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The conceptualisation of green building is anticipated to be the backbone of Malaysia’s building construction and engineering activities in forthcoming years.

Energy efficiency had been a concern for building professionals, especially when considering rising energy costs, and there were existing fundamental guidelines to address energy usage in buildings that had been around for the past decade or more.

Socio-economic awareness had focused on the importance of sustainable building, especially among academic and professional associations, with the launch of the new green building tool called the Green Building Index (GBI).

Green technology (GT) will be able to ensure Malaysia remains competitive in the international markets as global demand for sustainable products increase.

Green development strategies are not only for economic considerations; rather, we have a moral obligation to leave behind an environment which is as pristine as we inherited.

Malaysia’s has identified carbon mitigation efforts which need to be undertaken quickly in line with the target set.

The initial step that will be taken is implementing energy efficiency (EE) efforts.

According to the International Energy Agency’s BLUE Map Scenario, end-use fuel and electricity efficiency itself could contribute to about 36% carbon emission reduction in 2050.

The government had also issued a strong sign of commitment to the green sector through offered incentives such as the Green Technology Financing Scheme (GTFS) which was also a key driver for the green building sector expansion.

In the 2010 budget announcement, tax incentives for buildings with GBI certificates was introduced.

GBI tax incentive, stamp duty exemption and US$467 million funding under the National Green Technology Fund were among the key factors driving the green building segment and the advancement of the building construction market in Malaysia.

In his budget speech for 2010, Prime Minister, Dato’ Seri Najib Tun Abdul Razak announced the establishment of RM1.5 billion GTFS.

GTFS is an effort to improve the supply and utilization of GT. GreenTech Malaysia appointed as the conduit for the GTFS application.

The scheme could benefit companies who are producers and users of GT.

As a sign of commitment, the Government will bear 2% of the total interest/profit rate.

In addition, the Government will provide a guarantee of 60% on the financing amount via Credit Guarantee Corporation Malaysia Berhad (CGC), with the remaining 40% financing risk to be borne by participating financial institutions (PFIs).

Till June 2012, almost RM775 million in soft loans under GTFS still available.

Up to June this year alone, 16 projects had already been certified.

Five are on waste and water, one on transport and 10 others on energy. To date, a total of 188 projects have been certified.

As of June, just over RM725 million has already been approved under the scheme.


What is Green Technology Financing Scheme (GTFS)

The GTFS is a special financing scheme introduced by the government to support the development of GT in Malaysia with a total financing amount of RM1.5 billion.

GTFS is a soft loan supported by the government; the treatment of the loan is similar to that of normal loans, where the borrower must repay the loan to the bank throughout the tenure period.

The national GT policy has clearly defined that any product, equipment or system which minimises the degradation of the environment; reduces greenhouse gas emissions; safe for use and promotes a healthy and improved environment for all forms of life; conserves the use of energy and natural resources and promotes the use of renewable resources is categorized as GT.

GTFS exists to help incorporating GT elements in specific project related to the identified sectors. It includes (but is not limited to) the following:

a.      Energy sector

i.        Energy supply sector

Power generation and energy supply side management including co-generation by the industrial and commercial sectors

ii.       Energy utilization sector

Energy utilization sector and demand side management programmes

b.      Building sector

Construction, management, maintenance and demolition of building

c.       Water and waste management sector

Management and utilization of water resources, wastewater treatment, solid wastes and sanitary landfills

d.      Transportation sector

Public transportation infrastructure, “green” vehicles, and bio-fuel.

GTFS also offer other benefits include 2% subsidies interest (from the total interest rate charged).

60% on the total approved loan is Government guarantee.

Training is provided to applicants to enhance their knowledge in GT.

Government has appointed GreenTech Malaysia as the focal point to set standards and promote GT projects.

Private companies that could benefit from this scheme are Producer or User of GT products or systems.

GTFS for Producer or User category are as follows:

Features Producer Of GT User Of GT
Financing size Maximum: RM50 million per company Maximum: RM10 million per company
Financing tenure Up to 15 years Up to 10 years
Eligibility criteria Legally registered Malaysian -owned companies (at least 51%) in all economic sectors Legally registered Malaysian -owned companies (at least 70%) in all economic sectors
Participating financial institutions (PFIs) All commercial and Islamic banks.
GFIs: Bank Pembangunan, SME bank, Agrobank, Bank Rakyat, EXIM bank and Bank Simpanan Nasional

(Listing of commercial banks and Islamic banks from Bank Negara Malaysia website.)

This scheme applicable for new and retrofitting or expansion project which incorporates GT elements which not funded or partly funded.

The GTFS is not for ongoing projects or completed.


(this article written for 1BINA.my)