Gov incentives for millers, biodiesel and biogas producers

Biodiesel and biogas plant contractors, oil palm millers installing greenhouse gas capture tanks and biodiesel plant owners are eligible to apply for cheaper loans under a new government scheme.

Energy, Green Technology and Water Minister Datuk Seri Peter Chin said that under the 2010 Budget, the government, through commercial banks, will offer RM1.5 billion worth of loans to companies that supply and use environmentally friendly technologies.

"I urge process engineers and plant owners using green technologies to put in their applications to my ministry. Once approved, they can get the soft loans from the banks," Chin told Business Times in an interview in Kuala Lumpur.

"The government is promoting green technology across all sectors," he added.

Suppliers of green technology can borrow up to RM50 million, while their clients are eligible to take a maximum loan of RM10 million. The loans, of which the government will bear 2 per cent of the total interest rate, will be offered at all commercial banks from January 1 next year. The government will also guarantee 60 per cent of the loan.

When contacted, Lipochem Sdn Bhd managing director Koh Pak Meng said, "This is good news. It will speed up the implementation of home-grown technologies to produce biodiesel and biogas." Since 2005, it has been leveraging on Malaysian Palm Oil Board (MPOB)'s technology to build biodiesel plants in Malaysia, South Korea and Indonesia. It is now working with scientists in Japan to further develop efficient ways to capture harmful greenhouse gas from palm oil mill effluent and process it into biogas for power generation.

Oil palm millers, timber processors and rubber glove makers using biomass to fuel their boilers are also eligible to apply for pioneer status and investment tax allowance.

Three weeks ago, Chin launched the handbook on Incentives for Renewable Energy and Energy Efficiency In Malaysia. "The government will only receive applications for these fiscal incentives until the end of 2010," he said.

The pioneer status, granted under the Promotion of Investments Act 1986, provides a 10-year income tax break for renewable energy businesses. There is also a full tax allowance on qualifying five-year capital expenditure. Unused allowances can be carried forward until fully absorbed.

Chin added that all applications for pioneer status, investment tax allowance and exemptions from import duty and sales tax must be submitted to the Malaysian Industrial Development Authority (MIDA).

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