EU’s European Investment Bank Keen To Finance Infrastructure Projects In Malaysia

By Harizah Hanim Mohamed & Mikhail Raj Abdullah

KUALA LUMPUR, Aug 7 (Bernama) – The European Investment Bank (EIB) is keen to finance Malaysia’s infrastructure projects, particularly those aligned with the country's transition to a sustainable, green economy espoused by the MADANI government.

Outgoing European Union (EU) Ambassador to Malaysia, Michalis Rokas said EIB, the EU’s investment bank, is ready to offer a mix of financial instruments including loans, bank guarantees and grants, especially for long-term infrastructure projects.

These projects encompass rail and port development, green transformation, and waste management across various states such as Perak, Sarawak, Pahang, and Penang, he said to Bernama in an interview today.

“Malaysia remains an attractive investment destination for EU companies and international financial institutions like EIB,” said Rokas, who will assume his new posting in North Macedonia on Sept 1, 2024, after his four-year stint in Malaysia.

Reflecting on the ASEAN-EU Commemorative Summit in Brussels in 2022, Rokas highlighted that European leaders committed to the Global Gateway initiative, which aims to invest 10 billion euros (approximately RM50 billion) in seven economies in Southeast Asia, including Malaysia, by 2027.

EIB’S FINANCIAL OFFERINGS

“The Global Gateway initiative includes soft loans from EIB, which can provide financing, de-risk investments for companies through guarantees, and offer grants without creating dependencies.

“Given the scale of these investments, trusted partners like EIB are essential, where they can commit to investments spanning up to 25 years — a unique proposition that commercial banks often cannot match,” he added.

He noted that it would also be difficult for companies to obtain concessionary or soft loans from banks or lending agencies and financial institutions on a long-term basis, especially for mega infrastructure projects, which is where EIB can fill the gap.

The initiative is value-based, transparent, sustainable, and green, ensuring that the benefits, including job creation and ownership, remain in Malaysia, he said, citing that EIB financed the metro systems in New Delhi and Latin America.

Jointly owned by the 27 EU member states, the Luxembourg-based EIB is one of the largest financiers of green projects globally and has regional offices, including one in Jakarta which focuses on funding activities in Southeast Asia and the Pacific region.

“I’ve visited several Malaysian states and talked about this new opportunity, which has garnered significant interest and offers significant potential, for instance, the port development in Lumut and sustainable aviation fuel projects such as hydrogen in Sarawak and Penang,” said Rokas.

Elaborating on the EU’s investments in Malaysia, he cited Port of Antwerp-Bruges International (PoABI) and Perak State Development Corporation having formed a strategic partnership last year to develop the port of Lumut.

This was PoABI’s first major project in Southeast Asia, said Rokas, adding that the EU provided a 1.9 million euro (RM9.5 million) grant for feasibility studies, recognising the port’s potential as a logistics and industrial hub.

PROPOSAL-BASED APPROACH FOR EIB FINANCING

Rokas explained that the EIB operates on a proposal basis, with states, governments, or private companies needing to submit their project proposals for consideration.

Citing the Kuala Lumpur-Singapore High-Speed Rail (HSR) project and the Mutiara Light Rail Transit (LRT) system, which require billions of ringgit, he emphasised the need for trusted partners like EIB that can commit to long-term investments.

Moreover, the Malaysian government is cautious about debt levels and prefers not to offer guarantees, which is why EIB financing is structured in such a way that it would not increase a country’s indebtedness.

He said projects like the HSR and inter-operability systems could only be undertaken by the EU, China and Japan, adding that with many other projects on the horizon in Malaysia, such as airport extensions, the EU can play a significant role.

Rokas assured that EIB’s financial assistance does not create dependencies but instead supports value-based, transparent, and sustainable projects with local ownership.

He added that EIB only approves sustainable projects, distinguishing its approach from other models.

“So, we have a very good proposition which is different from the Chinese model. By partnering globally, the EU aims to mitigate dependencies on China,” he said.

Rokas highlighted Sarawak and Perak as areas of interest for EU investors, noting that Sarawak’s green transformation projects, such as hydrogen production and sustainable aviation fuel, align with the EU’s green investment initiatives and present significant investment opportunities.

“There are numerous investment opportunities in Penang, Johor, and Selangor, and we are waiting for comprehensive proposals,” he added.

-- BERNAMA