Green technology finance scheme: What has gone wrong? — The Green Ninja
JULY 16 — “To promote green technology, the government will establish a fund amounting to RM1.5 billion. This fund will provide soft loans to companies that supply and utilise green technology. For suppliers, the maximum financing is RM50 million and for consumer companies RM10 million. The government will bear 2 per cent of the total interest rate. In addition, the government will provide a guarantee of 60 per cent of the financing amount, with the remaining 40 per cent by banking institutions. Loan applications can be made through the National Green Technology Centre. This scheme will commence on 1 January 2010 and is expected to benefit 140 companies.” — Najib Razak (Budget 2010, paragraph 55)
Prime Minister Najib Razak first announced the setting up of a fund to promote technologies that are “clean” and environmentally-friendly, known otherwise as the Green Technology Financing Scheme (GTFS), in his 2010 Budget Speech. An agency called GreenTech Malaysia was simultaneously set up to manage the fund and the overall development of green technology in the country.
When the Budget 2010 was first read, this Green Ninja remembers there was indeed a lot of excitement. After all, who wouldn’t? The figure announced was in the B-illion mark — RM1.5 billion to be exact — sufficient to make many entrepreneurs salivate.
Suddenly everyone was hyped up on green technology. The GTFS was the magical acronym on everyone’s mind.
Call it the typical Malaysian mindset. Although the green industry, such as generating electricity from the sun and wind energy was something relatively new to most Malaysians, no one wanted to be left out in the scheme.
Just two years down the road, we are still nowhere near the target of RM1.5 billion, which has to be achieved by year end. Whether Najib will extend the deadline beyond December 2012 is anyone’s guess, but like most fluff, the excitement is short lived.
Despite efforts to explain how companies could apply and benefit from the GTFS, and people travelling from as far as Penang to attend the briefings provided by GreenTech Malaysia in Bangi, the outcome is just as disappointing.
GreenTech Malaysia, despite putting its efforts to provide free consultancy and helping companies obtain a green certificate (which qualifies them to apply for GTFS funding), is now struggling with the question whether it is able to meet its target by year end.
We are already into our second quarter of 2012, but GreenTech Malaysia’s published summary report (http://gtfs.my/), still dated July 15, 2011, shows that we are far from reaching the target of RM1.5 billion meant to benefit 140 companies.
From a total of 120 companies which have been assessed by GreenTech Malaysia, 75 per cent (or 90 companies) have been awarded the Green Certificate, which certifies that their business proposals are certified “green” and therefore eligible for the GTFS. However, of this only 14 companies have successfully obtained their loan, with a total value of only RM207 million (or just over 13 per cent from the target figure of RM1.5 billion).
Why is the rest of the money (RM1.29 billion) not disbursed to companies which have been certified green and are eligible for the GTFS? Why the anti-climax?
Something’s wrong somewhere
The Green Ninja asks, what has gone wrong? Is it the policy or the implementation of the policy that has gone wrong? Is the blame on the entrepreneur himself?
No, the entrepreneur has in fact done all he could to obtain the green certificate, since everyone knows that no loan would be disbursed if you fail to qualify the green assessment.
However, he has yet to find out that, after obtaining the green certificate, it does not guarantee him access to the financing that he needs. Why?
The answer is simple. He had thought the RM1.5 billion was meant to be soft loans from the government. The truth is: the RM1.5 billion mentioned in Najib’s speech is not money set aside by the government as soft loans, but the government is working alongside with banks to support its scheme. All that the government is doing is to subsidise two per cent of whatever interest charged by the banks, and provide guarantee for up to 60 per cent of the loan through the Credit Guarantee Corporation Malaysia Berhad (CGC).
There is no wonder why banks would not loan you the money. With or without the green certificate, if you do not have a viable business and cash flow plan in place, no banker would loan you any money.
The banks have stood firm on this ground. After all, which bank would release any loans unless it is convinced that you will be making good money? The bottom line is profit, and bankers know who they choose to play golf with.
So, you have a situation that, despite the guarantee of 60 per cent on the financing amount provided, banks are still not excited about the GTFS.
No wonder, all the sighs and groans! After thinking through, this is what has gone wrong. The Green Ninja goes back to Najib’s Budget speech, and yes — the answers are there in paragraph 55!
Maybe, like most people, the Green Ninja heard his speech wrongly. It sounded more like the government had set aside RM1.5 billion to be used as soft loans to assist 140 companies in an effort to boost the green economy. What’s more important is the “soft loan” (similar to the RM250 million given to the National Feedlot Corporation) from the government’s coffers. This is the wildest of all dreams.
Doesn’t it sound like that? No?
* The Green Ninja discusses topics of public interest that have adversely impacted the environment.
* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.