KUALA LUMPUR, 18 OCTOBER 2024 – Budget 2025 sends a strong signal to Oil & Gas Services and Equipment (OGSE) companies to participate in the energy transition, providing opportunities which support the pivot to a green and sustainable economy anchored on the principles of the Madani Economy Framework.

Mohd Yazid Ja’afar, President/CEO, Malaysia Petroleum Resources Corporation (MPRC) said, “MPRC lauds Budget 2025’s emphasis on a green, digital and resilient future that is inclusive for all Malaysians as we continue to reach for high-income status. Many of the initiatives announced under Budget 2025 will create opportunities for the OGSE sector, especially as we continue to tackle the energy transition and move higher up the green value chain,” said Mohd Yazid.

In particular, the increase in the National Energy Transition Fund, from RM100 million to RM300 million demonstrates the government’s clear intent to accelerate the energy transition. “This significant allocation highlights a serious commitment to scaling up renewable energy and reducing dependence on fossil fuels, clearly signalling to OGSE companies which form the oil & gas supply chain to rise to the demands of a low carbon economy,” said Mohd Yazid.

Furthermore, Budget 2025 paves the way for the development of Carbon Capture, Utilisation, and Storage (CCUS) in Malaysia ahead of the tabling of the CCUS Bill in November this year.

“Expanding tax incentives for downstream carbon products under the New Investment Incentive Framework underscores Malaysia’s understanding of the importance of CCUS in achieving net-zero emissions. This initiative, coupled with plans to facilitate access to sustainable financing and introduce a regulatory framework, reinforces Malaysia’s positioning as a key player in the global carbon management market,” said Mohd Yazid.

Additionally, he noted that the introduction of a carbon tax by 2026 is a bold but necessary regulatory move to speed up the adoption of low-carbon solutions like CCUS. Revenues from the carbon tax would fund green technology R&D to ensure that innovation continues to drive Malaysia’s energy transition.

MPRC also views positively the continuity and enhancement of funding from Bank Negara Malaysia’s RM2 billion green technology financing facilities, RM3 billion under the Green Technology Financing Scheme (GTFS), as well as the extension of tax exemptions and incentives under Green Income Tax Exemption (GITE) and Green Investment Tax Allowance (GITA) programmes, respectively. These will benefit the OGSE sector in managing the increasing requirements to comply with sustainability, which is key for accessing finance and investments.

The host of SME financing and export incentives announced will also assist OGSE SMEs to address access to financing, enhance productivity and expand their market reach. “OGSE exports remain a crucial focus area of the National OGSE Industry Blueprint (OGSE Blueprint) 2021-2030, and it is hoped that OGSE companies will explore these avenues for export financing,” said Mohd Yazid.

Various digital and technology-focused allocations from Budget 2025 are also seen to encourage more technology collaboration between industry and academia. These would further benefit the OGSE Technology Network led by MPRC and participated by industry, academia and R&D institutions to bridge R&D and commercialisation, noted Mohd Yazid.

The government’s increased investment in the technical and vocational education and training (TVET) ecosystem could also be pivotal in sustaining the OGSE sector’s growth. Given that TVET-trained personnel form the backbone of the OGSE sector, the increased allocation ensures a skilled workforce capable of meeting the industry’s evolving demands.

In addition, a range of incentives for industrial training can significantly enhance students’ technical skills, provide invaluable hands-on experience, and better prepare them for the workforce. Further, the higher minimum wage and establishment of a reasonable wage for TVET graduates could significantly benefit low-income workers and boost the appeal of TVET programmes, leading to a more equitable and skilled workforce.

Mohd Yazid concluded that overall, Budget 2025 align with MPRC’s strategic focus areas of OGSE sector development, energy transition (sustainability) and policy advocacy and advisory, where the organisation will soon announce new initiatives on OGSE capability-building in sustainability and facilitation of strategic partnerships.

“We are also finalising the Mid-Term Review (MTR) of the OGSE Blueprint, which will be introduced in 2025. We further expect benefits from Budget 2025 to support new initiatives to be announced from the OGSE Blueprint MTR,” concluded Mohd Yazid.

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About MPRC

Established in April 2011, Malaysia Petroleum Resources Corporation (MPRC) is an agency of the Ministry of Economy primarily tasked with advancing Malaysia’s Oil and Gas Services and Equipment (OGSE) sector. As countries around the world, including Malaysia, embark on the energy transition, MPRC further advocates for OGSE companies to pivot towards cleaner and sustainable energy as new areas for business growth. MPRC also provides policy recommendations to the Government on the oil & gas and energy industries.

Following the launch of the National OGSE Industry Blueprint 2021-2030 (OGSE Blueprint), MPRC serves as its custodian, coordinating and implementing its initiatives together with OGSE Blueprint partners. The OGSE Blueprint seeks to develop a robust, resilient, and globally competitive OGSE sector that contributes to sustainable national development in Malaysia.