KUALA LUMPUR, Oct 18 — Financial institutions could soon restrict loans for companies that cause harm to the environment if the Natural Resources and Environment Ministry have its way.
Minister Datuk Seri Wan Junaidi Tuanku Jaafar said the mechanism will affect local and foreign companies operating in Malaysia, regardless of industries.
“We are working with the banking sector to devise a mechanism (in which) the banks will either discontinue or limit the financial facility offered to companies who damage the environment, regardless whether there are construction, manufacturing, plantation or agriculture companies,” he said after officiating at the national level Malaysian Environment Week at Taman Tasik Titiwangsa yesterday.
Wan Junaidi said although these industries may be contributing positively to the economy, they may be causing adverse effects to the environment.
“We can impose several restrictions. For example, if we find companies or foreign investors using obsolete and environmental-unfriendly technologies, we can inform financial institutions to block financing.
“Although international banks have this mechanism, it has yet to be implemented locally.”
He urged companies and foreign investors to practice self-monitoring, self enforcement and also focus on sustainable projects and green technology.
“Don’t wait until the government takes drastic measures such as issuing a stop-work order or enforce regulations and laws,” he warned.
“The haze is a result of lack of internal mechanism and unsustainable development. What the companies do (burning forests) is not only affecting one country, but also its neighbours,” he said.
“Internal mechanisms must be there as everyone should contribute to the interests of preserving the environment.”
Wan Junaidi also urged investors to refrain from financing and bringing in industries which still adopt obsolete and environmental-unfriendly technologies.
“If foreign investors would like to carry out projects here, the government should look into its sustainability and whether these companies adopt environmental-friendly technologies.”
The ministry’s proposal was met with mixed reaction with industry players saying the matter must be approached with caution.
Calling the move a positive development, Federation of Malaysian Manufacturers president Datuk Seri Saw Choo Boon agreed those responsible for environmental degradation should be held accountable.
“Economic development should not come at the expense of the quality of our environment.
“But we need to have safeguards in place to ensure innocent companies and businesses are not penalised,” he said.
Kuala Lumpur Malay Chamber of Commerce vice-president Major (rtd) Sarmide Marjuden said such a move should be carefully studied.
“We are talking about potentially cutting off business and industries from the banking sector as punishment.
“We must proceed with caution as it will affect not only the companies and industry but the banking sector as well,” he said.
Malaysian Associated Indian Chambers of Commerce and Industry president Tan Sri K. Kenneth Eswaran said: “The plan needs the input of industry players and those involved in preparing the legislation must engage with the various industries.
“We can’t single out any particular industry. Industrial impact on the environment happens in sectors as diverse as land reclamation and construction.”
