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Rising power costs boost Malaysian solar and LED lighting sectors

A combination of rising energy costs and supportive government environmental policies excited hopes of better times to come for many exhibitors at the combined Solar Asia and Ecolight Asia shows held in Kuala Lumpur earlier this year.

Photo: Trina Solar: Building Malaysia’s green power base.
Trina Solar: Building Malaysia's green power base.
Photo: Trina Solar: Building Malaysia’s green power base.
Trina Solar: Building Malaysia's green power base.

A surge in business is on the cards for the Malaysian LED lighting and solar panel industry, according to exhibitors at the Solar Asia 2015 and Ecolight Asia 2015 show, with both shows held in Kuala Lumpur as part of the city's week long Ecobuild Asia initiative. Overall, two main trends were spurring this optimism – rising energy costs, which are forcing companies and consumers to look at energy saving options, and government policies aimed at boosting Malaysia's environmental credentials.

Beh Hun Yong, Business Development Manager at the Pulau Pinang-based IQ Group, manufacturers of sensors and sensor-controlled LEDs, said: "Right now, everyone is going green. As energy costs are quite high, people's thinking is starting to change."

Kenree Low, Assistant Sales Manager at Lybase, a Malaysian LED manufacturer agreed, saying: "The industry is growing strongly with people now looking for more green products." Such developments were clearly timely, with exhibitors at the Ecolight event claiming to offer energy savings of between 70 and 90% compared to conventional lighting.

Opinions, though, were divided as to whether this new interest in energy saving products was a result of growing environmental awareness among companies and consumers in Malaysia or simply a response to rising energy prices. Justin Yang, an International Sales Executive at Ri Shang, a Shenzhen-based LED manufacturer, was firmly in the latter camp.

He said: "People here are not really concerned about green issues. When I tell them that a product is good for the environment, they are not interested. They only care about the cost."

This view was not, however, universal. Bryan Ooi, Business Development Manager at TCMY, a Malaysian trading company specialising in LED lighting systems, said: "The big companies we supply are not only interested in cost savings, they also want to be environmentally-friendly. They see this as part of their corporate social responsibility programme."

Another recent driver for the growth in LED lighting has been government involvement in the sector. Highlighting this, Low said: "The government has started a green procurement programme in a bid to encourage a shift from conventional lighting systems to LEDs. All new developments must now use LEDs.

"Enforcement of the regulations, though, is something of an issue. There are many sub-standard products on the market – a lot of them sourced from China – and the government needs to apply the rules on only buying LEDs for new developments far more strictly."

Yong also felt that more could be done at an official level to drive the growth in LED lighting. Explaining his concerns, he said: "Last week I was at an equivalent event in Singapore and there were ten times as many people in attendance.

"The government in Singapore is doing a lot to encourage people to go green, particularly through tax incentives. As a result, in Singapore, the ROI on LEDs is very good. You can make your initial investment back in as little as nine months, far more quickly than you can do here."

Consumer education in Malaysia was another area that a number of exhibitors felt was holding back the industry. With this in mind, Low said: "Lybase has had its products certified in line with both Malaysian and international inspection regimes in order to demonstrate their safety and efficiency. While our customers appreciate this, they often don't realise the importance of the certification until we explain it."

Photo: Hun Yong: “Everyone is going green”.
Hun Yong: "Everyone is going green".
Photo: Hun Yong: “Everyone is going green”.
Hun Yong: "Everyone is going green".
Photo: Ooi: “Not only interested in cost savings.”
Ooi: "Not only interested in cost savings."
Photo: Ooi: “Not only interested in cost savings.”
Ooi: "Not only interested in cost savings."

The expectation is, however, that this will change in the coming years, with many exhibitors acknowledging that LED lighting is still a relatively young industry. Ooi said: "Five or ten years ago, LED products were not very reliable or stable. Now, as they become more dependable, longer lasting and capable of providing a better light, people are gaining confidence."

Similar trends are also being seen in the solar energy industry. New Yoong Chee, a Manager with MSD Blue Ocean, a local solar ring manufacturer said: "Everyone is going green. We have many developers coming to us saying that they want a green building and everything associated with it. A lot of people are not looking at the green part of it, though. It is actually more about saving money."

As with the LED lighting sector, the future of solar power in Malaysia is heavily linked to government policies. Junrhey Castro, Sales Manager for the Emerging Markets, Asia and the Middle East at Trina Solar, a Chinese photovoltaic module producer, sees Malaysia a key emerging market, though currently still far less significant than Japan, China or India.

He said: "The Malaysian government is inclined to give broad support to solar energy and green energy, so we see a change in policy coming soon, something that will strongly influence the market. This should attract more investors, both overseas and local, making the business case for investing in solar even stronger."

Such is the demand for electricity in Malaysia that Trina Solar is also getting involved in power production. Explaining the move, Castro said: "As the demand for power exceeds supply, we have been building solar power plants and selling the power generated to the utility providers."

Both MSD Blue Ocean and Trina Solar also manufacture solar products in Malaysia for export. Castro said: "While the largest part of our manufacturing is in China, we also have a factory in Malaysia, which mainly serves the US market."

According to Chee, part of the reason MSD Blue Ocean manufacturing in Malaysia is because it is cheaper to export from Malaysia than from China. He said: "We chose Malaysia because there are a lot of incentives to trade with Australia and New Zealand and it is also cheaper to get to those countries from Malaysia. As an additional consideration, if our parent company produced the goods in China, then they would face lots of anti-dumping tariffs if they wanted to sell in the US. This is not an issue if we manufacture in Malaysia."

Chinese companies are significantly involved in both the LED lighting and solar industry in Malaysia, with exhibitors at both Solar Asia and Ecolight Asia offering a range of different views as to the quality of Chinese-made goods. Perhaps unsurprisingly, Chinese companies – or those selling China-made products – maintained that their clients were more than happy to buy from China.

Representing one such company, Chee said: "Our clients don't find it a problem that we have a Chinese parent company. We have lots of clients who buy products from German or American companies and then find out that they are all made in China."

By contrast, Ooi complained that competition from cheaper, lower quality LED lights from China was one of the major problems TCMY faced. He said: "There is a significant quality difference between our products and Chinese products. Whether this affects consumers depends on their budget. If the budget is limited and they want to go the energy saving route, then they have to go for Chinese products. If they want quality, then they look elsewhere – perhaps to us."

Unsurprisingly, price remains one of the major factors in accessing the solar or LED lighting markets in Malaysia. As the cost of energy rises and the government looks to encourage energy saving, the use of renewable energy will inevitably become more appealing. This is a development that will clearly benefit the LED lighting and solar power industries and one that many exhibitors were keenly anticipating.

Photo: MSD Blue Ocean: Sourcing solar panels from China and Malaysia.
MSD Blue Ocean: Sourcing solar panels from China and Malaysia.
Photo: MSD Blue Ocean: Sourcing solar panels from China and Malaysia.
MSD Blue Ocean: Sourcing solar panels from China and Malaysia.

The Solar Asia 2015 and Ecolight Asia 2015 exhibitions took place from the 9-11 September at the Putra World Trade Centre in Kuala Lumpur.

Geoff de Freitas, Special Correspondent, Kuala Lumpur

Content provided by Picture: HKTDC Research
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