs and human resources committee chairman said the state government had a few meetings with the relevant government agencies regarding the JS-SEZ.

Lee said that the digital economy was a sector proposed because Singapore has certain advantages in the region being a regional centre of connectivity in terms of data, digital economy and cyber-related matters.

“Johor is located next to Singapore and has the natural resources, talents and necessary ingredients to support and complement whatever the city-state has at the moment,” he added.

Lee said this at the opening ceremony of the NEC Malaysia office in Iskandar Puteri here on Wednesday (March 20).

Apart from the announced measures to ease the movement of people and goods, another work in progress is to allow the free flow of data between Johor and Singapore under the JS-SEZ, said Lee.

He added that Johor has also witnessed the rapid expansion of the data centre industry in the past two years.

“At the moment, we have four data centres that are up and running while 10 more are in various stages of construction and another 14 more are in various stages of discussion with the state government and federal government,” said Lee.

“All these are the necessary digital infrastructure that will allow the digital economy sector to prosper and eventually attract the artificial intelligence and related industries to the region,” he added.

Lee also welcomed Japanese IT solutions company NEC for setting up its centre of excellence in Sunway City, Iskandar Puteri, adding that it would serve as a platform for Malaysian talent to equip themselves with skills needed to excel in the managed services and cyber defence industries.

Source: The Star

Digital economy proposed sector of focus for Johor-Singapore Special Economic Zone

By DHL

• The new 10,000 square meters facility will meet growing demands in the automotive, technology, cloud business and data center sectors
• Located in the Free Trade Zone of Johor’s Senai Airport City, the South Region Hub offers great connectivity to North-South Expressway and Senai International Airport

DHL Supply Chain, the global leader in contract logistics, announced the inauguration of its first warehouse in Southern Malaysia. The South Region Hub, a EUR 5.2 million investment, will add 10,000 square meters of warehouse space to DHL Supply Chain’s existing portfolio of 236,000 square meters in Malaysia. The construction of the facility will be undertaken by local developer, Eastern Group, and is expected to be ready by Q1 2025.

Strategically located in the Free Trade Zone of Senai Airport City, the South Region Hub is a mere 10 minutes away from the North-South Expressway and Senai International Airport, enabling faster delivery times. This also marks a strategic step to fulfill the soaring demand of warehousing from sectors including automotive, technology, cloud business and data center, as DHL Supply Chain grows its business presence in Southern Malaysia.

Mario Lorenz, Managing Director, DHL Supply Chain Malaysia said, “With the launch of the South Region Hub as our 24^th facility in Malaysia, we are looking to elevate the standards of logistics in the Southern region and beyond. This investment reflects our confidence in Johor’s potential as an epicenter for regional distribution. Positioned at a prime location, our Hub will establish new benchmark in efficiency and sustainable logistics solutions.”

As part of DHL Supply Chain’s global sustainability commitment, the South Region Hub will be a carbon-neutral operation with facilities such as solar panels, smart LED lighting and rainwater harvesting solutions.

The launch of the South Region Hub forms part of DHL Supply Chain’s strategy to invest EUR350 million in Southeast Asia over the next four years, with EUR131 million allocated specifically for Malaysia. This investment will expand DHL Supply Chain’s warehousing capacity, workforce and sustainability initiatives in the country. Additionally, DHL Supply Chain is set to open three more facilities across Malaysia – two in Penang and one in the Central region.

DHL – The logistics company for the world

DHL is the leading global brand in the logistics industry. Our DHL divisions offer an unrivalled portfolio of logistics services ranging from national and international parcel delivery, e-commerce shipping and fulfillment solutions, international express, road, air and ocean transport to industrial supply chain management. With about 395,000 employees in more than 220 countries and territories worldwide, DHL connects people and businesses securely and reliably, enabling global sustainable trade flows. With specialized solutions for growth markets and industries including technology, life sciences and healthcare, engineering, manufacturing & energy, auto-mobility and retail, DHL is decisively positioned as “The logistics company for the world”.

DHL is part of DHL Group. The Group generated revenues of more than 81.8 billion euros in 2023. With sustainable business practices and a commitment to society and the environment, the Group makes a positive contribution to the world. DHL Group aims to achieve net-zero emissions logistics by 2050.

Source: Malay Mail

DHL Supply Chain to invest in a new warehouse facility in Senai Airport City, Southern Malaysia, to fulfill growing logistics demand

By Zarina Nalla 

Prime Minister Datuk Seri Anwar Ibrahim’s international efforts are yielding promising results.

Recent trips secured potential investments from Germany (RM45.4 billion) and China (RM170 billion) in crucial sectors like semiconductors, aerospace and medical devices.

This aligns with Malaysia’s strategic goal of attracting foreign direct investment (FDI) that fosters technological advancement and propels the nation towards becoming a high-income economy.

Data from the Malaysian Investment Development Authority (Mida) confirms a significant rise in approved investments in 2023, reaching RM329.5 billion, with FDI being the major contributor.

Beyond securing financial commitments, a critical evaluation of the incoming investments is crucial. ESG (environmental, social and governance) considerations must be factored in to ensure responsible business practices.

Furthermore, alignment with Malaysia’s long-term economic goals is essential.

Investments should contribute to technological advancement and propel the nation towards a high-income status. To achieve this, a robust framework for monitoring, evaluation, and facilitation is necessary.

Malaysia’s economic story is one of remarkable transformation. From its roots in agriculture, the nation transitioned into a manufacturing powerhouse, with the electronics and electrical (E&E) sector serving as its driving force.

This strategy fuelled rapid economic growth, propelling Malaysia towards becoming a middle-income economy. However, a crucial element has been missing: A strategic shift towards climbing the value chain.

