Seminar on “Malaysia’s Economic and Climate Transition”

Thursday, 27 June 2024 – In this hybrid seminar, H.E. Nik Nazmi Bin Nik Ahmad set out Malaysia’s priorities and strategies in meeting its climate ambition.


Last year, the Anwar Ibrahim administration unveiled the Madani Economy framework, the National Energy Transition Roadmap (NETR), the Mid-Term Review of the 12th Malaysia Plan, the New Industrial Master Plan (NIMP) 2030, and the Hydrogen Economy and Technology Roadmap—all in quick succession. The Malaysia Studies Programme and Climate Change in Southeast Asia Programme jointly organised a hybrid seminar with H.E. Nik Nazmi Bin Nik Ahmad as a guest speaker to unpack these roadmaps and plans. H.E. Nik Nazmi is the Minister of Natural Resources and Environmental Sustainability (NRES) and Member of Parliament for Setiawangsa.

Speaker H.E. Nik Nazmi Bin Nik Ahmad with moderator Dr Cassey Lee. (Credit: ISEAS – Yusof Ishak Institute)

H.E. Nik Nazmi started by drawing attention to the triple planetary crisis. He said that as a trading economy, making the transition to have green supply chains is important. He then introduced five themes around which his talk would be organised: (1) sustainability as an all-in effort for the Malaysian government; (2) legislative and regulatory ecosystem; (3) the human ecosystem; (4) the importance of states as a federation; (5) ASEAN must be all-hands.

On the first theme, H.E. Nik Nazmi highlighted that the core of Anwar’s Malaysia Madani is sustainability. Relatedly, the NETR, NIMP, Hydrogen Economy and Technology Roadmap and National semiconductor strategy were launched with this goal in mind. These roadmaps and plans lie at the centre of government and cut across various ministries. He highlighted the importance of cross-ministerial collaboration and not working in silos. For example, the government has set up the Climate Change Action Council chaired by the Prime Minister and the Decarbonisation Committee which H.E. Nik Nazmi chairs. An important move, H.E. Nik Nazmi pointed out, is cutting back on subsidies. For example, RM4.6 billion was saved after electricity subsidy retargeting. He said that a concurrent trend is that Malaysia has “a lot more solar panels”.

On the second theme, H.E. Nik Nazmi outlined several targets that Malaysia has committed to. These include a 45% reduction in emission intensity by 2030 as outlined in the Nationally Determined Contribution roadmap and net zero by 2050. As Malaysia had been a low-cost export-driven economy, he said it needs to change to be more sustainable. Malaysia also wants to showcase its megadiversity and have pledged to maintain half of land area to be under forest cover. Malaysia is also coming up with a climate change bill and national adaptation plan.

On the third theme, H.E. Nik Nazmi spoke of the trend of “greenlash”, that is, opposing green policies, common in Europe. He said it is important to engage. For example, to have more conversations about the connections between Islam and the environment. This could mean going to the kampung and madrasa in a way to make more sense other than the affluent Bangsar bubble, to reach a wider crowd, describing it as a “battle for hearts and minds”. He also pointed out efforts in engaging and getting input from NGOs and youths through consultative panels.

On the fourth theme, H.E. Nik Nazmi said that as a federation, states matter a great deal. With 13 states and a post-election coalition with various views among the parties, Malaysia cannot just solve issues with the same ease as when they had a two-thirds majority. He cited the Melaka state government as a positive example of being very hands-on and thus tends to win most awards, such as working with schools and institutions to support environmental efforts. For example, Melaka successfully implemented a 54 hour car-free weekend (versus Kuala Lumpur’s 3 hour). He also highlighted the need for a national framework.

Lastly, as Malaysia prepares for its chairmanship of ASEAN next year, H.E. Nik Nazmi highlighted the importance of ASEAN being more than just a pillar of foreign policy. He spoke of the importance of an ASEAN bloc in COP and the importance of adaptation in developing countries. Key issues include addressing pressures faced relating to palm oil, which Malaysia hopes to work with Indonesia on, and addressing transboundary haze. He emphasised that while a common narrative is that newly industrialised countries do not deserve to have higher blame, it is not a blame game issue. He said Malaysia accepts the science as global citizens and believe it can be at the forefront of the green revolution by adopting more ambitious climate policies.

