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Malaysia’s EV and RE sectors set to accelerate

Malaysia’s EV and RE sectors set to accelerate

19 Feb 2023

The electric vehicle (EV) and renewable energy (RE) sectors, the direct “E” (environmental) sustainability initiatives are set to gain larger traction while sectors with “S” (social) risks such as those with foreign labour dependence will be losing steam within the ESG (environmental, social and governance) spectrum.

Maybank IB head of Malaysia and regional equity research Anand Pathmakanthan said that Malaysia has attracted a lot of negative headlines over the last few years due to “S”-related allegations of mistreatment of foreign labour.

“The problem has impacted specific companies in the manufacturing sector such as Top Glove, ATA IMS and plantations such as Felda and Sime Darby Plantation.

“Malaysia’s ESG investors will likely wish to steer clear of sectors with “S” risks such as foreign labour dependence and focus on more direct “E” sustainability initiatives,” he told Sunbiz.

Firms that can show big improvements in their “E” factors including pollution reduction and energy savings as well as those which are facilitating the global transition to a low-carbon economy via clean energy and EV are likely to draw the greatest investor interest.

“This is especially given the government has stated ambitious targets in these areas which will support corporate investment and profitability,” he added.

The Sustainable Energy Development Authority has launched the Malaysia Renewable Energy Roadmap in December 2021. At the headline level, the national RE target (as a share of total installed generating capacity) has been revised higher to 31% from 20% previously and to 40% by 2025 and 2035 respectively.

The Low Carbon Nation Aspiration 2040, which is part of the NEP, has set the target of at least 38% EV usage by 2040 from less than 1% currently.

KPMG Malaysia head of Sustainability Advisory Services Phang Oy Cheng shared with Sunbiz that there is a crucial need for sound policies and frameworks in bolstering ESG investments.

“It has been observed that a major reason for the highly restricted growth in the EV sector compared to our Asean neighbours is the lack of a coherent policy framework. For instance, the National Automotive Policy 2020 does not explicitly call out the incentives and the support the government will provide to EV makers,” she explained.

Source: The Sun Daily