Saudi Arabia's ACWA Power signs MoU to develop renewables capacity in Malaysia
DUBAI :Saudi Arabia's ACWA Power said on Thursday it had signed a preliminary agreement to develop up to 12.5 gigawatts of renewable energy generating capacity in Malaysia with an initial investment of up to $10 billion.
The renewable energy utility said in a statement it agreed a memorandum of understanding with the Malaysian Investment Development Authority to explore developing the capacity by 2040.
Malaysia wants renewable energy to make up 70 per cent of its power mix by 2050.
ACWA said it also signed strategic partnership agreements with several Malaysian companies for possible energy projects, including for large-scale water desalination.
"These strategic agreements represent a significant milestone in ACWA Power's expansion in Southeast Asia and reflect our commitment to supporting Malaysia and the broader ASEAN region's energy transition," ACWA CEO Marco Arcelli said in the statement.
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Business Times
2 hours ago
- Business Times
Transition finance: Where business meets green growth
RISING heat, floods and food price shocks – these are not distant concerns, but the everyday realities of climate change confronting people globally. This is especially so in Asia, which has some of the most climate-vulnerable communities in the world. The tension between delivering inclusive growth to improve people's lives and protecting the environment to ensure future generations' needs can be met is at the heart of Asia's climate paradox. It is also why transition finance – aimed at enabling decarbonisation in high-emitting sectors – is gaining ground as an investment theme. 'Unlike green finance, which focuses on projects that are already climate-friendly, transition finance enables step-by-step change,' says Helge Muenkel, chief sustainability officer at DBS. 'It supports the rewiring of systems, including those that aren't green yet – but can become greener over time.' Importantly, transition financing is a tool not just for decarbonisation, but for broader business transformation. And it also drives climate adaptation outcomes – helping businesses and communities build resilience as they transition, Muenkel added. ' Unlike green finance, which focuses on projects that are already climate-friendly, transition finance enables step-by-step change. ' — Helge Muenkel, chief sustainability officer, DBS One key application for transition finance is in the power sector, including coal-fired power which is responsible for around 20 per cent of global greenhouse gas emissions, making it the single largest source of emissions globally. There are about 5,000 operational coal-fired power plants in Asia, many of which are still relatively young, with years or even decades left in their operating life. A recent study by Global Energy Monitor shows that by the 2040s, the average age of a coal power plant in South-east Asia will be about 28 years. This figure varies by country; for example, the average age of a coal plant in Thailand will be 39 years, in Indonesia 27 years, and in the Philippines 28 years. New coal capacity is also being added, with Asean countries currently having close to 30 gigawatts of coal capacity in various stages of development. This presents a complex challenge. 'Decarbonising the power sector is not about flipping a switch overnight,' Muenkel says. 'We are running an ultra-marathon, not a sprint. But we do need to act with urgency – and finance plays a vital role.' A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up Helge Muenkel, chief sustainability officer at DBS. PHOTO: DBS Since 2021, DBS has reduced its thermal coal exposure by more than half from $2.7 billion to $1.3 billion in 2024. Shilpa Gulrajani, head of sustainable finance at DBS' Institutional Banking Group, explains: 'Reducing emissions is essential. But for many countries, energy security and affordability remain pressing concerns. Solutions must be grounded in local realities and balance environmental, social and economic priorities.' Therefore, instead of abrupt shutdowns of critical infrastructure, a more pragmatic approach involves managed coal phase-outs, including the planned early shutdown of coal-fired power plants in the region. DBS co-leads a working group in the Monetary Authority of Singapore-convened Transition Credits Coalition (Traction), which aims to support the early and managed phaseout of thermal coal power plants across the region by helping to create a new financial tool: high integrity transition credits. Natural gas continues to play a role in South-east Asia's energy mix as a transitional energy source to support the phaseout of coal and expansion of renewables and energy storage that are not yet a commercially viable option in specific parts of Asia. This applies to the extent that stringent environmental safeguards are met – including robust methane leakage mitigation. This approach supports a responsible, time-bound pathway from coal, while laying the groundwork for longer-term decarbonisation. Catalysing real-world change Transition finance is also about supporting real economy hard-to-abate sectors like steel, cement and aviation – integral to economic development but among the most challenging to decarbonise – as they retool operations, upgrade technology and adapt to a low-carbon future. This includes supporting the scale up of 'enabling activities' – projects that may not directly reduce emissions but play a critical role in facilitating wider decarbonisation in a value chain. For instance, supplying low-carbon materials to electric vehicle producers or providing storage solutions for renewables can accelerate the transition across entire value chains. ' For many countries, energy security and affordability remain pressing concerns. Solutions must be grounded in local realities and balance environmental, social and economic priorities. ' — Shilpa Gulrajani, head of sustainable finance, DBS' Institutional Banking Group. In 2025, DBS enhanced its Transition Finance Framework (TFF), materially increasing the number of activities the bank will support. The new TFF also provides for robust governance and transparency for assessing such opportunities. The framework provides greater clarity to clients and stakeholders on eligible transition financing activities, and helps unlock capital for sectors that need to decarbonise but fall outside of conventional green taxonomies. 