Kuala Lumpur, 14 December 2023: The Institute for Democracy and Economic Affairs (IDEAS) released Brief IDEAS No. 39 today, titled “Competitive Neutrality in the Malaysian Power Sector: Removing Barriers for a Greener and More Innovative Energy Industry.” Authored by Dr Renato Lima de Oliveira, IDEAS Senior Fellow and Assistant  Professor of Management at the Asia School of Business with the IDEAS team, this report delves into crucial aspects of Malaysia’s power industry, addressing obstacles and proposing pathways for a more level-playing field amongst industry players, thereby enabling a smoother, more efficient transition toward renewable energy use in Malaysia. 

The historical dominance of state-owned enterprises employing a vertically integrated model in the energy sector globally has been disrupted by increasing environmental concerns and the rise of renewable energy sources. There is no doubt that this model of energy supply has succeeded in providing Malaysians with reliable, affordable energy. However, this model is no longer aligned with the nation’s trajectory towards clean, intermittent and decentralised energy sources. With the vital goal of achieving net-zero emissions in the near future, the Malaysian energy sector must see a spike in investments and innovation.

The study assesses the current regulatory landscape of the Malaysian energy sector and whether a level playing field is present in order to promote the entry of new industry players. Using competitive neutrality as the core concept, the authors analyse the nature of competition in the energy sector and the challenges faced by industry players. “According to experts at the Focus Group Discussion held for this study, many of the industry players face restrictions in growing their businesses due to policy constraints and lack of access to the resources needed for energy generation, ” said Dr Juita Mohamad, Director of Research at IDEAS.

Two recommendations are put forth in the paper. Firstly, it proposes a comprehensive reform of the electricity supply industry to increase the share of renewable energy, fostering a more competitive market in line with the fundamental principles of the National Energy Transition Roadmap (NETR). Secondly, the report underscores the significance of enhancing competitive neutrality, both broadly across government-linked companies (GLCs) and specifically within the electricity supply industry. This, it argues, will unlock new investment opportunities and propel the growth of sustainable, green practices. 

“Recognising the risks associated with insufficient competition, especially in sectors facing such challenges, there is a need for a concentrated effort to strengthen Malaysia’s electricity sector’s regulatory framework,” ends Dr Tricia Yeoh, CEO of IDEAS.

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