Malaysia holds a significant share of the global E&E market (13.6 per cent). However, its contribution lies primarily in low-value assembly and packaging. This translates to limited technological advancement and a workforce skilled in routine tasks.

While this approach has yielded economic benefits, it presents a significant challenge: Can Malaysia achieve its aspirations of becoming a high-income nation solely by relying on assembly-based activities?

An unfortunate consequence of over-dependence on assembly has been the neglect of domestic research and development (R&D) capabilities. This has not only limited technological innovation but also hindered the creation of high-skilled jobs within the E&E sector.

According to the World Bank, Malaysia’s spending on R&D as a percentage of GDP is significantly lower compared to regional competitors like Singapore and South Korea.

This lack of investment translates to a dearth of cutting-edge research facilities, limited opportunities for domestic talent to contribute to innovation, and ultimately, an economy susceptible to the whims of the global market.

The path forward necessitates a paradigm shift in Malaysia’s approach to FDI. Moving beyond simply attracting large-scale investments, the focus must be on strategic FDI that aligns with the nation’s long-term economic goals.

Identifying and qualifying the type of investments being poured into Malaysia require a special skill set. The newest kid on the block is impact investments.

The relevant agencies should screen business proposals carefully before giving the green light. One must keep in mind that the end goal is to fulfill strategic growth for the nation: these investments must add value to our economy and help us move closer towards being a high-income nation.

We need to break out of the middle-income trap, a challenge which has been discussed for decades.

Perhaps it is time for the government to organise announcements around actualized investment numbers as well?

Focusing solely on approved investments paints an incomplete picture of economic progress. Placing greater emphasis on actualised investments and making this data readily available provides a clearer understanding of the tangible outcomes achieved through FDIs.

Approved investments require at least 18 to 24 months to come to fruition, more often than not, investors make U-turns for various reasons which include obstacles faced in soliciting approvals or identifying local partners or talent even.

The facilitation of investments is another matter we are still grappling with today.  Bureaucratic hurdles and inefficiencies in infrastructure development act as significant deterrents to the business community.

Former minister Tan Sri Rafidah Aziz who served over three administrations was quoted to have said that we should be more focused on action. She also recommended that a council be established, one chaired by our prime minister himself, focusing on the facilitation of investment.

The issue of land approvals, basic utilities have been problematic since yester years. When will such unnecessary barriers be overcome?

How can we address the issue of talent needed for these investments? The World Bank has expressed that investors need talent much more than tax incentives.

There has been much debate on the subject of our nation’s brain drain. When we don’t pay our workers well, we cannot expect productivity says some economists. We have been blamed for under-paying our talent and hence we lose them to our neighbour.

Others express that because our economic activities are low-end in nature, talent with special skills cannot find suitable jobs and leave. A vicious cycle.

Several countries like Singapore and South Korea have successfully leveraged strategic FDI to achieve remarkable economic transformation.

We can learn from their experiences. Realising this vision requires a collective effort from various stakeholders. With this, we can then hope to see the revival of Malaysia’s economic story, and one that is more resilient to face the future.

*The writer is former chief operating officer and former acting CEO of Malaysian Institute of Economic Research.

Source: NST

Malaysia must shift gears to innovation hub

Simaero, a global provider of flight simulators for airlines, training organisations and commercial pilots, plans to expand its operations in the Asia Pacific market by opening a training centre in Malaysia.

Minister of Investment, Trade and Industry (MITI), Tengku Datuk Seri Zafrul Abdul Aziz said over the next five years, the global demand for pilots will increase to 600,000, half of which will be for Asia.

“When this training centre opens in Malaysia, not only will Malaysian pilots no longer have to go to Paris, but we can also attract pilots from the entire Asia Pacific region to undertake their training in Malaysia,“ he said.

Tengku Zafrul said this in a post on Instagram today after trying out the Microsoft Flight Simulator facility at the Simaero Paris Training Centre in France.

He said the centre offered flight simulators for various types of aircraft, including Airbus, Boeing, ATR, and light aircraft such as Beech and Fokker.

“All pilots need training. Therefore, there is a high demand for (such) training centres,“ he said.

Source: Bernama

Tengku Zafrul: Simaero plans to open training centre in Malaysia

Bridge Data Centres International Pte Ltd (BDC) has reinforced its collaboration with Tenaga Nasional Bhd (TNB) through the signing of the Electricity Supply Agreement (ESA) for its forthcoming data centre venture in Malaysia.

The ESA, which was executed on March 7, 2024, signifies TNB’s commitment to furnish additional power resources to facilitate BDC’s expansion plans for its data centre presence in Johor.

BDC’s alliance with TNB commenced in 2022, when it initially received 275 kV of utility power from TNB to support its inaugural hyperscale data centre endeavor.

Two years later BDC is in the process of developing another data centre campus, emphasising lower Power Usage Effectiveness (PUE) standards within the region.

Construction of the facility is progressing according to schedule, with the first phase of the core and shell building nearing completion, it said in a statement.

BDC, a key player in the Asia Pacific data centre market, said it anticipates achieving the Certificate of Completion and Compliance (CCC), a mandatory statutory requirement, in the earliest phases soon.

The company’s president Eric Fan said throughout its journey to advance digital connectivity and the digital economy of the country, TNB and various Malaysian government agencies at both the state and federal levels have provided unwavering support to BDC. 

“We are grateful for this support and confident that our partnership will continue to grow stronger in the years ahead,” he said.

BDC is a subsidiary of Chindata Group, which in turn is a carrier-neutral hyperscale data centre solution provider in global emerging markets.