'This transformation requires financing solutions for activities that often fall outside of existing taxonomies,' says Gulrajani. 'We strengthened our framework to give clients and the broader industry clearer guidance on what a credible transition in Asia can look like, even as global standards evolve.' The enhanced TFF leverages the bank's deep industry knowledge, combined with the sustainable finance team's transition expertise, to help clients better manage risks and identify opportunities amid their decarbonisation journey. In addition, the framework also sets expectations on transition plans and available financial products, supporting a more structured and transparent transition financing ecosystem across the region. 'We work closely with clients to ensure their transition plans and timelines are both pragmatic and rigorous, and that capital is deployed where it can drive real decarbonisation.' As financial institutions ramp up support for transition financing, an increase in their financed emissions in the near term is to be expected. This rise reflects the practical realities of enabling real-economy shifts, especially in hard-to-abate sectors where emissions reductions take time, says Gulrajani. It is also a signal that capital is being directed where it is most needed to achieve long-term transformation. 'At DBS, we are willing to take on this risk because we believe it is a necessary part of enabling the transition,' she adds. The future of transition finance Shilpa Gulrajani, head of sustainable finance at DBS' Institutional Banking Group. PHOTO: DBS According to DBS, transition finance is still in its early stages in Asia, but momentum is building. As one of the region's earliest movers, the bank has developed internal frameworks, supported industry partnerships and pioneered innovative financial instruments to accelerate change. DBS has also been co-leading the transition finance working group of the Singapore Sustainable Finance Association, which aims to position Singapore as a regional transition finance hub. 'We are helping create a broader ecosystem where capital, policy and innovation come together,' says Muenkel. 'Asia has the innovation, talent and the impetus to act. With the right collaboration, we can lead the world in this journey.' Complexities in the global landscape have raised questions on whether sustainability can continue delivering both impact and returns. Still, climate change continues and for DBS, the answer is clear. 'Notwithstanding recent geopolitical developments affecting sustainability globally, climate change will further accelerate, affecting the communities we operate in, and needs action,' says Muenkel. 'DBS aims to be the best bank for a better world – and that means staying the course even in challenging times. We are here for the long haul.' Find out more about the DBS Transition Finance Framework .
CNA
2 hours ago
- CNA
Retailers in Singapore seek lower costs and bigger market in Johor Bahru, but face challenges
JOHOR BAHRU: Tucked in the corner of a suburban mall 15km from the Johor-Singapore Causeway, Japanese hair salon company QB House's first outlet in Johor Bahru easily attracts quizzical looks from most passers-by. The small salon on the first floor of Aeon Tebrau Mall, with its fluted wooden panelling at the entrance and neat booths with bright overhead lighting, exudes a clean and minimalist design. One of QB House's first customers when the store opened on May 13 was Singaporean Jerry Ng, who decided to have an unplanned haircut after walking past the store. 'I usually go to the Malay barber near where I stay (in Singapore), but I decided to try something new,' said Ng. When met at the store recently, Osamu Matsumuto, chief operating officer and director of the chain's parent company QB Net Holdings, told CNA that the outlet is the company's first foray into Johor Bahru and it is eyeing around 10 branches in the city in the short term. He added that QB House faces market saturation in Singapore, where it already has 30 outlets, and is looking to expand across the Causeway to tap Johor's lower costs. 'Singapore is a bit small and there's too much competition,' said Matsumoto. 'I have strong confidence (in our expansion plans into Johor) because we have been planning for this for many years, and we believe that now (is the right time) because the living standards are higher and the expectations of quality service is there,' he added. QB House is one of an increasing number of Singapore retailers who are eyeing expanding or moving their outlets into Johor Bahru, where the cost of operations is lower and the appetite for higher quality retail standards is increasing. However, many of these companies are facing roadblocks in their plans. Challenges include finding skilled labour, facing bureaucratic red tape as well as the fear that their outlets are located in malls that ultimately fail due to low footfall. President of the Singapore Retail Association Ernie Koh told CNA: 'There is an (outflow) of retail away from Singapore because of the higher costs of operating and the stronger Singapore dollar vis-a-vis many regional currencies, so many are opening front-end stores in Malaysia, Thailand and Japan. 