KUALA LUMPUR: Malaysia's local banks and financial institutions must be ready to mobilise trillions of ringgit in climate financing, said Khazanah Research Institute deputy director of research Yin Shao Loong.
Yin highlighted that until 2023, Malaysia did not have a clear costed policy for its energy transition making it difficult to justify raising funds.
“Because, why go out and look for funds when you don’t even know how to use them?” he said in a panel session at Climate Finance Summit 2025 today.
He said the introduction of the National Energy Transition Roadmap in 2023 provided Malaysia with its first rough estimate of the cost involved. “The estimated bill came to around RM1.3 trillion.”
However, Yin noted that the cost of climate adaptation, which has received less attention, has yet to be determined.
“It’s easy to imagine the total bill reaching RM3 trillion. That’s an eye-watering amount. It’s hard to even grasp,” he said.
For context, Yin pointed to Malaysia's pensions gap, which stands at around RM700 billion. He added that 1MDB, often cited as a major debt burden, involved only RM53 billion.
“So those are double-digit billions, compared to trillions,” he said.
Yin stressed that Malaysia has never attempted to mobilise funding at such a scale before.
“One of the lessons we can learn from international climate finance is that 80% is domestically mobilised, and only 20% comes from international sources,” he said.
This, he explained, is largely because there simply isn't enough international funding available.
“It’s a recurring point of contention at every climate convention in November and December. Last year’s convention, in particular, got very heated because not enough was promised.”
Yin said there was a pledge to increase contributions from US$100 billion (RM423 billion) per year to US$300 billion, but people were asking for trillions.
“The truth is, there simply isn’t enough available.”
Now that Malaysia has begun quantifying the potential costs, Yin said, the country must begin seriously looking for financing. “And we haven’t even started on what it will take to conserve forests, which are expected to absorb 90% to 95% of our emissions let alone adaptation,” he added.
Yin admitted he has doubts about whether Malaysia can raise that much money domestically.
“How many bonds can we realistically issue before the market starts asking, ‘Can this really be deployed and paid back?’
Sure, some bonds can be rolled over, he said, but without a clearer picture of adaptation costs, Malaysia is flying blind.
“That could be significant, considering 70% of our population lives in coastal zones. That’s a lot to protect,” he added.
Yin pointed to the 2021 floods, triggered by about a week of rain, which caused RM6.1 billion in damage, according to the Statistics Department.
“We weren’t prepared. We’re still not prepared for that kind of cost. And RM6.1 billion is roughly what our Covid-19 vaccine programme cost.”
Yin said he is not optimistic about the outlook stating that the way the United States has gone since 2024 is not encouraging. “And I’m not optimistic about the European Union either. It has traditionally been a climate champion, but it has now veered sharply to the far right and is talking more about missiles than climate.”
It is incredibly frustrating that international climate action is slowing down and, as a result, the availability of international finance may also shrink, Yin said.
“That means for us, we may have to shoulder even more adaptation costs ourselves as time goes on.”