Source: NST

Bridge Data Centers signs electricity supply agreement with TNB For its data center in Johor

Launch of modern plant aims to minimise illegal dumping to achieve zero carbon emissions by 2050

J&T Berjaya Alam Murni Sdn Bhd launched its Scheduled Waste-to-Energy (SWTE) plant at the Bukit Tagar Enviro Park yesterday, marking a milestone in the strategic collaboration between Berjaya Enviro Group of Companies Malaysia, J&T Recycling Corporation Japan and JFE Engineering Corp Japan.

Environment Department deputy director-general (operations) Dr Norhazni Mat Sari officiated at the event, which was also attended by J&T Berjaya Alam Murni managing director Koh Chee Yong, JFE Engineering president Hajime Oshita, Malaysian Investment Development Authority deputy CEO Sivasuriyamoorthy Sundara Raja and Japanese ambassador to Malaysia Katsuhiko Takahashi.

Koh said the project would enhance the circular economy and the cradle-to-cradle concept emphasised by the department, in which modern facilities convert waste into resources and renewable energy.

Such facilities include the 12MW Landfill Gas to Renewable Energy plant and the 100% Scheduled Waste to Alternative Raw Material Recycling plant.

“We got involved in the scheduled waste business by recycling 100% of it in 2017. In 2019, we started this project, which treats scheduled waste with a heat energy recovery system to increase its recycling rate.

“At present, we can handle 76 out of 77 varieties of scheduled waste in Malaysia and serve over 300 clients, primarily from the industrial sector involved in scheduled waste management.”

Koh said the bulk of the solid and scheduled waste J&T Berjaya Alam Murni receives comes from Kuala Lumpur, Hulu Selangor and Selayang.

“Our facility is equipped to handle scheduled waste for up to 400 years, providing clients with the assurance that they can send it to us without worrying about the disposal process.

“It can accept various types of waste for treatment, and then recycle or convert it into resources, and ultimately dispose it.”

Koh said the facility is situated within the Bukit Tagar Enviro Park and occupies about 263ha, with a buffer zone that has been gazetted for waste disposal by the Selangor government and the Hulu Selangor Municipal Council.

He said the facility aims to support efforts to minimise illegal waste dumping to achieve zero carbon emissions by 2050, with a 500m buffer zone maintained from any residential area as stipulated by the state government.

“The SWTE plant is a significant step that effectively sets the benchmark for sustainable waste management,” he said, adding that maintaining client loyalty to use the waste disposal services may pose challenges in the initial stages.

“However, one of our many plus points is that we can quantify carbon emissions when waste is sent to us, compared with sending it to unlicensed facilities or illegal dumping sites.

“This means companies can accurately quantify carbon emissions from their waste management activities for inclusion in their sustainability or annual reports and measure the actual reduction achieved.”

Koh said currently, the company stands as the only sustainable scheduled waste treatment centre in Peninsular Malaysia that offers a comprehensive solution for solid and scheduled waste management.

He said the recycling rate at the facility now stands at 30%.

But with the government’s initiative and market forces at play, this can be enhanced to achieve some 70% if it does not focus only on treatment and disposal.

Koh added that to bolster the management, operation and maintenance of the SWTE plant, some 250 job opportunities will be made available to residents.

Source: The Sun

Milestone in converting waste to renewable energy

J&T Berjaya Alam Murni Sdn Bhd (JBAM) has launched its new state-of-the-art waste-to-energy (SWTE) plant at Bukit Tagar Enviro Park (BTEP), which plays a pivotal role in transforming waste into valuable resources and renewable energy.

Malaysian Investment Development Authority (MIDA) Chief Executive Officer Datuk Arham Abdul Rahman said the SWTE facility is integral to the Sustainable Scheduled Waste Treatment Centre (SSWTC) and features a highly efficient thermal scheduled waste treatment system in compliance with the standards set by the Department of Environment (DOE) Malaysia.

“This venture addresses growing need for comprehensive waste management facilities driven by our nation’s industrial growth. Waste management stands as a critical issue in the country and the Malaysian Government is proactively enhancing the system to address environmental concerns and promote sustainable waste practices,” he said in a statement today.

JBAM is a joint-company comprised of Berjaya Enviro, J&T Recycling Corporation of Japan and JFE Engineering (M) Sdn Bhd to undertake the development and management of an SSWTC facility that has been approved by the Department of Environment and can receive, treat and dispose of 76 out of the 77 Scheduled Waste Codes, namely clinical, toxic and hazardous waste generated from medical facilities.

He said the SSWTC plant exemplifies JBAM’s commitment to corporate responsibility, setting a benchmark for local businesses to address the scarcity of such facilities.

Managing director of JBAM Koh Chee Yong said the event marks an ultimate milestone in the strategic collaboration between Berjaya Enviro Holding, J&T Recycling Corporation and JFE Engineering (M) and looks forward to continuing the collaboration in exploring future opportunities for the development of environmental-related projects in Malaysia.

“We would like to thank government authorities, DOE Malaysia, MIDA, MGTC, Ambank and all our customers from industrial and private sectors for their continuous support and wish to reiterate that the SWTE plant is another significant step by BTEP towards the aspiration of effectively ‘Setting the Benchmark for Sustainable Waste Management’.

“The SWTE plant is our newest facility within the SSWTC inside BTEP designed for thermal treatment of scheduled waste with a heat energy recovery system to increase the recycling rate of scheduled waste via our synergistic operations. It is also worth noting that 250 direct jobs have been created to support the management and operation and maintenance of the SWTE plant,” he said.

