The emphasis on Environmental, Social, and Governance (ESG) principles within Malaysia’s Budget 2024 signifies a progressive step towards a sustainable future. Recognising this, the Malaysian Investment Development Authority (MIDA) has taken a proactive initiative to empower domestic small and medium enterprises (SMEs) and mid-tier companies (MTCs) in their ESG and sustainability journeys by introducing the Domestic Investment Accelerator Fund – ESG Adoption (DIAF-ESG Adoption) program.
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What is DIAF-ESG Adoption?
DIAF-ESG Adoption is a financial assistance program offering Malaysian SMEs and MTCs in selected sectors a matching grant to defray the costs associated with implementing ESG practices. These costs may include:
- Validation, verification, and ESG certification
- Subscription of system and/or software for monitoring of ESG practices
- Carbon emissions monitoring and reporting services and/or ESG practices reporting
Companies can receive a matching grant of up to 50% or 70% of their eligible expenses, with a maximum limit of RM500,000 per company.
Who is Eligible?
Companies that meet the following criteria are welcome to apply for DIAF-ESG Adoption:
- The company must be incorporated under the Companies Act, 2016.
- Effective equity ownership of the company must be at least 51% Malaysians.
- The company possesses a valid Business License from the respective Local Authority.
- The companies must engage/undertake any of the following activities:
- Manufacturing activities where the company must possess a valid Manufacturing License (ML) from MITI or the Confirmation Letter for Exemption from ML from MIDA in compliance with the Industrial Coordination Act, 1975; or
- Services activities that are governed/supervised by relevant ministries/agencies in the following areas:
- Hotel and Tourism;
- Private Healthcare;
- Private Education;
- Oil & Gas Services;
- Global Establishment – Principal Hub/Global Services Hub;
- R&D Activities;
- Logistics Services; or
- Other Services: –
- Ship Building Ship Repair;
- Green Technology Project – Business Purpose;
- Sterilisation Services;
- Digital Infrastructure; and
- Maintenance, Repair & Overhaul for Aerospace.
- The company has been in operation for at least 3 years.
- A company is categorised as SME or MTC based on the following criteria:
Sector | Types | Criteria |
SME | Manufacturing | Sales turnover not exceeding RM50 million or Total employees not exceeding 200 |
Selected Services | Sales turnover not exceeding RM20 million or Total employees not exceeding 75 | |
MTC | Manufacturing | Sales turnover from RM50 million to RM500 million |
Selected Services | Sales turnover from RM20 million to RM500 million |
The Application Process
MIDA has designed a straightforward application process for DIAF-ESG Adoption. The companies are to complete the following steps for the grant application:
Step 1 : Complete an “ESG Self-Assessment”
Complete an “ESG Self-Assessment” by visiting https://sustainability.mida.gov.my/
Step 2 : Obtain quotations from vendors/ service providers of choice
Obtain quotations from vendors/service providers of choice for the eligible project as per guidelines.
Contact us now to help you with this step.
Step 3 : Complete the DIAF-ESG Adoption form
Complete the DIAF-ESG Adoption form, providing details such as company information, existing project costs, financing structure, workforce composition, sales turnover, and more. Additionally, companies are required to outline their proposed ESG project, including objectives, project location, start date, duration, and total project cost in the form. A breakdown of expenditures must be provided, detailing costs for validation, verification, software subscriptions, and monitoring services.
Step 4 : Prepare supporting documents
Prepare supporting documents, include:
- Completed ESG Self-Assessment Report
- Proof of payment for the application fee
- Detailed quotations from relevant vendors or service providers
- Audited financial statements for the past three years
- The latest company profile by Companies Commission of Malaysia (SSM)
- Manufacturing License (ML) or Confirmation Letter Exempted from ML from MIDA
- Business premise license
- Copies of any other pertinent licenses or permits (Applicable for services company only)
- Approval letter of incentives/grant approvals by MIDA or other government agencies (if applicable).
Step 5 : Submit the application
Key in the required information and upload the DIAD-ESG Adoption form and the required documents at https://investmalaysia.mida.gov.my/
The DIAF-ESG Adoption initiative by MIDA presents a unique opportunity for Malaysian SMEs and MTCS to embrace sustainable practices and drive business growth. By aligning with ESG principles, companies can enhance their competitiveness, attract investment, and contribute to Malaysia’s sustainable development goals. Take the first step towards a more resilient and prosperous future by leveraging the DIAF-ESG Adoption for your business today.
Please note that the information provided in this article is for informational purposes only. Companies are advised to refer to the official guidelines and requirements outlined by MIDA for accurate and up-to-date information regarding the DIAF-ESG Adoption initiative.
Visit https://www.mida.gov.my/forms-and-guidelines/ for official guidelines and latest information.
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Contact us to help you to prepare and apply for the DIAF-ESG Adoption.
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