'More are setting up operations in Johor Bahru and yes, this can be challenging for different reasons. But overall, it (makes sense) because the reliability of brands from Singapore command a premium in Malaysia,' he added. Many retailers CNA spoke to are also buoyed by how the Johor-Singapore Special Economic Zone (SEZ) could potentially increase the demand for high-end products and services. Yet, they noted that many of the corporate incentives for the SEZ are targeted at the manufacturing and pharmaceutical industries, and that more can be done to also boost retail. WHY MOVE TO JB? Koh said that while there are currently no statistics on the number of Singapore-based retailers moving into Johor Bahru, SRA is working with a third-party firm to study the trends closely. However, he stressed that the significant interest can be seen anecdotally from the 27 retail company representatives and three trade industry leaders retailers who joined the association for a business exploration trip in May to learn first-hand procedures and challenges in moving their business across the Causeway. Moreover, Koh noted that there have been numerous queries from its members to move both its front-end retail stores as well as back-end logistics facilities to Johor Bahru. Koh said that this is inevitable given the push factors in Singapore, such as high costs of rental and labour, and the pull factors in Johor Bahru - including the upcoming Johor-Singapore Rapid Transit System (RTS) Link which is set to increase the city's accessibility to shoppers from Singapore. He added that this is especially so for the service-oriented retailers like hair salons, nail salons, dentists and optometrists. 'With the RTS Link coming in 2026, I always like to say 'Empty hands go, empty hands come back' meaning Singaporeans will increasingly travel across to JB for services relating to their hair, eyes, face, teeth, so they can travel over and take the train back without carrying too many things,' said Koh. Joshua Koh, president of the Singapore Furniture Industries Council (SFIC), told CNA that Singapore retailers are losing business to competitors from China and Johor due to costs. For instance, because of high rental costs, Singapore retailers have to actively manage their offerings to maximise the rental yield. This is different in Johor where lower rentals mean retailers have much larger showrooms and a wider variety of products 'at significantly lower prices'. 'We are concerned that the opening of the RTS will further add on to this trend of consumers going overseas for their furniture purchases as travel in and out of Johor will be much more convenient,' he added. 'Unless there are more cost effective measures to bring costs down, the only way to level the playing field is for Singapore retailers to set up shop in Johor.' Bedding company Epitex told CNA that it plans to expand its market into Johor Bahru because it is targeting Singaporean visitors or Malaysians who work in Singapore but live in Johor Bahru. Epitex's retail and operations manager Tan Shea Hao told CNA that the chain has 24 outlets in Singapore and that the competition is 'quite packed already' so it plans to open outlets in Johor Bahru. Tan noted that its outlet in Woodlands, near Johor, is its best performing one. So the company is looking to open stores across the Causeway and price the goods at slightly levels lower than in Singapore. 'We have two outlets in Malaysia (in the Klang Valley) but we are spending more to open more shops in the different states, especially in Johor,' said Tan. Meanwhile, QB House's Matsumoto said that the main target customer base for its upcoming Johor stores are locals. But he acknowledged that Singaporeans may also patronise these outlets given that the prices are slightly lower than in Singapore. A haircut for men at QB House's Aeon Tebrau Outlet costs RM32 (S$9.72) while in Singapore, the same service is priced at S$14. 'Our focus is on servicing local Johoreans but of course, we welcome Singaporeans as well, especially since many of them are familiar with our products,' said Matsumoto. 'From our estimates, 30 per cent of the shoppers in Johor Bahru malls are Singaporeans,' he added. SALARIES MUST BE COMPETITIVE While there is impetus and interest from Singapore retailers to set up shop in Johor Bahru, they face a variety of obstacles. QB House cited how it has faced challenges hiring qualified hairstylists given that many of the skilled workers from Johor Bahru prefer to ply their trade in Singapore for higher salary. 'It has been quite challenging because the talented stylists prefer to go to Singapore, we've been trying to recruit for two months already,' said Matsumoto. 'We have a few candidates but hopefully with this first store, more people here will recognise us and apply,' he added. A hiring ad outside the store stated that it is ready to offer stylists a salary of between RM3,000 and RM5,000, but Matsumoto acknowledged that the firm may have to increase this to be competitive in the Johor market. 'Maybe we'll have to pay more than that, the figure is still negotiable,' he said. Epitex's Tan told CNA that finding skilled manpower to front its retail stores in Singapore and Malaysia has been the company's 'main problem' given that the industry has a high 'turnover rate'. He anticipates that it will be the same for their Johor Bahru stores as well, but is optimistic that the company will be able to offer competitive salary packages given that these outlets are expected to be more profitable than elsewhere in Malaysia. 