KUCHING, Malaysia — In an ambitious pivot away from its entrenched oil and gas legacy, Malaysia’s Sarawak is working to carve out a new identity as Southeast Asia’s emerging green energy powerhouse, the head of the state’s investment agency told Nikkei Asia.
The state, located on the island of Borneo that Malaysia shares with Indonesia and Brunei, possesses immense energy resources. Its operational hydroelectric dams include Bakun and Murum, while the under-construction Baleh Dam is slated to add 1,285 megawatts to the grid by 2026. Sarawak Energy, the state’s power company, estimated that Sarawak has a potential 20,000 MW of hydropower over about 50 sites, of which 3,452 MW has been harnessed.
The Bakun Dam, Sarawak’s largest hydroelectric project and one of Southeast Asia’s most significant, was completed in 2011. The 7.4 billion ringgit ($1.56 billion) facility spans the Balui River and boasts a capacity of 2,400 MW. Its construction was part of a broader initiative to reduce reliance on fossil fuels and promote sustainable energy sources within the region.
“Sarawak is transcending its traditional energy models to embrace a future where renewable energy is the cornerstone of economic and environmental sustainability,” Timothy Ong, chief executive of InvestSarawak, said in an interview last month.
“The future of Sarawak lies in green energy, and our commitment to this vision is unwavering,” Ong said. “Through strategic investments, partnerships, and a dedicated workforce, we are not just imagining a sustainable future; we are actively building it.”
The effort is paying off, attracting a slew of foreign direct investment into the green sector. In 2023, Sarawak drew 21.4 billion ringgit in investments, with a significant chunk funneled into manufacturing and renewable energy initiatives, according to Awang Tengah Ali Hassan, the state’s deputy premier, as reported by the state information office earlier this month.
State-linked Sarawak Energy signed a memorandum of understanding in October last year with the United Arab Emirates’ Abu Dhabi Future Energy Company, also known as Masdar, as part of joint effort to develop 2 gigawatts of renewable energy projects in Malaysia at an investment value of $8 billion, according to the Malaysian Investment Development Authority. One of the plans includes developing 1 GW of renewable energy projects in Sarawak.
Beyond hydropower, Sarawak is also aiming to become a leader in the nascent hydrogen energy industry in the region. Collaborations with Japanese and South Korean companies such as SK Energy, Sumitomo Corp. and Eneos highlight the state’s role in the ongoing international push towards hydrogen as a clean, alternative fuel source.
“These ventures bring more than just investments; they bring knowledge and innovation, propelling Sarawak onto the global stage of renewable energy,” Ong said.
Sarawak’s green agenda also extends to its burgeoning digital economy, with plans to power tech industries and data centers using renewable energy. The initiative aligns with global demand for sustainable digital infrastructure, marrying digitalization with green energy in a move that Ong describes as “setting the stage for a future where digital and green go hand in hand.”
The road to a green future, however, is not without challenges. Sarawak is grappling with the need for skilled manpower and technological skills to drive its renewable ambitions. To this end, Ong said that InvestSarawak is focusing on education enhancements and talent repatriation strategies for “building a future-ready workforce for Sarawak’s renewable energy sector.”
Ong said: “We’re focusing on enhancing local education and creating enticing opportunities for our people abroad to return and contribute to our green ambitions. This is more than just a job; it’s about building a sustainable future for our next generations.”
Sarawak can play a key role in the renewable energy industry because the state can provide cost-competitive electricity tariffs. Ong reiterated that it will be serving as an anchor for energy intensive digital, advanced manufacturing.
“For me, the focus is not on the value of the investment,” he said. “My focus is on our economic complexity. On investment value, it’s pointless if we don’t have sophistication in our supply chain and that is what keeps your multinationals in the state, so you can always have the attraction [for] retention of talents.”
