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Partnerships between public and private investors and philanthropists are needed to help south-east Asian countries fund decarbonisation projects, the governor of Bank Negara Malaysia (BNM) said in a speech this week.
“The urgency of climate action cannot be overstated. We must act decisively today, not just to minimise the impact on our region but to capitalise on the opportunities of the future,” Datuk Abdul Rasheed Ghaffour told a meeting of investors hosted by the Asean group of 10 south-east Asian states.
The UN estimates that the region needs about US$422bn by 2030 for climate mitigation and adaptation, but current finance flows into the region are only up to $6bn a year.
“There remains a huge gap between financing needs and current financing flows. No one party can or should shoulder this alone,” the central bank governor said.
Climate change has increased the risk of drought and floods for countries like Malaysia. Ghaffour has previously said that 25% of Malaysia’s population could be displaced due to climate change by 2030.
Ghaffour noted that the Asean Power Grid project, which should facilitate renewable energy integration across the region, needs investment of about $764bn for power generation and transmission systems by 2040.
But he said projects like this are often hampered by the high cost of capital and the lack of effective risk mitigation mechanisms.
“We have seen blended finance increasingly being utilised to tackle these financing challenges, combining public, private and philanthropic funds to mitigate risks and attract more investment,” he said.
Ghaffour said Islamic finance offered these kinds of blended finance structures which could be used to support the transition towards a more sustainable economy
“By tapping into Islamic finance instruments, Asean nations can access a broader investor base, including those seeking Shariah-compliant investment options. I invite the investment community to leverage the diversified and mature Islamic finance ecosystem in Malaysia,” he said.
This page was last updated April 10, 2025
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Emma Thomasson is a British journalist, consultant and trainer based in Berlin. She is an expert in economics, politics, business and technology. She previously worked for Reuters as a correspondent and bureau chief in Germany, Switzerland, the Netherlands, South Africa and the UK.
