" Tax Component as an Effective Instrument in the Development and Usage of Green-based Technologies in Malaysia "

Jeong Chun Phuoc, 25 dec 2009

I refer to the Datuk Halim Man's (Secretary General for Ministry of Energy, Green Technology and Water) article today "Energy Solution is Right Here", The Star -25.12.2009 at p. N35.

Achieving a 'Grid Parity' will take Malaysia perhaps another 10-15 years. This is the projected estimation if foreign technologies are used as a generating input into current development of renewable energy in the Malaysian context.

Local R&D into this area remains fragmented if not uncoordinated due to several constraints where financial support remains a stumbling block.

In enhancing local involvement in the research and development of sustainable green energy-related technologies, Malaysia may need to learn from international leaders such as Denmark , Germany , Japan , Korea etc depending on the specific niche area of green energy specialization.

The establishment of the recent Green Technology Policy(GTP) (and the accompanying Renewable Energy Policy & Action Plan Roadmap) is a move towards the right direction that the government is serious in taking renewable energy policy to the next level (where Grid Parity will be the prime objective in the context of national renewable energy paradigm).

Legal Measure not the only Effective Tool

The proposed Renewable Energy Act (REA) may help drive national policies on renewable energies but it will not be effective in facilitating such a drive unless due attention is also given to tax matrix as an effective tool apart from other related legal instruments or even the proposed Renewable Energy Act(REA).

GST and Green Technology and Energy

With reference to the imminent enforcement of GST, it can be seen that no attention has been given to the tax consideration as an effective tool in facilitating the pickup rate and public acceptance of green energy and related green technologies.

Tax Treatment of Green Technology and Energy

Usage of 'green technologies' will still be subject to the same tax liabilities and subsequent tax treatment(notwithstanding certain tax exemptions granted for specified R&D subject matter). Up to now, there is no indication at all from the government that the usage, promotion and implementation of green technologies and energy will not be treated differently from the tax liability aspect.

Tax as Another Effective Base Instrument

Hence, in order to achieve an integrated approach in finding a viable energy solution to the green technology and adoption of renewable energy equation, the tax component must be taken into serious account.

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Jeong Chun-phuoc*
Lecturer-in-Law
and a reader in Strategic Environmental Intelligence(SEI)
He can be reached at : Jeongphu@yahoo.com