Exploring Issues and Challenges of Green Financing in Malaysia: Perspectives of Financial Institutions

Abstract

This research offers a better understanding of the green technology financing in Malaysia through investigation of major issues, challenges, and initiatives of a green technology financing scheme, as well as the perceived motivations and benefits of the scheme from the perspective of Malaysian banks. The method of analysis included qualitative approach comprising of round-table discussion (focus group) and open-ended surveys. The application of a multi-method design through the combination of various large players in the scheme, coupled with the higher amount of investment required for some areas of green technology, requires a funding capital which is beyond the limit currently supported by the government. The key drivers for Green Technology Financing Scheme (GTFS) by Malaysian banks were found to be related to secure financing packages, guarantees and support from the government, feasibility of the project falling within the financing criteria by the bank, interest subsidies obtained, and the sustainability agenda. Forty-nine percentage of bankers queried considers the applicants as the source of barriers for green technology financing. Moreover, the banks consider lack of project viability, lack of track record or success studies, and a lack of knowledge concerning green technology as the three major barriers to the success of green technology financing. The study also found that Malaysian banks do not consider green technology financing as a component of their CSR , while only 29% of them see the benefits of the scheme in terms of helping to expand their market share and enhancing their corporate image.