Koh said BTEP stands as an integrated treatment centre for both municipal solid waste and scheduled waste in Malaysia, reflecting Berjaya Enviro Group’s commitment to advancing the circular economy and the facility also includes the 12 MW landfill gas to renewable energy plant.

“These initiatives resonate with our nation’s sustainability agenda and green technology development goals. Notably, these projects have received significant support from MIDA, through tax incentives and the facilitation of collaborations with various government agencies,” he said. 

Source: Bernama

JBAM inaugurates new state-of-the-art scheduled waste-to-energy plant

Sweden is keen on collaborating with Malaysia, given the substantial potential for growth and cooperation in sustainable practices to bolster sustainable initiatives and foster a green transition.

Swedish ambassador to Malaysia, Dr Joachim Bergstrom said that Swedish companies in Malaysia have been actively engaging with local stakeholders to drive sustainable agendas, focusing on sectors such as green manufacturing, transportation, mobility and energy transition.

“I think that we will potentially see increased trade within the energy transition area, where companies can supply storage and transmission facilities for biofuels and waste energy.

“In many ways, Sweden and Malaysia are very like-minded. We are both small countries with a long history and tradition in trading, besides being neutral and non-aligned,” he told Bernama.

Bergstrom noted that recent discourse between the two nations has centred around developing joint efforts to combat climate change and promote sustainable practices.

“Notably, the ‘Pioneer the Possible’ initiative serves as a platform to facilitate collaboration and raise awareness regarding sustainability goals,” he added.

Launched in 2023, the platform aims to boost green transition in Malaysia through collaboration between Swedish companies such as Volvo Trucks and Atlas Copco as well as local stakeholders, said Trade Commissioner of Sweden to Malaysia, Emma Broms.

“The Malaysian Green Technology and Climate Change and Business Sweden had inked a memorandum of understanding, and there is also the collaboration with the Federation of Malaysian Manufacturers, other local stakeholders and ministries within this programme,” she said.

There are currently over 80 active Swedish companies based in Malaysia, with close to 9,000 employees working with local counterparts to increase access to green energy.

Broms emphasised Malaysia’s potential to become a crucial partner in Asean-European Union bilateral trade and economic strengthening.

“Digitalisation is one of the areas where we will see a lot of development going forward. Ericsson is currently rolling out the 5G network in Malaysia, paving the way for other companies providing solutions,” she said.

She added that Sweden also has much to offer in terms of cybersecurity, which would become increasingly important going forward.

“We also see numerous developments in the healthcare area as there is a growing demand for medical devices and digital e-health solutions,” she said.

Broms also noted that a new production facility for electrically-powered mining vehicles is being constructed by Swedish company, Sandvik, in Sendayan TechValley business park, near Seremban.

“There is already a lot of development happening, with Swedish investments into Malaysia amounting to US$500 million, making Malaysia one of the largest receivers of Swedish investment,” she added.

Source: Bernama

Sweden keen to forge green partnership with Malaysia: Ambassador

The collaboration between Tenaga Nasional Bhd (TNB) and Siemens Energy can be the catalyst for exploring innovative technologies and solutions for the use of hydrogen in Malaysia.

Investment, Trade and Industry Minister Datuk Seri Zafrul Tengku Abdul Aziz said this initiative is in line with the National Energy Transition Roadmap (NETR).

In a post on X, Tengku Zafrul said TNB and Siemens Energy had signed a memorandum of understanding last year aimed at accelerating the decarbonisation of its thermal power plants, utilising green hydrogen produced from renewable energy resources.

He said this in conjunction with Prime Minister Datuk Seri Anwar Ibrahim’s visit to Germany beginning yesterday. Anwar kicked off his visit to Germany by visiting Siemens Energy, one of the world’s leading energy technology companies.

Besides Tengku Zafrul, also accompanying the prime minister are Foreign Minister Datuk Seri Mohamad Hasan, Entrepreneur and Cooperatives Development Minister Datuk Ewon Benedick, and Malaysia’s Ambassador to Germany Datin Paduka Dr Adina Kamarudin.

Siemens Energy operates in 90 countries and employs approximately 90,000 workers involved in the entire energy landscape – from conventional to renewable energy, grid technology to storage, and electrifying complex industrial processes.

Its factory in Huttenstrasse, Berlin, has about 3,400 workers involved in the assembly of gas turbines and electrolysis-based hydrogen production systems.

Anwar, who is also the Finance Minister, and his entourage were taken on a tour of the facility and held discussions with the senior officials of Siemens Energy.

Source: Bernama

TNB, Siemens Energy Coorperation, a catalyst for exploring green hydrogen usage technology

Sarawak aims to generate 10 gigawatts (GW) of energy through a mix of hydroelectric, solar and gas by 2030, the Sarawak Public Communications Unit reported.

This target was announced by Sarawak Premier Tan Sri Abang Johari Openg during his recent visit to the Mini Hydroelectric Power Station (HEP) Kota 2 in Lawas on Feb 7.

Abang Johari expressed confidence in Sarawak Energy Berhad (SEB) and its CEO Datuk Sharbini Suhaili to meet this goal, emphasising the inclusion of new energy generation methods and a clear direction already set by the leadership.

In addition to hydro, solar, and gas, a biomass plant is also planned, capable of generating an additional 1 to 1.5GW of energy.

He also highlighted legislative amendments that allow entities other than SEB to generate energy, with SEB acting as the sole purchaser, thereby increasing energy production capabilities.

Additionally, Abang Johari said Sarawak has the potential to attract European investment for renewable energy and green energy projects.

He said that 19 ambassadors from the European Union are considering establishing the European Investment Bank to finance such projects, with Sarawak being viewed as a strategic investment location.

