Hong Leong Bank sees growth in RE, viable investment for SMEs

Hong Leong Bank has approved up to RM1.3bil in RE financing to-date.

KUALA LUMPUR: Hong Leong Bank (HLB) sees growth in renewable energy (RE) as a commercially viable investment for SMEs and the bank has approved up to RM1.3bil in RE financing to-date.

The bank said solar power is the fastest-growing renewable power source in the world and in Malaysia. Its uptake and investment have been ramping up over the past few years with initiatives such as green technology incentives and enhanced net energy metering (NEM) programs.

With solar power systems primarily driving the country’s renewable energy goals, HLB said there are an abundant of opportunities for corporates and SMEs to pursue in building a more sustainable business.

For SMEs starting out to integrate more environmental, social and governance (ESG) considerations into their operations, RE adoption can prove to be a daunting task.

With many schemes and programmes for solar power options, over 100 solar power service providers and a significant amount of investment needed, these can become barriers for businesses to take the step to use RE for power generation.

The bank recently hosted its second virtual “Sustainability Roundtable” on “Renewable energy (Solar): Industry outlook & preparing for a sustainable future” to support the country’s transition to a low carbon economy and national ambition to increase the renewable energy share to 31% of the country’s power mix by 2025.

The roundtable underscored RE, especially solar, as both a commercially viable and environmentally positive investment, in which SMEs and corporates should consider to future-proof their operations.

HLB’s managing director of business corporate banking, Yow Kuan Tuck said sustainability as a mindset and culture is a necessity in every business and industry, including financial institutions.

“The links between a financial institution and climate change or low carbon footprint may not be as intuitive at first glance but where and how we invest, loan or channel money impacts the way businesses are run and how well our economy performs in the long run, ” he said.

“As a bank, we have a responsibility in steering the sustainability transition and mindset amongst our SME and corporate customers. We do this with the provision of working together where we find opportunities and solutions to balance profit, people and the planet, as well as enable households, businesses and the economy to become more resilient to climate change impacts.”

The HLB Sustainability Roundtable was moderated by Gladys Mak, HLB’s RE specialist while also present were industry leaders Esther Lew, principal assistant secretary of RE from the Ministry of Energy and Natural Resources; Wan Hashimah Wan Salleh, director of green technology division at the Malaysian Investment Development Authority (MIDA), and Gary Dass, CEO of Tex Cycle Technologies (M) Bhd.

Lew said at the current trajectory, solar power is targeted to make up 52% of total RE capacity in 2025 and 60% in 2035.

“There are ample solar opportunities for various society segments can tap into. The government currently has three programs – NEM Rakyat for domestic consumers, NEM GoMEn for government buildings and the new Net Offset Virtual Aggregation Programme (NOVA) for SMEs, ” she said.

Meanwhile, Wan Hashimah said investing in green technology such as solar power has garnered interest from both big companies and SMEs from a range of industries due to the cheaper cost of installations and materials over the years, proven cost savings and commitments by companies to go green and the Government tax holidays.

In addition, the industry has also shown the evolution of local services companies which have transformed from being EPCC (engineering, procurement, construction and commissioning) companies to now becoming investors in large scale solar (LSS) projects and listed on the ACE Market of Bursa Malaysia.

“This has shown that solar is a growing industry in Malaysia, ” Wan Hashimah said.

Gary Dass said Tex Cycle had used solar panels to generate power for the company’s plants and after a year and seven months “we have experienced an average of savings at 40% per annum, equivalent to approximately RM200, 000.

“Furthermore, these savings also equate to 491 tonnes of CO2 reduction, close to 27, 000 trees planted and 197 tonnes of reduction in fossil fuels usage in environmental contributions, ” he said.

As for HLB, Yow said that since 2018, it has identified RE as a commercially viable industry with significant growth potential.

The bank also introduced climate-positive financing, which focuses on renewable energy and energy efficient projects to contribute to the country’s RE and low carbon economy agenda.

“To date, we have approved up to RM1.3bil in RE financing for solar, biomass, biogas and small hydropower projects, ” he said.

HLB introduced its SME solar financing programme in February this year, a green energy financing facility specially developed for Malaysian SMEs looking to install small-scale solar photovoltaic systems.

It also aims to encourage more businesses to look at sustainability as an investment which can bring long-term competitive advantages and as a gateway to build business resiliency against future disruptions, cushion against future rise in energy costs as well as meeting the rising demand of conscious consumerism for sustainable businesses.

HLB expanded its RE team of specialists to further grow this promising portfolio. The renewable energy specialists also work closely with customers and provide value-added services, including advisory in guiding new energy players on warranties and guarantees coverage for equipment as well as help clients evaluate the feasibility and generation capacity of their projects.