Mida: ESG-related investments set to surge

KUALA LUMPUR: Environmental, social and governance (ESG)-related investments in Malaysia are anticipated to surge this year as more companies are likely to export ESG-compliant goods, especially to the European Union (EU), says the Malaysian Investment Development Authority (Mida).

Last year, Mida approved 889 green technology and green efficiency projects with an investment value of RM3.7bil.

In the first quarter of this year, the country attracted 212 green technology projects and services activities amounting to RM433mil.

Mida chief executive officer Datuk Arham Abdul Rahman said ESG investments would stem from new foreign direct investments, domestic direct investments and existing companies in the country.

“There will be more ESG investments as many multinational companies (MNCs) are exporting their products from Malaysia to the EU, which have to be ESG-compliant. This would drive an increase in ESG investments in the country.

“We are here to support these MNCs in order for them to be ESG-compliant.

“We want to put in place all the policies, facilitation and support to ensure that Malaysia is ready to host new greenfield investments coming in for the next few years,” he said on the sidelines of Mida panel discussion on ESG Agenda.

From 2001 to March 2022, Mida approved investments for 3,186 green projects and green services amounting to RM35.5bil.

On the overall investment performance in the first quarter of this year, Arham said the country has attracted RM42.8bil worth of investments in the manufacturing, services and primary sectors.

Last year, Malaysia attracted a record breaking RM306.5bil in the manufacturing, services and primary sectors.

Despite fears of a global recession, PwC Malaysia deals partner of economics and policy Patrick Tay Soo Eng said ESG investments are likely to increase because investors see this as an opportunity to build stronger foundations to grow post-recession.

He opined that the focus on ESG investments would continue to grow, although other investments could be impacted if economic conditions deteriorate.

“What I see on the ground is that people may be taking a pause in other investments but they are planning their projects using ESG as a strategy going forward. They see ESG investments as the long-term trend.

“I see investors responding to the current food crisis. They are thinking about how to restructure their business and make a series of investments in ESG to triple productivity and to reduce the foreign labour problem and so on.

“For example, if I am under stress, what do I do? I try to cut costs. So, ESG strategies are a good way to reduce costs over the long term. I think the smarter investors would focus on that and that’s what we are seeing,” added Tay.

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