muhammad bin ibrahim : role and opportunities of the financial system in supporting green technology welcoming remarks by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at the green technology financing bankers ’ conference, hosted by the central bank of malaysia and the institute of bankers malaysia ( ibbm ), kuala lumpur, 2 october 2012. * * * ladies and gentlemen, distinguished guests, introduction i am pleased to welcome you today to the green technology financing conference jointly hosted by bank negara malaysia and the institute of bankers malaysia ( ibbm ). this conference is timely and provides the industry with valuable opportunities to stay abreast with key developments in green technology financing and discuss transformative solutions to grow this new era of financing in a sustainable manner. my remarks today will hence focus on how the financial system can play a catalysing role in the development of a vibrant and dynamic green technology financing ecosystem, and to continuously support the needs of the economy in becoming a high value added high income economy by 2020. the world ’ s ecosystem is experiencing growing risks of climate change, resource depletion and environment degradation which have far reaching and irreversible ramifications for societies and economies. in the past 100 years, the global temperature has risen by 0. 74°c as carbon dioxide intensity has increased largely due to increasing use of fossil fuels. more than 80 % of our energy needs are currently derived from fossil fuels, exerting a huge burden on this non - renewable resource. the global forest acreage has reduced by 40 % in the last 300 years. in many countries around the continents, hectares of forests are lost annually, resulting in severe deforestation issues that will leave adverse consequences to future generations. sustainable development is hence paramount, necessitating financial support, strong political will and fundamental cultural changes to create the necessary enabling environment. increased awareness for sustainable development is beginning to profoundly change the behaviour of consumers, who are beginning to demand for more green solutions. this trend and awareness has begun to shape preferences for goods and services, as evident from a survey of young adults conducted by the boston consulting group where 73 % of respondents stated that green factors are amongst the key considerations in making purchasing decisions. more households and businesses are adopting green lifestyles – a trend that is already well - entrenched in many advanced countries and gaining rapid momentum in several developing economies, including in the asean region. the environmental products and services market globally is estimated to be worth usd1. 4 trillion. the growth potential

aggregate terms, the value accumulated by participating financial institutions in terms of greater familiarity with green technology applications, and their potential and success factors for commercialisation is an important ingredient in positioning financial institutions to further expand financing into this new and increasingly important area of growth. therefore, the financial industry needs to do more. opportunities moving forward moving forward, the finance industry ’ s ability to leverage on the opportunities in green technology financing will determine the pace of growth in the green technology sector in malaysia. the sme masterplan 2012 – 2020 has identified potential areas such as solar power and energy efficiency products as well as other related services such as design and consulting of green solutions that could facilitate smes to move up the value chain. this is expected to contribute towards achieving the targets set under the sme masterplan, where smes contribute 41 % of gdp, 62 % of total employment and 25 % of total exports by 2020. another important trend is that with higher commodity prices and advances in green technology solutions, price differentials between traditional solutions and green solutions are likely to narrow substantially over time. under these conditions, the green technology sector is expected to attract significant investments across many sectors which will produce high value added outputs and create high - income employment opportunities. a united nations study estimated that about usd76 trillion worth of investment is needed in green technology over the next 40 years to “ avert a climate change catastrophe ” such as global warming, resource depletion and loss of biodiversity. already, economies that have invested strategically in the green technology sector are reaping the benefits. germany, for example, which produces 17 % of the world ’ s green technology outputs has seen an increase in employment in the green technology sector from 166, 000 jobs in 2004 to an estimated 280, 000 in 2011. recognising the immense potential of the green sector, 77 financial institutions from 32 countries have adopted the equator principles to enhance their capability to provide financing to ventures which are both economically viable and environmentally friendly. adoption of the equator principles allows financial institutions to play a leading role to promote responsible environmental stewardship and socially responsible development. furthermore, training and access to the tools and research necessary to develop the necessary expertise to adopt green financing is available through global initiatives such as the united nations environment programme finance initiative. to achieve more significant progress in green financing, some key priorities in malaysia could include the following : i. financial institutions to constantly develop expertise in support of this sector. green financing teams should have in - depth