With a potential investment of 1 billion Euros, Sarawak could receive approximately RM6 billion to build more hydro dams, supported by Europe’s commitment to sustainable development.

Highlighting the safety and environmental compliance of the Kota 1 and Kota 2 mini hydro stations, the Premier assured that these projects align with the European Union’s Sustainable Development Goals (SDG).

The combined energy output of these stations, including the Kalamuku station, amounts to 15MW, which now powers the Lawas district.

Source: NST

Sarawak sets 10GW energy generation goal by 2030

The latest investment for the flagship National Energy Transition Roadmap (NETR) projects and initiatives being negotiated is around RM50 billion, according to the Economy Ministry.

The ministry explained that NETR’s flagship projects and initiatives have different levels of maturity and most are still in the pre-implementation stage.

The flagship projects have started and are being monitored by the Economy Ministry through the National Energy Transition Committee which convened for the first time on Nov 27, 2023, the ministry said in a reply to a question from Mersing MP Muhammad Islahuddin Abas, who wanted to know the latest status of NETR Phase One in meeting the net zero emissions target including the amount of investment identified and the number of job opportunities that have been generated to date.

The reply was posted on the Parliament website today.

The ministry added that the government has placed the development of the Energy Transition Based Industry as an initiative to accelerate the country’s economic structure reform under the Mid-Term Review of the 12th Malaysia Plan.

The NETR Phase One has introduced 10 flagship projects and initiatives under six energy transition drivers namely energy efficiency, renewable energy, hydrogen, bioenergy, green mobility and carbon capture, use and storage.

This flagship project and initiative targets an investment opportunity of over RM25 billion, the creation of 23,000 skilled and high-value job opportunities as well as a reduction in emission of 10,000 Gigagrams of CO2 equivalent per year.

Source: Bernama

Investment in NETR projects, initiatives estimated at RM50 bln

Sarawak, having established a foothold in the country’s green economy, will be the major renewable energy hub in Southeast Asia, says Prime Minister Datuk Seri Anwar Ibrahim.

He said Sarawak is very much ahead in green economy among Asean countries and is currently in the process of supplying green energy to Singapore and Peninsular Malaysia via undersea submarine cable.

“Sarawak is also building a hydro dam in Kalimantan to supply green energy to Nusantara, the new capital of Indonesia,” he said in his address at the Invest Asean forum held during the Asean Australia Special Summit in Melbourne, Australia last Thursday.

In response to a question posed by Sarawak Australia Business Chamber (SABC) president Rodger Chan during a dialogue session at the summit, Anwar also said Malaysia, as the host country of the Asean Summit 2025, will have Sarawak holding “one or two of the Asean events” in Kuching.

This, he remarked, will be a good opportunity for Australia and other Asean countries to visit Sarawak as well as invest in Malaysia.

Meanwhile, Chan in a press statement said it is timely and appropriate for Sarawak to be involved in the hosting of the Asean events next year so as to showcase the state’s potential as the hub for green hydrogen production and development.

“Sarawak has among the world’s oldest rainforest of over 140 million years old offering rich biodiversity and green energy potential, of which over 70 per cent of the total energy generation mix in Sarawak is from renewable energy,” he said.

“Next year will mark the 70th anniversary of diplomatic relations between Australia and Malaysia,” he said, adding that SABC has undertaken the role as a lead partner to the newly established Borneo Economic Community (BEC).

Initiated by the Asean Business Advisory Council, BEC comprised government and business chambers of Kalimantan, Sarawak, Brunei, Sabah and Labuan.

Also present at the summit forum were Australia Malaysia Business Council (AMBC) Victoria president Nathanael Kitingan and SABC vice president Henry Chuo. 

Source: Borneo Post

PM Anwar: Sarawak to become major renewable energy hub in SE Asia

Development works for phase two of the expansion project at Westports Holdings Bhd’s container terminals will kick off in the third quarter of 2024, the Selangor State Legislative Assembly was told today. 

State executive councillor for trade and investment Ng Sze Han said the expansion is expected to be completed within a 15-year period and will significantly increase the port’s capacity. 

“It involves the construction of an additional wharf spanning 4.8km, which will contribute an additional capacity of 13 million twenty-foot equivalent units (TEUs) a year,” he said today.

Ng was responding to a question by Taman Medan assemblyman Dr Afif Bahardin regarding the movement of containers through Port Klang and the commencement date of the expansion works at Westports.

In his reply, Ng also highlighted that cumulatively, Port Klang handled 13.72 million TEUs in 2021, 13.22 million TEUs in 2022, and 14.06 million TEUs in 2023.

Westports wholly owned Westports Malaysia Sdn Bhd (WMSB) recently obtained approval for the expansion of its container terminals, through an extension of its concession agreement with the government, which now stretches until 2082.

Last December, WMSB inked a third supplemental privatisation agreement with the government and Port Klang Authority to extend its concession period.

The expansion of Westports aims to nearly double the port’s capacity to close to 28 million TEUs from the current 14 million. 

This will involve the construction of eight additional container terminals, designated CT10 to CT17.

The expansion project will be executed in two phases, with the initial phase focusing on the construction of terminals CT10-CT13.

Source: Selangor Journal

Westports’ Phase 2 expansion to commence in Q3 2024, says exco

Sarawak is committed to becoming a green state that generates green energy and promotes a green economy, said Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg.

He welcomed all investors, who share the same direction and ideas, to come to the state.

“We will encourage investment based on the needs of the world,” he said during the Sakura Ferroalloys 10th anniversary dinner here last night.

“If you want to invest, come and see me. We will try to help you with these products.”

Abang Johari said Sarawak is blessed with abundant natural resources, but requires the brainpower to harness them.

