To remain competitive in an increasingly dynamic and complex global economy, Malaysia is focused on fostering a culture of innovation for long-term gains.
December 12, 2024
The Malaysian economy has continued to grow on the back of structural reforms, despite global turbulence and uncertainty. In the third quarter of 2024, the economy expanded by 5.3%, driven by strong investment activity and continued export growth. This brings GDP growth in the first nine months of 2024 to 5.2%, up from 3.8% in the same period last year. The robust performance reflects both business and consumer confidence in the Malaysian economy and the government’s economic management.
The government has reaffirmed its commitment to strengthening governance and economic transformation as outlined in the MADANI Economy framework, designed to prepare the nation for an increasingly dynamic and complex global economy.
Boosting Strategic Growth Pillars
Malaysia is poised to emerge as a semiconductor powerhouse as global demand for high-tech equipment grows, driven by ongoing digital transformation across industries and the shift toward electric vehicles and renewable energy. The National Semiconductor Strategy provides clear policy direction to support the goal of elevating the sector further up the global value chain.
Meanwhile, the digital economy is one of the fastest-growing sectors in the country, contributing 23% to Malaysia’s GDP in 2023. The government has approved digital investments worth RM185.3 billion (US$41.4 billion) between 2021 and June 2024, including ventures from global tech giants, to underscore its commitment to further developing the sector.
The services industry, a cornerstone of Malaysia’s economy, continues to thrive, attracting a steady flow of investments. Real estate, information and communication technology and transportation services are among the top-performing sub-sectors.
The government is focused on attracting investments in strategic high-growth and high-value industries that will steer the nation toward an innovation-driven economy, ensuring long-term resilience.
Advancing Climate Goals and Sustainability
Malaysia remains deeply committed to its sustainability goals, aiming to achieve net zero by 2050 and reduce economy-wide carbon intensity by 45% by 2030. Its decarbonization efforts encompass the adoption of energy efficiency measures, renewable energy sources, improved waste management practices and cutting-edge technologies.
As Malaysia’s national energy company, PETRONAS plays a crucial role in advancing these goals. The firm is accelerating the energy transition through various pathways, including fostering and fortifying innovation ecosystems to deliver expedited, impactful solutions that shape a lower-carbon future. The group collaborates with businesses, educational institutions and government agencies to drive technological advancements, economic growth and climate actions. PETRONAS is also pursuing opportunities in high-value, lower carbon new businesses, including carbon capture and storage, renewables and hydrogen, in line with national energy and sustainability ambitions.
Another sustainability-driven corporation is Sunway Group, which celebrates its 50th anniversary this year. Sunway has built its enduring success by pioneering a sustainable approach to urban planning, starting with Sunway City Kuala Lumpur, Malaysia’s first integrated sustainable township. With a unique Build-Own- Operate business model, Sunway is determined to play a role in providing good governance for its communities, regularly investing in projects that promote socioeconomic development and environmental protection. Sunway City Ipoh, the company’s second township, has an additional RM4 billion (US$920 million) worth of investment to support the city’s sustainable socioeconomic growth in the next decade.
Looking Ahead
Regionally, Malaysia calls for enhanced cooperation and solidarity among its neighbors as it assumes the chairmanship of ASEAN in 2025. It aims to push for greater commitment to enhance ASEAN intra-trade and investment and establish climate-conscious policies that will benefit all member countries.
Looking ahead, Malaysia will continue “to embrace a spirit of openness, with a readiness to adapt, innovate and constantly push the boundaries of what is possible,” as stated by Prime Minister Anwar Ibrahim.
Building On An Innovation Legacy Toward A Sustainable Future
With 50 years of expertise, PETRONAS is fostering and fortifying innovation ecosystems to achieve a lower-carbon future.
Ir. Mohd Yusri Mohamed Yusof, PETRONAS Senior Vice President of Project Delivery and Technology
As PETRONAS celebrates its golden jubilee, this milestone not only marks half a century of excellence as Malaysia’s hydrocarbon custodian but also underscores its relentless pursuit of innovation and progress.
With the world at a critical juncture, PETRONAS’ journey over the decades showcases a dynamic transformation anchored by its mission to deliver energy responsibly and sustainably.
“Reaching 50 years is a remarkable feat for all of us at PETRONAS,” says Ir. Mohd Yusri Mohamed Yusof, PETRONAS Senior Vice President of Project Delivery and Technology. “While we strive for excellence to fulfill our amanah (trust) as the national hydrocarbon custodian, we place equal importance on the pursuit of technology and innovation that is key to progress.”
Operating in over 100 countries, PETRONAS, with a diverse portfolio encompassing oil, gas, petrochemicals and cleaner energy solutions, is resolute in playing a pivotal role in the energy transition.
