Malaysia’s Environmental Challenges And How To Overcome Them

Malaysia is currently facing several critical environmental challenges that demand attention and action. One significant issue is the subsidisation of utilities such as water and power to attract investors.

Malaysia strategically employs subsidies for utilities like water and power, with historical annual expenditure of about RM50 billion. These subsidies, which have favoured both domestic and international consumers, continue to significantly benefit foreign direct investment and domestic direct investment despite reduced subsidies for industrial and commercial users.

According to Medhini Group CEO Joel William, this strategy has successfully drawn investments, but it has also led to certain drawbacks. The availability of cheap and abundant utilities has created wastages and reduced incentives for industries to use these resources efficiently or invest in more sustainable systems.

“For instance, the low-cost supply of treated water for both domestic and commercial use does not encourage responsible consumption practices,” said Joel.

Another pressing issue is the heavy reliance on non-renewable energy sources for electricity generation, especially in West Malaysia. This heavy dependency on fossil fuels poses obstacles for industry players in meeting their carbon footprint commitments and obstructs the country’s transition towards a greener energy landscape.

“To tackle these environmental challenges, Malaysia must strike a delicate balance between attracting investments and promoting responsible resource management,” he said.

Encouraging industries to adopt sustainable practices and invest in renewable energy sources will be crucial in reducing carbon emissions and working towards a more sustainable future.

Taking proactive steps to acknowledge and address these issues will enable Malaysia to pave the way towards an environmentally conscious and sustainable future.

Addressing these environmental challenges requires a multifaceted approach and a commitment to sustainable solutions. While investing in renewable energy can be costly and time-consuming, there are other necessary steps that can be taken to tackle these problems more efficiently.

“Existing industries should prioritise enhancing their efficiency and reducing wastage. A significant portion of industrial electricity consumption, around 40 to 50%, is attributed to various types of motors. Encouraging industries to transition from older, inefficient motors to highly efficient ones, and implementing better motor control systems can lead to rapid and cost-effective energy savings,” said Joel.

The government has taken steps to address environmental challenges, but there is room for further improvement. To better benefit Malaysians, Joel said the government should consider implementing the following policies:

1/ Government-Backed Sustainable Industrial Parks

Encourage the development of industrial parks that prioritise sustainability by pre-investing in district cooling and centralised utility plants. These facilities can efficiently balance cooling and heating needs among tenants, making the entire park more environmentally friendly. Integrating solar parks and wastewater recovery systems can further reduce utility consumption and foster a greener industrial ecosystem.

Currently, industrial parks lack established guidelines, and while attempts have been made to introduce district cooling and central utility plants (CUF), challenges in implementation and management have hindered their success.

“The BioXcell project in Johor serves as a case in point. Initially boasting its own cooling water and steam generation, coupled with an integrated waste water management system (WWT), BioXcell pursued the innovative concept of supplying utility on-demand from a centralised system, which inherently aligns with sustainable practices,” said Joel.

However, this endeavour faced setbacks due to inadequate planning, misguided investments, and subpar execution. Consequently, the anchor tenant, Biocon, acquired operational control of the CUF, representing a missed opportunity for other industries within the park to leverage the intended low capital expenditure investment model.

2/ Mandatory Green Building Requirements

Impose mandatory compliance for all new industrial projects to meet minimum green building standards and use sustainable materials and construction techniques. This policy would promote eco-friendly infrastructure development and reduce the environmental impact of new industrial facilities.

3/ Incentives for Upgrading Ageing Facilities

Provide incentives to existing ageing facilities to upgrade their utility systems for greater efficiency. This upgrade would not only benefit the environment but also lead to lower operational expenses, directly benefiting the bottom line of industries.

“In the realm of grant allocation, a few organisations, including MIDA, have played a role, yet currently, these grants are suspended. Meanwhile, the Malaysian Rubber Council (MRC) stands as a success story, albeit focused on rubber product manufacturers. MRC’s initiatives have demonstrated notable achievements, particularly evident in cases where manufacturers have executed plant upgrades with remarkable returns on investment. However, the reach of such initiatives remains confined to a specific industry sector,” said Joel.

For Malaysia to amplify its sustainable industrial transformation, there arises a pressing need for a centralised and comprehensive entity—a genuine one-stop centre—that can provide industry players with grants or low-interest loans for capital expenditures related to plant upgrades.

In this regard, the Malaysian Green Technology and Climate Change Corporation (MGTC) emerges as a beacon of progress. By offering investment tax exemptions to companies committed to green infrastructure and solutions, MGTC reinforces the impetus to transition toward environmentally conscious practices.

Fitting The Key Piece In The Green Puzzle

Medhini Group fits in this ecosystem by providing essential services for clients planning their greenfield high-tech manufacturing plants.

“Our core business involves offering facility master plan and project management services, with a strong emphasis on engineering design that prioritises sustainable solutions aligned with SDGs and ESG principles,” said Joel.

To further enhance Medhini’s commitment to sustainability, the organisation has established a strategic partnership with TERAO, an esteemed international engineering firm specialising in sustainability design.

Their expertise lies in assessing baseline carbon footprints for existing facilities and devising effective solutions to achieve carbon reduction in alignment with planned goals, ultimately progressing toward net-zero emissions.

“Through this collaboration, we strive to contribute to the advancement of sustainable practices in the manufacturing industry, making a positive impact on the environment and communities we serve,” said Joel.

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