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Opinion Article: Budget 2022 - Continuation of Allocations for the Environment a Welcomed Gesture

The recent Budget 2022 announcement focused on achieving a comprehensive recovery, and rebuilding our economy post the COVID-19 pandemic. As our natural environment is the foundation which our society and economy are built on, we need to mainstream environmental protection into other policies and decision-making. As such, the announcement on aligning this year's and future budgets to green budgeting is very much welcomed. 

In line with the Prime Minister’s announcement that Malaysia is moving towards becoming a carbon-neutral nation by 2050, it was heartening to see the inclusion of carbon initiatives in the budget, such as the introduction of the voluntary carbon market and incentives for electric vehicles. We hope to see more initiatives for a smooth transition towards carbon neutrality in the future, including  strategic climate adaptation plans and resilience building, as well as support mechanisms for those affected by climate impacts.  

Circular economy is named as the 8th game changer in the 12th Malaysia Plan (12MP), and we should be making this an important part of our recovery plan. It was therefore good to see this budget give added support to Micro, Small and Medium Enterprises (MSMEs) to transition to the use of sustainable raw materials and renewable energy. This would also help build resilience in businesses and our economy, which is a main theme in this year's budget.

We were encouraged to see that restoring nature was identified as a way to reduce natural disasters, such as coastal erosion and flooding. In this sense, there is more integration of environmental actions to meet other objectives including community empowerment and disaster risk reduction, in line with the 12MP's overarching approach of breaking down silos in addressing issues. WWF-Malaysia urges that Nature-Based Solutions (NBS) be implemented where appropriate in climate vulnerable areas, for example protecting mangrove, coastal and marine habitats to safeguard coasts and secure coastal livelihoods.

The continuation of the Ecological Fiscal Transfer (EFT) allocation - which rewards and incentivises states to protect their natural environments - is also consistent with the 12MP’s plan to protect 20% of terrestrial and 10% of marine areas by 2025. We are reassured with the government’s pledge to allocate the EFT annually, using outcome-based ecological criteria. We look forward to working with the government to help develop these criteria, and urge that allocations be  increased substantially to reward states for maintaining and restoring nature, which benefits all Malaysians.

The announcement of programmes to empower local communities, army veterans and Orang Asli such as the Jahai tribe - as biodiversity guardians of forest areas - is much-needed. These are commendable efforts towards boosting the local communities’ involvement in conservation. Anti-poaching work is crucial in ensuring that the protection of natural resources can be carried out on the ground level. An increase in the number of rangers recruited, will allow for more forest to be patrolled. Forging partnerships with the local communities is among the key efforts to safeguard the forest and its co-inhabitants such as the Malayan tiger. Hiring the Orang Asli community will increase their participation in national-level conservation efforts and encourage stewardship-based initiatives. Though not specifically mentioned, we hope allocations can also be made for the native communities in Sabah and Sarawak who are also doing their part in protecting their wildlife, landscape and seascape. We call for these initiatives to be sustained over the long-term.

We urge that elements of sustainable infrastructure be incorporated in decision-making on development projects, especially for the Pan Borneo Highway and the Central Spine road. Bearing climate change in mind, development and infrastructure in this country require good planning to avert environmental disasters, protect ecosystem services and conserve biodiversity. Development plans should support social inclusion, apply NBS and take account of climate risks. To ensure the long-term survival of mega biodiverse countries like Malaysia, we need to integrate sustainability and a healthy respect for both the benefits nature can bring, and the havoc it can wreak, in what we build. 

The government’s second issuance of the world’s first Sustainability Sukuk would put the necessary market infrastructure in place (e.g. creation of sustainability yield curve and legal and tax frameworks) which will promote better pricing and efficient market operations. As a result, entities such as corporations, banks, private investors and GLCs would be encouraged to enter the market. 

Building on the Sustainable and Responsible Investment (SRI) sukuk framework and the upcoming SRI taxonomy by the Securities Commission Malaysia, we believe that the Sustainability Sukuk will spur greater issuance by the private sector, creating the necessary momentum to fund socially and environmentally sustainable projects and initiatives. While this is a domestic issuance catering to the domestic needs, we envisage that the Sustainability Sukuk framework will be progressively enhanced to be in line with global standards and investors' expectations over time. We also hope that the sovereign wealth funds and institutional investors continue to uphold good governance and align their objectives with the broader goals of climate and environment - to achieve long-term value creation for our future.

Finally, our marine ecosystems are some of  the most biodiverse in the world and support coastal economies and livelihoods, through regulating climate, providing coastal protection, supporting tourism, and providing food security. A large part of our protein consumption comes from fish. However, illegal and overfishing are decimating our fisheries. In addition, coastal reclamation and pollution from marine debris and land-based activities are destroying our marine environments, jeopardising our seafood production and placing the many communities that live on the coast at risk. We therefore urge that marine conservation-specific initiatives such as the establishment of marine ecological corridors, the elimination of destructive fishing practices, fisheries stock recovery, and combating poaching of marine species amongst others - though not mentioned specifically in the budget - are effectively and urgently carried out. 

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