PETALING JAYA: According to Fitch Solutions Country Risk & Industry Research, Malaysia’s 12th plan (12MP) will drive infrastructure investments around two key themes, connectivity and sustainability.

He said the 12MP contains a number of plans and goals for the country’s energy and infrastructure sectors and highlights three key features, namely the development of transport infrastructure with emphasis on improved connectivity, stronger momentum towards sustainability and acceleration of green infrastructure, and the water sub-sector as a key area for promoting sustainability.

“The 12MP highlighted efforts to strengthen its road and rail network, mainly to connect its airports, ports, industrial areas and the main city center. The government will seek to provide fiscal support and strengthen the institutional framework and regulations around the sector to encourage investment, ”he said in a statement.

The logistics sector has been identified as a key economic growth area for the government over the next few years and will require improved port capacity as well as roads to support the trade flow of goods. At the same time, the government aims to improve connectivity with less developed areas, mainly through the construction of highways and railways.

“Several states, including Sabah, Sarawak, Kedah, Kelantan and Terengganu, will be given priority, with at least 50% of development spending allocated to these regions.

“Malaysia’s transport infrastructure sector will outperform the wider construction market over the decade, supported by its strong portfolio of transport projects,” said the research arm of Fitch Ratings.

The goal of carbon neutrality by 2050 is one of the government’s main goals and strategies to support its national renewable energy sector in recent years.

A number of regulations have already been put in place to encourage investment in the sector, including feed-in tariffs, tax incentives and renewable energy auctions. As part of the 2021 budget, the incentives for the green investment tax rebate and the green income tax exemption will be extended until 2025, based on the expanded list of green assets 2020.

At the same time, the Green Technology Financing Scheme 3.0 will be guaranteed by Danajamin up to RM2 billion. The government is also looking to improve green energy trading with the private sector while planning to launch a 2035 renewable energy transition roadmap.

Over the next decade, Fitch expects robust growth in the capacity of non-hydropower renewables to replace shrinking thermal power plants. While coal projects have already faced headwinds due to environmental oppositions and reduced availability of funding.

“In addition, the government is looking to introduce carbon taxes. Earlier, the Ministry of Environment and Water said it was seeking to launch a national emissions trading system, ”he said.

In the short to medium term, the research arm believes that the impact of carbon pricing will remain limited, due to structural issues to be addressed before its launch, including scope, pricing and trading mechanisms, liquidity and others. .

“In addition, Malaysia’s policymakers will need to weigh this against its economic recovery considerations, including how the cost might end up being passed on to consumers,” he said.

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