Bloc commits to mobilize $10.8bn for ASEAN sustainable projects
Six major ports function as crucial transhipment hubs that play integral roles in the state’s supply chain by NURUL SUHAIDI
KUCHING, Malaysia — Sarawak, a resource-rich state in Malaysia with an ambitious
sustainable energy agenda, is drawing interest from the European Union, but the 27-
nation group’s top official in the country says the bloc needs new cooperative
mechanisms for its companies to take advantage of the opportunity.
“We have seen the opportunities and the vision of the state, bringing in hydrogen,
sustainable transition to green energy and energy transition,” Michalis Rokas, the EU
ambassador to Malaysia, said in a speech at the EU-Malaysia Business Day 2024 event
held on Feb. 14 in Kuching, the capital of Sarawak, which is located on the island of
Borneo.
Malaysia is the EU’s third largest trading partner in ASEAN, while the EU is the fourth
largest destination for Malaysian exports. The EU is also the second largest source of
foreign direct investment for Malaysia at 25.2 billion euros in 2022.
Still, Rokas acknowledged the limited presence of European businesses in Sarawak. To
bridge this gap, he proposed a “blending” model whereby European companies would
take the lead in strategic investments, while the EU would provide financial support
through grants, guarantees and concessional loans through the European Investment
Bank (EIB). This approach aims to de-risk projects and attract private capital,
accelerating Sarawak’s green ambitions.
Rokas also said the potential partnership aligns with the EU’s Indo-Pacific Strategy,
which emphasizes fostering partnerships with regional countries on issues like climate
change and clean energy. Sarawak’s focus on developing hydrogen production,
sustainable aviation fuel, and transitioning away from fossil fuels resonates with the
EU’s own sustainability goals.
The EIB has been active in Southeast Asia for over three decades, financing projects in
various sectors such as energy, transport, climate action and infrastructure. In 2022, it
opened a regional representative office in Jakarta to further strengthen its engagement
in Indonesia, Vietnam, Cambodia, Laos and the Philippines. Nikkei Asia understands
that the bank has been attempting to operate in Malaysia since 2020. Its application is
pending government approval for a framework agreement.
Rokas also said during his speech that the EU and its 15 member states with a presence
in Malaysia will be working on a plan to propose a Global Gateway flagship project in
Sarawak.
Meanwhile, the state’s deputy premier Awang Tengah Ali Hassan welcomed the
potential partnership, highlighting the existing trade relationship between Sarawak and
the EU, which stood at 2.1 billion euros in 2022. He emphasized the state’s commitment
to renewable energy, with a target of generating at least 60% of its power from clean
sources by 2030.
Sarawak, abundant in oil, gas and timber, is the only Malaysian state with more than
70% renewables in its energy mix, mainly from hydroelectric dams. It has three
operational large-scale hydroelectric dams, with a fourth, Baleh, under construction.
The total installed capacity of the operational large-scale hydroelectric dams in Sarawak
is 3,452 megawatts. Once Baleh is completed, the total capacity will increase to 4,737
MW.
Last year, Sarawak announced plans to sell one gigawatt of renewable energy to
Singapore via a 700km undersea cable by 2032.
“We seek to establish a stronger connection between Sarawak and Europe,” Awang said
at the business event. “I hope this will serve as a venue to forming new networks and
posing new paths which yield fruitful outcomes towards an inclusive economy.” He
added that Sarawak’s green push has led to collaborations with global players from
South Korea and Japan to develop the hydrogen industry in the state.
Sarawak is already embarking on two major hydrogen production projects — with
Japan’s Eneos and Sumitomo Corp. on one called H2ornbill, and South Korea’s
Samsung Engineering, Posco and Lotte Chemical on another dubbed H2biscus — in the
port town of Bintulu, where one of the world’s largest LNG complexes is located.
The Sarawak state legislative assembly building and Sarawak River in Kuching, Malaysia. (Photo by Norman Goh)
4/2/24, 2:01 PM EU official praises green energy push by Malaysia’s Sarawak – Nikkei Asia
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The two projects will have the potential to produce up to 238,000 tonnes of green
hydrogen annually, generating an estimated 2.4 billion ringgit to Sarawak’s gross
domestic product by 2030, according to Abang Johari, the state’s premier during his
annual new year address in January.
Sarawak also boasts, according to the premier, ASEAN’s first integrated hydrogen
production plant and refueling station, powering hydrogen buses in Kuching since 2018
and a tram on a test basis beginning last year.
Also, a third hyrdogen project is based in Rembus, near Kuching, for domestic use and
is expected to be fully operational in 2025, according to state-linked company SEDC
Energy and the Sarawak Economic Planning Unit. On Monday, SEDC Energy signed an
agreement with Gentari, a subsidiary Malaysia’s state energy conglomerate Petronas to
develop the Sarawak H2 Hub in Bintulu, according to a statement by Gentari.
Total hydrogen industry investment in Sarawak is estimated to be worth at $4.2 billion,
an SEDC Energy spokesperson told Nikkei Asia.
Hydrogen produced in Sarawak is known as green hydrogen — produced via electrolysis
and powered by renewable electricity from hydroelectric dams. Additionally, the state is
pioneering the production of crude algae oil for sustainable aviation fuel using
microalgae.
Timothy Ong, the chief executive of the newly established state investment promotion
agency InvestSarawak said at a panel session that Sarawak is not only in competition
with other regions of Malaysia, but with countries like Vietnam, Indonesia, Thailand
and Singapore as well.
“Although a lot of people come to Sarawak for renewable energy, I can comfortably tell
you today that we have more demand than available supply when it comes to renewable
energy,” Ong said. He added it is important for the state to understand that investment
benefits must trickle down to the people of Sarawak and companies and not just remain
in the hands of foreign or domestic investors.
