THE agreements signed on green and digital economies between Malaysia and Singapore in January this year indicates the latest potential in Asean neighbours as they have shared history, geography, economy, culture, and family ties to collaborate and boost prosperity at home and across the region.
While Asean has grown significantly in recent decades, there is still huge potential for Malaysia and Singapore to be at the heart of attaining it.
The International Monetary Fund data reported that Malaysia and Singapore contribute nearly a quarter of Asean's GDP and the projected combined GDP of US$914 billion in 2023 will ascend to US$1.15 trillion by 2027. This economic heft is underpinned by a robust mutual trade.
Each is the other's second-largest partner, with trade expected to total about US$110 billion in 2022. Moreover, Singapore is Malaysia's second-largest foreign investor, with US$12 billion invested in 2021.
In a significant move to strengthen economic ties with Singapore, Malaysia made the historic decision to lift its 18-month ban on renewable energy exports on May 9, this year to tap into Singapore's demand for cleaner energy and encourage local renewable energy generation.
Minister of Economy, Rafizi Ramli made the announcement and pledged to double the speed of the country's initial renewable energy installation target and achieve a 70 per cent generation capacity by 2050.
The export ban was imposed in October 2021 and was aimed at keeping the domestic renewable energy supply to induce foreign and domestic direct investments from clean energy requiring businesses.
This step marks an important milestone in Malaysia's energy landscape while gearing the nation towards a greener future with a view to forge new economic frontiers.
The renewable energy export to Singapore aligns with Malaysia's commitment to environmental sustainability and reduction of CO2 emissions.
Therefore, displacing fossil fuel-based energy generation in Singapore with clean and renewable energy from Malaysia will create significant strides towards mitigating climate change and improving air quality.
According to the International Energy Agency estimates, this landmark agreement has the potential to prevent over 2 million tonnes of CO2 emissions annually, an equivalent to taking 425,000 cars off the road each year.
This ambitious move strengthens Malaysia's position in international efforts to combat global warming and bolsters its reputation in environmental sustainability.
The prospects of renewable energy exports seem lucrative, but Malaysia remains steadfast in securing reliable, affordable energy for its citizens and supporting the local industries.
The Natural Resources, Environment and Climate Change Ministry has outlined a comprehensive roadmap that ensures domestic energy requirements are met, with renewable energy accounting for 23 per cent of Malaysia's total energy mix by 2025.
In line with its increased targets, the Malaysian government has also approved the development of self-contained renewable energy systems which enable renewable energy trading by private sector participants on a willing- buyer willing-seller basis.
This commitment underscores Malaysia's dedication in fostering sustainable development and ensuring benefits from the renewable energy revolution.
The government's latest initiatives also welcome a move to free up the market-driven renewable energy development, which helps to accelerate the energy transition momentum.
Removal of the export ban provides an opportunity for Malaysian renewable energy providers to generate more revenue, over and above the market rates from existing power purchase agreement system; hence, empowering organisations that are focused on renewable energy development to examine the development of microgrid and off-grid energy solutions.
Crucial to Malaysia's successful renewable energy export venture is the establishment of a robust infrastructure and seamless integration with Singapore's power grid, estimated to cost an astounding US$143 billion encompassing funding for new renewable energy generation sources, grid infrastructure reinforcement, energy storage system integration, and operational expenses to ensure a smooth and efficient energy transfer.
This remarkable investment not only enhances regional cooperation in the sector but also solidifies Malaysia's pivotal role as the primary energy hub in Southeast Asia.
Malaysia's move to open up the import of renewable energy to Singapore is a positive move, especially in the spirit of the Asean power grid initiative in which we hope to see increased regional cooperation in cross-border energy trade.
As Malaysia harnesses its renewable energy potential, opportunities are embraced for economic diversification, environmental benefits, and enhanced energy security.
Malaysia is poised to lead the change towards a greener and more resilient future, empowering regional partnerships, and energising the economy.
This trailblazing move paves the way for a cleaner energy landscape and serves as an inspiration for nations worldwide to embrace the untapped renewable energy potential, accelerating towards a more sustainable and prosperous future.
The writer is Senior Training Consultant, Public Policy, Project Management and Governance Studies Centre, National Institute of Public Administration (Intan)