International Research Network for Low Carbon Societies and Low Carbon Asia Research Network

Low Carbon News in Malaysia in August 2013

Green Technology Financing Scheme (GTFS)  

Date: 7 August 2013

Green technology is generally sophisticated with high-priced, particularly for local small and medium enterprises (SMEs) whose are low in capital venture. This has slowing down the diffusion rate of green technology into SMEs and hindering them toward green practice. To create an enabling environment for green growth development in Malaysia, the Government initiates Green Technology Financing Scheme (GTFS), a unique fund to provide low interest with short term payback period loans for local enterprises to invest green technology. The Government will bear for 2% of total interest rate and giving a guarantee of 60% on approved financing credit. A total amount of RM 3.5 billion (USD 1.1 billion) were offered and accessible for SMEs on the period of 1^st January 2010 – 31^st December 2015. Applications can be made through Malaysia Green Technology Corporation (GreenTech Malaysia).

Reference/ Link: http://www.gtfs.my/

Green Technology Financing Scheme (GTFS) 

7 August 2013

1.0 Introduction

Green technology is generally sophisticated with high-priced, particularly for local small and medium enterprises (SMEs) whose are low in capital venture. This has slowing down the diffusion rate of green technology into SMEs and hindering them toward green practice. To create conducive and dynamic environment for green growth development in Malaysia, Ministry of Energy, Green Technology and Water (KeTTHa) together with Ministry of Finance (MoF) initiates Green Technology Financing Scheme (GTFS), a unique funding system to provide low interest with short term payback period loans for local enterprises to invest green technology. Under the scheme, the Government will bear for 2% of total interest rate and a ratio of that the Government guarantee of 60% on approved financing credit via Credit Guarantee Corporation Malaysia Berhad (CGC) whilst 40% by the respective banking institutions. A total amount of RM 3.5 billion (USD 1.1 billion) were offered and accessible for eligible SMEs on the period of 1^st January 2010 – 31^st December 2015. Applications can be made through Malaysia Green Technology Corporation (GreenTech Malaysia) with first come first serve basis. To date, 108 applications with the amount of RM 1,487,995,415 have been approved, leaving the balance of RM 2,012,004,585.

2.0 Types of Green Technology Financing Scheme (GFTS)

The soft loan under Green Technology Financing Scheme (GFTS) is open for the local SMEs who are keen to invest into green technology. They can be either the green technology producers or the green technology users. Green technology producers refer to industries whose manufacture environment friendly commodities. In the meanwhile, green technology users are the industries utilise resource efficient appliances in reducing environmental impacts. More details information on green technology is to be discussed on next section. The financial scheme features for green technology producer and green technology user are differing from one another (Table 1).  The caps for the loans are set at maximum RM 50 million for producers whereas RM 10 million for users.

Table 1: Guideline of Green Technology Financing Scheme (GFTS)

3.0 General Criteria

The scheme is only applicable for new project and retrofitting or expansion that incorporates Green Technology elements which have not been funded and partly funded. Green technology characterize by Malaysia Green Technology Corporation (GreenTech Malaysia) as products, equipments or systems among the key areas of energy, building, township, transport, water and waste management which satisfy the following criteria (i) minimise the degradation of the environment; (ii) zero or low greenhouse gas emissions; (iii) safe for use and promotes healthy and improved environment for all forms of life; (iv) conserve the use of energy and natural resources; or (v) promote the use of renewable energy. In order for interested SMEs (both producers and users) to obtain the valid GFTS certification from GreenTech Malaysia, the above criteria are essential. Apart of technical evaluation from GreenTech Malaysia, they are compulsory to conduct feasibility study and develop commercial viable business model to acquire loan applications from Participating Financial Institutions (PFIs) (Table 2).

Table 2: List of Participating Financial Institutions (PFIs) with correspond to their project financed in Green Technology Financing Scheme (GFTS) (as August 2013)

References: http://www.gtfs.my/

Prepared by: Teh Bor Tsong, Universiti Teknologi Malaysia