Malaysia: Energy Policy in the 8th Malaysia Plan/Five Fuel Policy

The goals of the 8th Plan include a safe, cost-effective, secure energy supply which means promoting renewables, cogeneration, diversification, efficiency and using auditing, financial and fiscal incentives, technology development, and labelling.  The 8th Plan includes several incentive mechanisms for the promotion of environmental measures and the use of renewables in the private sector. Companies that undertake forest plantation projects or energy conservation measures or use energy from renewable biomass, mini-hydro or solar are eligible for Pioneer Status with a tax exemption of 100% of the statutory income for 10 years; or Investment Tax Allowance of 100% on the qualifying capital expenditure incurred within five years, which can be offset against 100% of the statutory income for each year of assessment. For the energy related measures, companies can also qualify for higher exemptions or allowances if the activities take place in ‘promoted areas’.  Originally the four fuel diversification policy focused on oil, gas, coal and hydro.  In the 8th plan, it was broadened to include renewables as a fifth in the new Five Fuel Strategy.

Date Implemented: 2001-2005

Status: Framework Policy

Targets: Renewable Energy was to make up 5% of the nation’s total energy consumption by 2005

References: Environmental Management, Malaysian Industrial Development Authority

http://www.mida.gov.my/beta/view.php?cat=3&scat=32&pg=164