Financial Institutions Should Support Green Economy – Najib
KUALA LUMPUR, Sept 8 – Prime Minister Datuk Seri Najib Razak today urged financial institutions, businesses and agencies to work together more closely and be more innovative in realising the global call for green technology.
While interest from both businesses and financial institutions have been strong, Najib said the end result has been less positive.
Last year, the government introduced the Green Technology Financing Scheme to assist companies that were users and producers of green technology.
To date, 125 applications have been received with 97 approved projects having been awarded Green certificates valued at more than RM2 billion.
“This may sound tremendously encouraging but there remains a gap between demand and supply. I have been informed that out of the 97 Green Certified projects, only 21 have received letters of offers for loans from financial institutions.
“I urge all parties to rise to this challenge and play their role in supporting the development of green economy to the fullest,” he said at the launch of the 2nd International Greentech & Eco Products Exhibition & Conference Malaysia (IGEM 2011) here today.
Najib also launched the Low Carbon Cities Framework and Assessment System in line with Malaysia’s transition towards a low carbon economy and to reduce carbon dioxide emission by 40 per cent in 2020.
“It has long been my aspiration to develop both Putrajaya and Cyberjaya as shining examples of eco-friendly townships and to replicate this in other towns and cities across Malaysia,” he said.
The Low Carbon Cities Framework is intended to help local councils, town planners and developers formulate action plans to cut carbon emission.
Najib also said there was tremendous potential for green technology growth in Malaysia, especially within the four target sectors namely energy, construction, transportation, water and waste management.
Meanwhile, Minister of Energy, Green Technology and Water Datuk Seri Peter Chin Fah Kui said the banking sector should be more bullish in terms of providing loans to the industries that used green technology in their processes.
“I think banks should be more forthcoming in their loan portfolios for these types of industries. Certainly there is much that they can do,” he said.
Chin said there were foreign banks that were interested in such projects.
“I’m encouraged by the fact that there are foreign banks like Japan’s Sumitomo Bank which is coming in with big to establish an environmental fund which will be used for green technologies. I had fruitful discussions with them recently. We are trying to work with them on how to finance solar panel being installed in houses. Hopefully, we’ll come up with a system,” he said.
“I wish every bank could look at things in that sort of positive light, especially our local banks,” he added.
Chin said the fear of failure of the high risk of these projects could be the reasons why for local banks were not supportive of green projects.
“There is some risk of course. Every loan has a risk. No loan is 100 per cent guaranteed. But, we have to be proactive in certain areas,” he added.
He also said in green financing, the government had already provided some buffer for the risk.
“There is the Credit Guarantee Corporation which guaranteed 60 per cent of the loans given.
“So, basically financial institutions are only taking up 40 per cent of the risk. The scheme itself is already reducing the risk for the banks and yet they are still not up to it.
“They don’t accept the challenge in providing the green financing,” Chin added.