Friday, February 21, 2014

TMR: Islamic financing to boost green initiatives through 2015

By Linda Archibald

Malaysian Green Technology Corp (Green- Tech Malaysia) is “banking” on the Islamic financing industry to come in more strongly in financing green initiatives in the country through 2015.

To date the Islamic finance sector is contributing nearly 20% or RM300 million of the RM1.5 billion Green Technology Financing Scheme (GTFS)-approved financing support for 120 projects.

GreenTech Malaysia CEO Ahmad Hadri Haris told The Malaysian Reserve: “Moving forward into 2014, (we) expect to see a lot more Islamic financing being involved in green initatives.” Ahmad Hadri named AmIslamic Bank Bhd, Malayan Banking Bhd, Kuwait Finance House and HSBC Amanah Malaysia as among the existing participating financial institutions (PFIs) under GTFS who have been supportive towards green financing.

“And that is great as Islamic financing shares same ethical values with green initiatives. It has a common platform, ground — quality of life, benefit to environment,” he said, adding that with Malaysia as the hub for Islamic financing, this he described as an untapped potential that should be explored.

Ahmad Hadri said he hopes to work with bank associations and Bank Negara Malaysia to strengthen this message that there is tremendous opportunity to grow green initiatives through Islamic financing.

He also said Islamic banks from around the world should capitalise on this opportunity in Malaysia and bring in funds to tap into green initiatives in this region.

Ahmad Hadri also said that GreenTech Malaysia is also in the middle of identifying anchor banks for green financing.

“Among the 22 banks, we can see some, like the Malaysian Debt Ventures Bhd, are more active in energy projects. Thus, we can encourage applicants to talk to them. Likewise, Maybank is interested in different areas,” he said, adding that the details have yet to be finalised.

GTFS was first established by Prime Minister Datuk Seri Mohd Najib Razak soon after he tabled Budget 2010, as an effort to improve the supply and utilisation of green technology to benefit companies companies who are producers and users of green technology.

In turn, as its commitment towards the cause, the government pledged to bear 2% of the total interest/profit rate, aside from providing a 60% guarantee on the financing amount via Credit Guarantee Corp Malaysia Bhd (CGC), with the remaining 40% financing risk borne by PFIs.

The prime minister also appointed GreenTech Malaysia as the conduit for the GTFS application. Since it commenced in on Jan 1, 2010, more than RM1.5 billion has been disbursed to benefit more than 120 projects.

However, almost another 180 other GTFS-certified projects have yet to receive funding, largely due to failure to secure loans from 40% PFIs. GTFS is only available until Dec 31, 2015, and the application for guarantee cover is on a firstcome- first-served basis.

Commenting on GreenTech Malaysia’s efforts to address the prevailing struggles to get financial institutions to share a common understanding on green technology and initiatives, he said, GreenTech Malaysia has started to include them in the pitching sessions by applicants.

“Here, all the project proponents are together with the banks on one platform and they can field their questions,” he said, adding that in turn, GreenTech Malaysia has also started delving seriously into issues of project viability and risk assessment.

“We have consulted some of the banking industry experts and adjusted some of our processes to be more attuned to this,” Ahmad Hadri added.


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