He recalled seven years ago, Sakura Ferroalloys Sdn Bhd was one of the first official project launches that he attended after being appointed chief minister.

The plant located in Samalaju Industrial Park (SIP) was launched by then prime minister Tun Abdullah Ahmad Badawi.

“SIP has attracted and approved investments worth RM111.73 billion, of which RM12.07 billion is already in commercial production with direct employment of 9,293.

“The potential is there and we have companies with an expected investment of RM15.66 billion at various stages of construction, including those that are now being cleared and implemented,” he said.

He added there are also a few projects that will enhance industries in Samalaju, one of which is the Bintulu-Samalaju gas pipeline project, which involves a 70km gas pipeline from Bintulu to SIP that is expected to be completed by the end of 2025.

He said once in operation, the project will increase the distribution of gas supply to users in SIP, including the combined cycle gas turbine that is currently under construction.

“In other words, we are upgrading the gas and electricity supply to SIP,” he said.

Abang Johari shared that in 1987, when he was industrial development minister, a name was required for the industrial park located in the Similajau area.

“I discussed with my then boss, the chief minister (the late Tun Pehin Sri Abdul Taib Mahmud), that we need to have a name in that area, so we have the concept that we will be successful together, that’s where Samalaju comes in.

“Sama means together in Bahasa (Malaysia), laju means the same momentum, so the industry is there and the local people work together for the benefit of both parties, that is the concept behind Samalaju.

“Sarawak has this concept, we welcome investors, at the same time we work with investors, that is the philosophy behind the Sarawak industrialisation programme,” he added.

Source: Borneo Post

Abg Jo: Sarawak committed to generating green energy, promoting green economy

SWIFT Haulage Bhd, the country’s largest container haulier by number of prime movers, is undeterred by the massive new warehousing capacity coming into the market. The group plans to add one million sq ft to the 1.6 million sq ft of warehousing space it currently owns and leases, by 2025.

It expects its future revenue growth to be majorly driven by its warehousing and container depot segment, while its container haulage and forwarding services segments should hold steady.

Container haulage and land transport services currently make up 75% of Swift’s total revenue; warehousing and container depot services contribute 15%; and the remaining 10% comes from its freight forwarding services.

Swift executive director and group CEO Loo Yong Hui expects the warehousing segment to account for at least a quarter of the group’s revenue when its warehousing capacity is bumped up over the next three to five years.

“We still have a lot of vacant land throughout Malaysia, including Penang, Johor and Kota Kinabalu,” he tells The Edge in an interview.

The warehousing industry experienced an unprecedented peak during the Covid-19 pandemic, as rising e-commerce sent retailers and general merchandisers scrambling for warehouse space to hold their inventory and supply-chain issues delayed shipments. Logistics companies such as Swift have responded by accelerating their investments in warehouses.

In the wake of the pandemic, Swift has seen the price of warehouse space surge about 30%, and those prices remain elevated despite new capacity concerns, according to Loo, who expects warehouse rates to climb further amid rising interest rates.

He points out that rates increase about 10% every three years — the period that warehouse operators and their customers typically sign leases for.

Even as more new warehousing capacity comes onstream in the country, Loo is confident that Swift can benefit from the geographic location of its warehouses, its state-of-the-art infrastructure, and the range of logistics services that gives it a competitive advantage over other smaller logistics companies.

“Location is key; no two warehouses are the same. [For example,] Shah Alam can cover areas up to Puncak Alam, but asking rates for warehouses in Puncak Alam are lower. The type of warehouse is also important [to attract tenants]. All our new warehouses boast high ceilings so that tenants can store more,” he says.

The group’s warehouse facilities are located in Tebrau, Johor; Mak Mandin and Seberang Perai in Penang; and Pulau Indah and Port Klang Free Zone in Selangor.

Swift is also in the process of constructing the six million sq ft Shah Alam International Logistics Hub (SAILH) on a 71-acre tract in Shah Alam through its 30%-owned associate company Global Vision Logistics Sdn Bhd (GVL). The first phase of the development will cost RM700 million and entail 2.8 million sq ft of warehouse space to be completed by end-2025. It has a ready customer in Watsons, which will occupy up to 400,000 sq ft.

IJM Corp Bhd, which owns a 25% stake in GVL, is the contractor for Phase 1. Hartamas Mentari Sdn Bhd owns a 30.9% stake in GVL; Ideal Force Sdn Bhd and GBA Holdings Sdn Bhd own a stake of 10% and 4.1% respectively.

“We believe our locations are prime. If the opportunity arises, we will still look to acquire more land [to build warehouses],” Loo says.

Citing the example of a 103,150 sq ft warehouse with a five-storey office block in Seberang Perai that Swift is acquiring from Transocean Holdings Bhd for RM30.2 million, he says: “The property is situated across from our northern region office operation. So, it made sense [to buy it].”

Following its takeover of rival MISC Inte­grated Logistics Sdn Bhd in 2016 and then Tanjong Express (M) Sdn Bhd in 2018, Swift has land banks across the country and is looking to monetise some of the land.

According to Loo, the holding costs of its non-revenue-generating land amount to RM15 million to RM18 million a year after taking interest and depreciation into consideration.

He says the group typically establishes one local warehousing centre each year. On average, constructing a 200,000 sq ft warehouse can cost RM30 million to RM40 million, excluding land cost, he adds.