The seminar proceeded to a Q&A session. H.E. Nik Nazmi first fielded questions on whether the carbon market should be guarded by market forces or regulation, whether “climate crisis” is a better term than the neutral “climate change”, whether states are over-reliant on land-based revenue (for example Sarawak’s revenue from state-based sales tax of petrol enables it to be successful) and what role the indigenous communities can play in conservation. To these questions, H.E. Nik Nazmi said to start with the fear which gets people to listen, then tell stories in a way that can inspire people. He spoke of the need to reflect on how resources are distributed across the federation, especially as states are becoming more assertive, and evolve revenue frameworks to be relevant to present-day issues. He also highlighted the use of language in engaging people, especially with the orang asli who are in danger of being sidelined and said it was effective when involving them as community rangers.

The next set of questions covered issues such as whether Malaysia was considering nuclear energy, what factors go into determining the energy mix and whether Malaysia’s abolishing of fuel subsidies creates domino effects on neighbouring countries like Indonesia and Brunei. H.E. Nik Nazmi noted that a key issue of nuclear energy is waste, though Malaysia is starting studies again after stopping research during the Mahathir years. He said that Malaysia’s energy mix is at about 40% gas, 35-40% coal and other sources including solar, hydroelectricity and some biomass, though the government has declared that there will be no new coal plants. He highlighted that it is cheaper to retire coal plants early in the US and UK as they are older than the plants in Asia. Regarding the question on domino effects, he said that Malaysia is already the country with cheapest fuel prices in the region. Where in the past diesel was about RM2 per litre cheaper than in Thailand, it is now about RM1 per litre cheaper. Malaysia has thus seen massive drop in diesel sale in the north.

H.E. Nik Nazmi then addressed questions including looking at the environment and sustainability efforts of the state as a consumer, whether there are any discussions on wind power, and what ASEAN can do more in addition to issuing a joint statement to COP. He said that the government faces several challenges in efforts such as the procurement of electric vehicles which is set to happen this year, including concerns from the fire department. Tenaga Nasional Berhad has also pushed back on providing charging stations as routes outside of Klang valley are not profitable. He also said that while there are circulars to discourage the use of single-use plastic, it ultimately boils down to cost in decision making, due to higher prices for ecologically-friendly options. He said ASEAN needs to go into a deeper dive to bring out its voice in a stronger manner.

H.E. Nik Nazmi then fielded questions including technical challenges of increasing use of bio-based fuel, encouraging battery recycling on a large-scale, efforts to make critical infrastructure more resilient to extreme weather events, whether the proposed EU ban on palm oil will eventually be resolved, and whether some messages resonate better with voters in phasing out fuel subsidies. He pointed out the efforts in incorporating palm oil into diesel though done on a smaller scale than Indonesia, the importance of communicating well to the international community. He also said that waste from crops can be leveraged on. The government is also pushing out new guidelines for processing used solar panels and batteries especially for EVs. He spoke about increasing the capacity of flood-mitigation projects and the importance of building a regional grid. He also expressed confidence that the palm oil ban will be resolved.

The session closed with H.E. Nik Nazmi answering three last questions by saying that it makes sense for Malaysia to accelerate development of an ASEAN energy grid under its chairmanship, Malaysia is open with working with everyone, be it the green Belt and Road Initiative or Just Energy Transition Partnership. He also said that Malaysia is becoming more selective in data centres, wanting only those with added-value like Artificial Intelligence. These technology companies also have their own net zero targets. Removing blanket subsidies including low cost of utilities also helps.

Senior Fellow and Regional Economic Studies Programme Coordinator Dr Cassey Lee moderated this seminar, which attracted 105 participants.

To view the recording of the event, click here.

(Credit: ISEAS – Yusof Ishak Institute)