Fueled by a passion for progress, PETRONAS sets its sights on accelerating the energy transition through various pathways. One such pathway involves fostering and fortifying innovation ecosystems to deliver expedited, impactful solutions to shape a lower-carbon future together.
The recent COP29 discussions reaffirmed that achieving net zero emissions requires collective action. As Malaysia assumes the ASEAN chairmanship next year, the region stands poised to harness its collective resources and expertise to accelerate progress toward this ambitious goal. Malaysia’s and ASEAN’s journey toward net zero, as the company progresses its Net Zero Carbon Emissions by 2050 Pathway, which addresses PETRONAS’ decarbonization efforts and outlines the growth targets for its cleaner energy solutions.
From left: Mohamad Nasir, Chief Executive Officer of INSTEP, Ir. Mohd Yusri Mohamed Yusof, Senior Vice President of Project Delivery and Technology, PETRONAS, Tan Sri Tengku Muhammad Taufik, President & Group Chief Executive Officer of PETRONAS, Daito Michio, President of JOGMEC, Professor Dato’ Ir. Ts. Dr Mohamed Ibrahim Abdul Mutalib, Vice Chancellor of Universiti Teknologi PETRONAS, marking the beginning of a collaboration between PETRONAS and JOGMEC to establish the Southeast Asia Methane Emissions Technology Evaluation Centre (METEC) at the ASEAN Energy Sector Methane Leadership Program 2.0 launch event.
A Passion for Innovation
PETRONAS actively collaborates with businesses, educational institutions and government agencies to drive technological advancements, economic growth and climate actions.
“We see creating and strengthening innovation ecosystems through collaboration as one of the important pathways to accelerating the delivery of technologies or solutions that the industry—and even the world—needs, especially in this defining era of energy transition,” says Ir. Yusri.
“With passion and determination, we have managed to deliver world-class technological wonders that make a global impact,” he adds.
Among these milestones is PETRONAS’ partnership with the Mercedes-AMG PETRONAS Formula One Team since 2010. As Title and Technical Partner, PETRONAS has developed cutting-edge Fluid Technology Solutions that maximizes performance through customized products and expert services, resulting in eight consecutive championships and adaptations for road use.
In 2021, PETRONAS achieved another milestone by becoming the world’s first energy company to produce liquefied natural gas (LNG) from two floating facilities.
Such achievements are a testament to PETRONAS’ steadfast dedication to research and development, centered around its state-of-the-art research hub in Malaysia, where over 500 scientists and technologists work to advance sustainability technologies. This effort is further supported by a growing network of collaborations between academia and industry.
This dedication to innovation extends beyond technology to nurturing human capital through initiatives like the BeDigital Bootcamp—a program designed to strengthen the digital literacy of local graduates in support of the nation’s digital economy aspirations.
“Human capital is the driving force behind our industry. None of this progress would be possible without the right talent. Our existing workforce is also being upskilled to support the energy transition as we re-evaluate the needs of the evolving energy landscape and identify how we can contribute effectively,” says Ir. Yusri.
Delivering Solutions Through Partnerships
Left: Collaboration is crucial to accelerating the delivery of technologies or solutions toward the energy transition. Right: PETRONAS leverages advanced analytics, data and AI to reduce energy consumption and emissions, delivering promising results.
PETRONAS aspires to empower all to thrive in the energy transition by working collaboratively with partners to achieve an inclusive and responsive approach to delivering energy. This is guided by an energy transition strategy, focused on optimizing core production business and capturing new growth opportunities, all while striving to responsibly manage carbon emissions.
For PETRONAS, gas will remain pertinent as a destination fuel, so operational decarbonization has become crucial. Its initiatives include leveraging advanced analytics, data and artificial intelligence (AI) to reduce energy consumption and emissions, delivering promising results.
Also, the game-changing Kasawari carbon capture and storage (CCS) project is poised to unlock high CO2 gas field developments, while aiming to cut CO2 emissions by 3.3 million tons of carbon dioxide equivalent (MTCO2e) annually when it comes onstream as early as 2026.
Believing in thriving together, PETRONAS adopts progressive collaboration models alongside its CCS endeavor, enabling new growth opportunities for players and exemplifying how pursuing sustainability can also maintain the vibrancy of existing businesses.
The group is also pursuing opportunities in the high-value, lower carbon new businesses, including CCS, renewables and hydrogen, in line with national energy and sustainability ambitions. To this end, Gentari Sdn. Bhd., PETRONAS’ clean energy solutions arm, was established to accelerate market presence in hydrogen, renewable energy and green mobility.