Last week, Swift opened its newest warehouse, with a storage capacity of 269,000 sq ft, in Westports, which will be occupied by Sharp Electronics (Malaysia) Sdn Bhd. “The new facility is using only less than 10 acres of the 58-acre land. We also have a 50-acre [tract] and a 29-acre [tract] in Northport, 70 acres in Penang and 28 acres in Muar, Johor, [for future expansion]. Because the construction of warehouse assets is capital-intensive, we will do it in phases. And if we want to ramp up [our expansion] faster, we may look at the possibility of entering into a joint venture like what we did with GVL on our existing or new land,” Loo says.

Synergy with Thai-listed SJWD

Earlier this month, Thai-listed SCGJWD Logistics PCL (SJWD) emerged as a new substantial shareholder of Swift, with a 20.44% stake. SJWD is the largest integrated logistics and supply chain services provider in Thailand.

“In the logistics industry, we need to go beyond just being country-specific. We want to have a regional presence because most of our customers are either exporting regionally or intra-Asia, or they have operations regionally,” Loo explains.

“We have been looking for a strategic investor for some time. SJWD was interested. SJWD itself is a merger of two Thai companies — SCG Logistics Management Co Ltd and JWD InfoLogistics PCL — into the largest logistics company in Thailand, and its aspiration is to become the largest integrated logistics and supply chain provider in Asean. SJWD has established its presence in Thailand, Myanmar, Laos, Vietnam, Cambodia, Indonesia, the Philippines and China except for Malaysia and Singapore. So, for them, [Swift is] the gateway to Malaysia and Singapore.”

He adds that Swift now has partners throughout Asean and is involved mainly in surface logistics such as transport services. “But with SJWD, we can now sell door-to-door services overseas.”

The deal with SJWD saw the holding of Swift’s single-largest shareholder Persada Bina Sdn Bhd reduced to 23.995%, from 35.155%. Companies Commission of Malaysia data shows Loo holds a 49% stake in Persada Bina, while Swift non-executive director Datuk Md Yusoff @ Mohd Yusoff Jaafar owns the rest.

“Our strategy is Persada Bina will still be the majority shareholder [of Swift]. They [SJWD] have a similar concept, where they do not necessarily have to own 100% of all their investments overseas,” says Loo.

Swift also plans to venture into the cold chain logistics sector by leveraging SJWD’s expertise in cold chain transport. “We can also form a new company to establish the cold chain logistics business here,” he says, adding that Thailand’s cold chain logistics industry is at least four times bigger than Malaysia’s.

He notes that demand for third-party companies to manage cold chain logistics in Malaysia is still low, as most food and beve­rage providers have their own cold chain facility.

Last Friday, Swift announced its financial results for the year ended Dec 31, 2023 (FY2023), which saw a 32.5% increase in net profit to RM64.23 million, from RM48.49 million in the previous year, while revenue grew 4.3% to RM671.19 million from RM643.77 million in FY2022. Swift attributes the increase in net profit to improved revenue, higher other income and lower tax expenses.

Loo says the group, which was listed on the Main Market of Bursa Malaysia in December 2021, has no dividend policy. For FY2022 and FY2021, its dividend per share stood at two sen and 1.8 sen respectively.

Loo expects the growth momentum of the group’s revenue to continue this year, supported by expansion of its warehouse business. He sees challenges ahead, however, given lingering macroeconomic headwinds such as a slowdown in global trade and high interest rates.

“In 2024, our revenue will continue to grow, but margins in the past few years were compressed because of higher finance costs, depreciation and overhead costs.

“In terms of interest rates, we hope this is the peak. But if we can unlock some value of our assets, then maybe it won’t have a full impact this year,” he says. 

Swift has 3,700 employees in Malaysia, Thailand and Singapore.

Confident of staying in the lead

Today Swift is the leading container haulier in the country, with 1,800 prime movers and 5,500 trailers, thanks to its inorganic growth approach. The companies it acquired include Macro Logistics (M) Sdn Bhd, Delta Express (M) Sdn Bhd, DKSH Transport Agencies (M) Sdn Bhd, MISC Integrated Logistics, Tanjong Express, Agenda Wira Sdn Bhd and Sentiasa Hebat Sdn Bhd.

Loo believes that, with a 8% to 9% share of the local container haulage market, Swift can maintain its lead because the second-biggest competitor has a market share of only 2.5% to 2.6%.

“It is very difficult for the competitors to challenge Swift because we have operations right next to our customers. If they call us, we are next door. Size is one thing; you also have to provide other services such as freight forwarding, distribution and warehousing. If you do pure haulage, it is tough,” he says.

“The traditional haulage players focus only on haulage and become price takers, as they cannot provide solutions. There are more than 400 haulage players in the country; most have five to 10 prime movers and are just doing their own cargo. But I have never heard of any forwarders that went into haulage saying they were making a lot of money. Many of them are suffering.”

As to whether Swift is still on the hunt for acquisitions, Loo says: “There is nothing for now. If at all, we are looking at services that we are already doing or more specialised types of logistics such as project logistics. During the good times, this segment contributed RM20 million in profit per year, but this has dropped because of a lack of government jobs and oil and gas investments. In this business, we are asset-light; we are just managing for customers. We do not have the actual equipment to do it. Maybe in the future, we can own our assets in project logistics through the acquisition of a project logistics provider.”

Swift’s cash and bank balances stood at RM159.19 million at end-December 2023, while borrowings totalled RM766.83 million, leading to a net debt of RM607.64 million. It has a net gearing ratio of 0.86 times. Nevertheless, Loo says the group has no plans to raise funds from the capital market.

Loo does not deem Swift to be an integrated logistics service provider just yet, as the group does not provide last-mile logistics services. It has no plans to do so, however, because he believes there are too many last-mile players in the market and local players are struggling to compete. “There are too many players with their own facilities already, and the volume is not big enough,” he says.