'I don't think it is a problem for us to actually pay more because Epitex is looking for workers with good quality and also salesmanship. If they are able to explain the products well to our customer with a lot of professionalism, I don't think salary will be an issue,' said Tan. Beyond frontline and service staff, SRA's Ernie Koh acknowledged that Johor Bahru has a talent brain drain especially for personnel in middle management. He added that in terms of hiring foreign workers, Malaysia also has a quota system and firms need to apply with the Human Resources Ministry before they can do so. Malaysia has a foreign worker quota set at 2.5 million people in total, and the services sector of which retail is part of, has a fixed ceiling at 15 per cent of this total. Hence, Koh said that companies looking to set up shop in Johor may have to deploy one or two of their middle management staff from Singapore, while juggling the difficulty of hiring lower-level workers in Malaysia, he said. 'But it can be managed.' He added that some of his member companies are also concerned with bureaucracies and red tape - additional administrative lag which may delay the opening of stores, and that expectations need to be managed. 'Hopefully our more mature member retailers with experience can help the other members,' said Koh, who cited companies like Mothercare and FJ Benjamin as those who have experience expanding operations from Singapore into Johor Bahru. Another issue that has surfaced among retailers is the concern that their business may not survive in the long term, given that there are some malls in Johor Bahru which have failed to garner footfall and sustain visitors. Shopping centres like Capital City Mall, Danga City Mall and JB Waterfront Mall have all failed to thrive and the latter two are now derelict, abandoned buildings. Singapore retailers CNA spoke to cited Mid Valley Southkey and JB City Square as locations they are eyeing as these malls attract consistently high footfall, especially customers from Singapore on weekends. Epitex's Tan said: 'Besides these two malls, we are also looking at suburban malls like IOI Mall in Kulai, they have shared an opportunity which we are considering as well.' 'We do our market survey and we have to consider whether the area aligns with the market we want to target. Factors we consider are also the mall's condition and status,' he added. SRA's Ernie Koh, who is also Joshua Koh's uncle, cautioned that retailers must be discerning over the location of their outlets in Johor Bahru and not merely be tempted when mall operators dangle cheap leases. 'There are well-managed malls and not so well-managed malls. We just have to be mindful that you just don't go for the price,' he said. SHOULD SEZ INCENTIVES ALSO INCLUDE RETAILERS? For now, Singapore retailers are encouraged by how the JS-SEZ could lead to more higher net worth expatriates being based in Johor Bahru, and this could boost the retail scene. However, some are also expressing hope that the financial incentives for the SEZ could be extended to Singapore retailers too, given that many of the requirements outlined by Malaysia's investment arm Malaysia Investment Development Authority (MIDA) seem to be tailored for industries like manufacturing, artificial intelligence and pharmaceutical. These incentives include lower corporate tax rates, income tax exemptions for its employees as well as stamp duty exemptions when purchasing commercial property. The retailers explained that some of the criteria for these incentives are also prohibitive for them. For instance Singapore retail companies which wish to open a logistics facility in Johor Bahru under the SEZ scheme for their back-end operations must have investment in capital expenditure (excluding land) of at least RM500 million. SRA's Ernie Koh told CNA that the retail industry in Johor would benefit if Singapore companies are incentivised to move operations as well. 'If the entire ecosystem is up, naturally retail will thrive as well because it is a downline industry. Singapore retailers want to also be part of it - rather than only manufacturers and tech start ups go over and (Johor) will be missing retailers in the service industries,' he said. QB House's Matsumoto told CNA that the JS-SEZ was one reason why it decided to expand into Johor as it expects 'an increase in population'. While he noted that the firm is unlikely to qualify for any tax incentives stipulated by MIDA, Matsumoto was hopeful that this is something both the Malaysia and Johor governments can consider. 'With more tax incentives and support, I believe Johor will be able to attract more high-end retail brands to come over and open their flagship stores,' he said. SFIC's Joshua Koh shared similar sentiments, highlighting how corporate tax subsidies for retailers would have a multiplier effect for Johor because it would provide jobs for locals and trigger a more vibrant retail scene. 'Some funding for consultancy fees may help companies make the shift quicker,' he said. However, Teh Kee Sin, advisor of the Small and Medium Enterprise Association of South Johor, told CNA that local authorities should be mindful of the importance of supporting local retailers too. 'There is a concern that if too many of these international brands come in, the rent for shop lots will go up and many local retailers will be priced out. Small local businesses are important to the ecosystem as well,' said Teh. In spite of potential competition with local Johor retailers, SRA's Ernie Koh is sanguine that businesses will be able to thrive and achieve win-win outcomes. 'If Singapore retailers are not seizing the moment, it will be a missed opportunity given away to Malaysia retailers. So we've got to be more proactive - if an economy grows, the retail industry will follow,' he added.
CNA
8 hours ago
- CNA
Asia First - Wed 4 Jun 2025
02:26:53 Min From the opening bell across markets in Southeast Asia and China, to the biggest business interviews and top financial stories, tune in to Asia First to kick-start your business day.
