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PETALING JAYA: The goodies doled out in the Budget 2024 for the green space are seen as a crucial step in the right direction to achieve the country’s net-zero targets.
One of such allocations include the extension of the tax exemption to fund management companies that manage Sustainable and Responsible Investment (SRI) funds as well as tax deductions on the cost of issuing SRI sukuk until the assessment year 2027.
Speaking with StarBizWeek, Areca Capital Sdn Bhd CEO Danny Wong said while the incentives provided by the government in the green space will never be quite enough, the overall incentives given this round is considered to be quite meaningful.
“Maintaining a 5% fiscal deficit is quite challenging. Given these financial limitations, the allocation to SRI and green initiatives is quite meaningful, even though in the bigger perspective it is still not enough. However, it is important to acknowledge that the government is striving to strike a balance, avoiding undue risk to our credit rating and fiscal deficit, while simultaneously channeling resources into the environmental, social and governance (ESG) space,” he said.
Wong said the support given to SRI funds in the budget serves to incentivise and bolster the growth of underlying SRI projects.
“For the past one or two years, the government has also allocated funds for low carbon emission and electric vehicle (EV) initiatives. Hence, the SRI incentive given aligns with the overall big picture. Companies have the project but investors need to be encouraged to come and participate in these endeavors, so as to foster the development of SRI funds,” he said.
Grant Thornton Malaysia country chief executive officer Kishan Jasani said the SRI-related incentives will serve as a catalyst for the market’s growth, and the government’s commitment to extending these incentives until 2027 provides a clear runway for development.
“Asset management companies can now embark on the creation of investment products and scenarios for prospective investors. This process typically takes one to two years from the initial idea to its fruition. This incentive acts as a driving force for companies to proactively develop these products.
“The second point pertains to tax deductions and the issuance of SRI bonds. These actions will motivate more companies to embrace green initiatives, as they will benefit from additional tax incentives.
“This shift allows companies to leverage the tax deduction, in contrast to the past when raising funds for a sustainable project yielded no such financial perks. Now, there exists a more defined framework guiding companies on how to bring their SRI bonds to market, engage the right experts, and execute their plans with a clear purpose,” he said.
Additionally, in line with its net-zero carbon emission initiatives and the National Energy Transition Roadmap, the government is also developing a roof solar buyback programme with minimal cost implications to the system.
At the same time, companies are encourged to offer a “Zero Capital Cost” subscription model, as will be offered by Gentari, for the residential housing category. Moreover, the Net Energy Metering (NEM) programme offer period was also extended until Dec 31, 2024 to encourage the installation of panels in residential premises.
ClimatEra Consulting Sdn Bhd Director/Founder Komathi Mariyappan said in the initial years of introducing the NEM program in Malaysia, its mechanisms and the relatively new technology were not widely understood by residents. It took several years for individuals to grasp the benefits of rooftop solar. Even as understanding grew, installation remained a challenge due to limited quotas.
“I am thrilled to witness the growing readiness among Malaysians to embrace solar installations, and these incentives are poised to encourage more individuals to enjoy the associated credits.
“While energy experts can delve into the technical aspects of NEM, many homeowners primarily consider the initial investment and potential cost savings. Looking ahead, if residential rooftops can also support Renewable Energy Certificates, it could further enhance the programme’s appeal,” she said.
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