COVID-19 Stimulus and Improving Energy Transition in Malaysia: Analysis and Recommendation

The social and economic devastation caused by the COVID-19 pandemic has compelled governments to mount unprecedented fiscal responses to stimulate the economy. Malaysia, for example, has rolled out over MYR 530 billion (USD 128 billion) as of September 2021. While there is a clear imperative for governments to devote sufficient resources to economic recovery, recovery plans that do not adequately factor in measures to reduce greenhouse gas emissions will put nations at greater risk of inadequately addressing a bigger threat – climate change.

This research examines Malaysia’s COVID-19 economic recovery plans and the extent to which they support a socially just, clean energy transition in the country. Despite government acknowledgement that a sustainable recovery can help transition to a climate resilient economy, provide jobs, and improve productivity, the study finds that the proportion of financing given to green initiatives in Malaysia’s pandemic stimulus packages is limited. Moreover, support has been provided to high fossil fuel emitting activities (e.g. through fuel subsidies). The study provides a number of recommendations to support Malaysia achieve the twin ambitions of economic recovery and a low carbon energy transition.