PETRONAS’ collaborative approach extends into methane emissions management. Through its par tnership with Japan Organization for Metals and Energy Security (JOGMEC), the company is establishing the Southeast Asia Methane Emissions Technology Evaluation Centre (METEC). This first-of-its-kind facility in Southeast Asia will enhance methane emissions management efforts by supporting experts to oversee measurement, monitoring, reporting and verification processes, as well as research and development initiatives.
The success of these initiatives is underpinned by the expansion of innovation ecosystems, which drive the development of cutting-edge solutions in a conducive environment and foster stronger partnerships. By connecting diverse expertise and resources, technologies like CCS, floating liquefied natural gas and advanced analytics not only accelerate decarbonization efforts but also sustain the vibrancy of the energy sector toward net zero goals.
The Next 50 Years
As PETRONAS embarks on its next 50 years, it remains committed to sustainable growth, environmental stewardship and technology-driven progress.
“The 50-year milestone is a pivotal moment for us to reflect and strategically act as a group—enhancing our efficiency, seizing opportunities and overcoming challenges to emerge stronger and more sustainable for the next 50 years and beyond,” Ir. Yusri says.
“Moving away from traditional business-as-usual models toward progressive collaboration will unlock opportunities for growth, foster innovation and ensure that sustainability drives value, not just for our industry, but for society as a whole.
“Every challenge is a doorway to progress. By joining forces with our partners, pooling knowledge and co-developing solutions, we can address pressing global issues,” he notes.
Building Resilient and Sustainable Cities of the Future
Sunway Group, a sustainability-driven corporation in Malaysia, celebrates its 50th anniversary this year and looks to the future with a resolute commitment to the triple bottom line.
Cities are at the forefront of addressing environmental and social issues. Sunway City Kuala Lumpur in Malaysia
With climate change accelerating at an unprecedented pace, the global push for governments and corporations to achieve net zero emissions by 2050 has gained momentum.
Sustainability has become a vital corporate mandate, laying the groundwork for responsible strategies that drive long-term growth, enhance risk management and boost stakeholder trust and brand loyalty.
As the need for corporate commitment to sustainability grows, Environmental, Social and Governance (ESG) factors have become essential to corporate decision-making and a significant driver for investors seeking sustainable opportunities.
Major corporations worldwide have increasingly embraced ESG principles to build resilient, sustainable economies. A 2022 KPMG survey revealed that 96% of the world’s largest companies actively report on sustainability—a clear indicator of how crucial ESG has become.
In Southeast Asia, robust economic growth and rapid urbanization in recent years have accelerated the region’s vulnerability to climate change.
Malaysia is also strengthening its focus on sustainability as it seeks to transition to a low-carbon, climate-resilient economy by 2030, with a commitment to reduce carbon intensity relative to GDP by 45%.
Though Malaysia contributes just 0.69% of global CO2 emissions, its per capita emissions remain relatively high at 8.6 tons per person—almost double the global average—highlighting its urgent need to reduce emissions.
The Malaysian government’s recent Budget 2025 initiatives support decarbonization with robust tax incentives for carbon capture, utilization and storage activities and the RM1 billion (US$230 million) Green Technology Financing Scheme.
This effort is further strengthened by the National Energy Transition Facilitation (NETR) Fund, with a dedicated RM300 million (US$68 million) allocation aimed at promoting sustainable environmental stewardship.
Malaysia’s largest federal budget of RM421 billion (US$96 billion) reflects the ambition to drive inclusive and sustainable economic development.
Sustainability-Driven Business Environment
In today’s sustainability-driven business landscape, companies must align with ESG principles to remain competitive for the long-term viability of their business.
Malaysia’s Sunway Group, celebrating its 50th anniversary this year, is demonstrating just how aligning business success with sustainability can help a company build resilience and thrive in changing environments.
Over its five decades, Sunway transformed from a tin mining and quarrying business into a multifaceted conglomerate spanning 13 industries, including construction, property development, retail, leisure, hospitality, healthcare and education.
Sunway integrates the United Nations (UN) Sustainable Development Goals (SDGs) and ESG targets into its business core, recognizing their complementary nature as pillars for driving meaningful and lasting growth.
“At Sunway, we see the ESG disclosure and compliance framework as one of the more effective tools and as a ‘means to an end,’ which is the SDGs. More importantly, we view ESG as a data-based sustainability mechanism that facilitates disclosures and fosters transparency,” according to Sunway’s Sustainability Report 2023.
“Through disclosures, stakeholders are able to see how companies are responding to pressing environmental, social and governance issues. We believe that transparency brings about accountability and builds trust. In other words, transparency promotes engagement with our stakeholders and helps keep the company on the right track to stay relevant in an ever-changing environment,” the report states.
For a more resilient supply chain, Sunway engages with its business partners across the group to promote the adoption of sustainable practices.