Of the six analysts covering Swift, two have a “buy” rating and four a “hold”, with an average price target of 59 sen, indicating a potential upside of 5% from last Thursday’s closing price of 56 sen. At the close of trading last Thursday, its stock was valued at RM493.2 million, with a price-earnings ratio of 8.59 times. 

Source: The Edge Malaysia

Swift Haulage undeterred by flood of new warehousing capacity, sees more upside

The Selangor state government is set to explore potential collaborations with Tenaga Nasional Bhd (TNB) for various renewable energy projects, including the development of a centralised solar park (CSP). 

The state government, Selangor State Development Corporation (PKNS)-owned Worldwide Holdings Bhd and TNB inked a memorandum of understanding (MOU) for the collaboration on Tuesday.

During a press conference after the MOU’s signing ceremony, Selangor Menteri Besar and Worldwide chairman Datuk Seri Amirudin Shari said the MOU is aligned with the National Energy Transition Roadmap (NETR) toward developing a CSP in collaboration with TNB. 

Amirudin noted that the MOU is also to explore potential collaborations in floating solar, battery energy storage, electric vehicle infrastructure, energy efficiency and other renewable energy projects. 

According to the NETR, the CSP initiative is to comprise five 100MW large-scale solar parks — an aggregate 500MW — to be co-developed by TNB in partnership with small and midsize enterprises (SMEs), cooperatives and state economic development corporations. 

For the CSP in Selangor, Amirudin said the state government is eyeing land in Hulu Bernam, noting that PKNS already owns land in the area. 

While Amirudin said parties are merely at the stage of discussing a potential collaboration with details yet to be cemented, he noted that based on TNB’s plans, the CSP project could be completed by 2025 or 2026.

The MOU was inked by Selangor state secretary Datuk Haris Kasim, TNB president and chief executive officer (CEO) Datuk Megat Jalaluddin Megat Hassan, and Worldwide CEO Datin Norazlina Zakaria.

Meanwhile, Deputy Prime Minister Datuk Seri Fadillah Yusof and TNB chairman Datuk Abdul Razak Abdul Majid were also present to witness the MOU signing ceremony.

Source: The Edge Malaysia

Selangor state govt partners TNB to explore RE project collaborations, including centralised solar park

The thriving data centre market in the country will drive electricity demand, auguring well for Tenaga Nasional Bhd (TNB).

According to Kenanga Research, the power group has guided for electricity demand growth of 2.5%-3% in financial year 2024 (FY24), higher than the 1.7% embedded in the Incentive-Based Regulation (IBR) mechanism, and largely to come from new data centres.

“The higher demand should entail a higher base under Regulatory Period (RP) 4, boosting TNB’s earnings from FY25,” said Kenanga Research in a report following a fourth quarter (4Q) FY23 results briefing with the group.

Demand growth for FY23 came in at 3.6%, led by the commercial and domestic segments.

In FY23, nine data centre projects with about 635 megawatt (MW) capacity were completed, which will bring annual sales of about RM350mil to Tenaga. Of these projects, two – the GDS Data Centre and the SIPP YTL Data Centre Park – were completed ahead of time.

“At the same time, TNB has signed electricity supply agreements (ESA) with nine projects for a total potential demand of 2,300MW of electricity.

“In FY24, nine more data centre projects with requirements of about 700MW are expected to be completed while 10 new ESAs are expected to be concluded with potential energy demand of 2,000MW. As such, this will result in a total potential maximum demand of more than 5,000MW of electricity from data centres by 2035,” said the research firm.

On the supply side, the group is transitioning into a green entity with about 7,700MW of green-energy developments in the pipeline.

So far, the budgeted RM2.76bil for FY23 energy transition (ET) capital expenditure (capex) was fully utilised while the ET capex for FY24 is RM3.33bil.

For context, RP 3 approved ET capex is RM8.2bil, to be used over FY22 to FY24.

The research house noted that as fuel costs increased, the Imbalance Cost Pass-Through (ICPT) mechanism’s under-recovery was raised by 6% to RM2.11bil – the first hike since 4Q22.

“However, it was still 67% off the peak of RM6.40bil in 4Q22. As a result, its receivables (including ICPT receivables) dropped substantially by 56% from the peak of RM22bil in 4Q22 to RM9.7bil in 4Q23,” Kenanga Research added.

TNB reported weak FY23 core profit after tax and minority interests at RM3.3il, dragged down by its loss-making domestic power-generation segment.

Hong Leong Investment Bank Research (HLIB Research) said the results were within its expectation, but below consensus. The research firm said it is “neutral” on TNB’s earnings outlook following the management briefing.

“TNB’s regulated earnings and cash flow remain sustainable in FY24, given stable fuel prices. Management remains upbeat on the progress of various projects under the National Energy Transition Roadmap, ensuring potential earnings growth in the longer term.

“However, we fear that near-term earnings will remain affected by the power-generation segment, facing unscheduled downtime (currently only the Manjung 4 power plant) and step down in capacity rate financing (CRF), as well as expiry of power-purchase agreements,” said HLIB Research.

Furthermore it added that contributions from new projects are only expected to be more meaningful from 2026 onwards.

HLIB Research said the power-generation segment “remains a black box to the investment community without details being readily available”.

The segment recorded a fuel-margin gain of RM1.1bil in FY22, resulting to a profit of RM860.5mil. In FY23, the segment recorded a fuel-margin loss of RM618.7mil, with a resulting loss for the segment of RM526.8mil.

“We fear the segment may continue dragging on the group. We understand FY24 will be hit by the downtime of Manjung 4 and step down of CRF of the Port Dickson plant starting early 2024.”

Source: The Star

TNB banks on data centres to drive power demand