The company’s Real Estate Investment Trust (REIT) arm, highly regarded by analysts and investors for its large and diversified portfolio, collaborates with its tenants through a green lease focusing on energy efficiency, water conservation and waste diversion.
Its malls arm, a key player in the mall business, introduced a tiered learning program focusing on improving sustainability in the retail sector.
Sunway has achieved enduring success by pioneering a sustainable approach to urban planning.
Building Sustainable Cities
According to the UN, cities and urban centers house nearly 60% of the world’s population and account for over 70% of global CO2 emissions. By 2050, nearly 70% of the global population will reside in cities, with significant urbanization unfolding in Africa and Asia.
In Malaysia, over 80% of the population is expected to live in cities and urban areas by 2030. As urbanization continues, cities are at the forefront of addressing environmental and social issues toward shaping livable, inclusive, sustainable and resilient urban areas.
Sunway has built its enduring success by pioneering a sustainable approach to urban planning, starting with Sunway City Kuala Lumpur, an abandoned former tin mine in the 1980s. Today, this award-winning sustainable township serves a population of 200,000 people.
As the country’s first integrated sustainable township, Sunway has set the benchmark for cities in Malaysia and beyond. With the SDGs at its core, the company integrates its net zero targets and sustainability commitment into township masterplans, which include green policies for buildings and townships, and water management.
In focusing on the social and environmental aspects of its townships, Sunway’s approach includes preservation of natural landscapes, renewable energy, water security, sustainable transport and efficient waste management, while also providing connected walkways for its communities across healthcare, education, retail and other key services.
With a unique Build-Own-Operate business model, Sunway is determined to play a role in providing good governance for its communities, regularly investing in projects that promote socioeconomic development and environmental protection.
In the northern state of Perak is the company’s second township, Sunway City Ipoh, with a RM2 billion (US$460 million) gross development value, and an additional RM4 billion (US$920 million) investment to support sustainable socioeconomic growth in the next decade.
As the population grew, Sunway and the Perak state government invested more than RM28 million (US$6.73 million) in road development and expansion projects to ease traffic congestion caused by urbanization in the surrounding areas.
In southern Malaysia, Sunway City Iskandar Puter i is one of the largest developments in Southeast Asia with an estimated gross development value of RM30 billion (US$6.9 billion).
The city, at the center of Johor’s economic growth, houses a fully carbon-neutral free commercial zone, which is expected to create at least 13,000 job opportunities and serve as a leading distribution hub for Southeast Asia.
The ongoing development of Johor Bahru-Singapore Rapid Transit System (RTS) Link is set to improve convenience and accessibility for the city’s expected population of 250,000 when fully completed.
The role of cities in tackling environmental and social issues will continue to grow with the increasing rate of urbanization. Adopting an SDG- or ESG-based approach can offer a structured roadmap to transform urban developments and city governance.
Pioneering Sustainable Finance
Southeast Asia’s financial sector is increasingly prioritizing ESG considerations in investment strategies, driven by the need to address climate change, labor practices and social issues. Green, social, sustainability and sustainability-linked debt issuance has surged, with the Asean+3 market capturing an 18.9% share of the global market, as reported by the World Bank.
Malaysia’s growing embrace of sustainable finance includes significant advancements in sustainability-linked sukuk, which are Shariah-compliant asset-based instruments akin to bonds. The Securities Commission Malaysia reports that such issuances have surpassed RM18.92 billion (US$4.3 billion) since 2014.
Sunway is actively contributing to sustainable finance through collaborations that integrate ESG principles. In May, the company issued a RM400 million (US$90.8 million) sustainability-linked sukuk to expand its healthcare group and secure green building accreditation by 2030.
Sunway’s Healthcare arm is a starperformer in the company’s portfolio, with projected revenue expected to reach RM2.3 billion (US$525 million) by 2025. It is also slated to be the fourth company to go public by 2027, joining Sunway’s current three public-listed companies with a combined market capitalization exceeding RM38 billion (US$8 billion).
In a groundbreaking move, Sunway-REIT launched Malaysia’s first sustainability-linked perpetual securities in October, raising RM500 million (US$114 million). This innovative move underscores Sunway’s ability to drive sustainable financing.
To accelerate its groupwide decarbonization efforts, Sunway aligned its financial practices with environmental goals by becoming the first corporation in Malaysia and among the first in Asia to introduce an internal carbon pricing framework, demonstrating the company’s active business leadership in sustainability.
As ESG factors continue to shape the business landscape, companies are well served to stay agile and adapt to changing environments and evolving expectations.
By staying attuned to global trends and embracing holistic ESG integration, businesses can build resilience, unlock new growth opportunities and drive long-term business success.