Malaysia’s EV Goal: Singular Legislation Needed

Malaysia ranks among countries in Asia with the highest car ownership per capita. Having identified this sector as driving “significant negative impacts to the nation”, including elevated carbon emissions within the transport sector, the country seeks to accelerate the penetration of electric four-wheelers to comprise 80 per cent share of the vehicle fleet by 2050. Currently, electric vehicles (EVs) comprise around 2.3 per cent of total registered vehicles. However, the country’s ambition to install EV chargers needs to be followed by consistent legislation.

Multiple studies have demonstrated that consumers’ willingness to adopt EVs is heavily reliant on the density and accessibility of a regional charging network. Dubbed a “chicken and egg problem”, EV charging infrastructure has to be in place to nudge consumers to shift to EVs. Recognising the importance of charging infrastructure to boost EV adoption, Malaysia aims to have 10,000 EV charging stations by 2025. However, progress remains slow, with less than a quarter of the goal achieved as of 20 March 2024.

The private sector has thus far been pivotal in electrifying roads. In April 2024, Singapore- and Malaysia-based EV charging companies Charge+ and ChargeSini signed a roaming collaboration agreement that grants EV drivers from both parties access to each other’s charging networks. The two companies target to achieve a combined network of 4,000 charging points by the end of 2024, up from ChargeSini’s 701 in Malaysia and under 2,000 by Charge+ in Singapore at the time of signing. Partnerships like this one have become increasingly common across Southeast Asia, signalling businesses’ commitment to scale up needed infrastructure to support the shift to EVs. In October 2023, ComfortDelgro-owned CDG Engie and Malaysia’s Yinson GreenTech signed a similar agreement to create a combined network of over 1,000 charging points for motorists on both sides of the causeway.

These moves bode well for the nascent charging infrastructure in Malaysia. Such agreements help to boost EV adoption rates, but they do not address the root of the problem of the slow expansion of charging infrastructure in Malaysia. This is still plagued by poor regulatory frameworks and high upfront costs.

Inconsistent and changing regulations pose an impediment to ramping up EV charging infrastructure. There is currently no singular legislation governing EV charging in Malaysia. Guidelines are defined at the agency level, including the Energy Commission’s Guide on Electric Vehicle Charging System and the Town and Country Planning Department PLANMalaysia’s Planning Guidelines for Electric Vehicle Charging Bay. Such had been the case in Singapore before the Electric Vehicles Charging Act 2022 was passed and took effect in December 2023. Prior to this act, some aspects were regulated under Energy Market Authority’s Electricity Act but have since been consolidated under the Land Transport Authority’s EV Act, including fire safety requirements adopted from the Singapore Civil Defence Force’s Fire Code. While the current sets of guidelines in Malaysia provide technical standards for EV charging, they are not enshrined in law and thus do not have enforcement power.

In an interview with ChargeSini, representatives shared that while charging stations can be installed quickly, it takes 3 to 4 months for licensing and permits to be approved. Several applications to different agencies are required, including Tenaga Nasional Berhad (National Energy Limited) for meter applications, Surahanjaya Tenaga (Energy Commission) for licenses and Bomba (Fire Department of Malaysia) for the necessary guidelines. There are also city council requirements, which differ from one to another. In some cases, EV charging companies are subject to rental fees to turn parking lots into EV charging bays. These logistical challenges result from the absence of a clear, single legislation governing the end-to-end process of EV charging infrastructure, from location identification to installation and operation. In fact, only 223 out of 2,020 public EV charging stations in Malaysia are licenced (as of 2 February 2024). Unlicensed charging stations could pose safety risks, with an EV reportedly catching fire at one such station in December last year.

Industry players also lament the lack of government support with regard to financing. ChargeSini shared that the cost of installation stands at RM20,000-25,000 (US$4,254-5,317) for AC charging stations and RM50,000 for DC charging stations. These are high upfront costs that companies struggle with, especially as the responsibility of installation rests on the private sector. As it stands, there are demand-side incentives such as tax exemptions of up to RM2,500 for spending on EV charging facilities, tax rebates for EV rentals and road tax exemptions. The government is also considering a One-Time Subsidy for EV ownership. However, no financial assistance is provided to charging operators. Industry players have thus criticised the government’s lofty goal of 10,000 charging stations by 2025 as a “dream”, with little tangible support to realise such a target. This has left private sector firms such as ChargeSini no recourse but to seek funding from venture capital and private equity firms. Some charging point operators have urged for subsidies to help to defray the upfront costs of installing EV chargers to ease the strain.

Multiple studies have demonstrated that consumers’ willingness to adopt EVs is heavily reliant on the density and accessibility of a regional charging network. Dubbed a “chicken and egg problem”, EV charging infrastructure has to be in place to nudge consumers to shift to EVs.

Malaysia should take a leaf from Singapore. Subsidising the installation of EV charges has been effective in the island-state. There, the number of EV chargers installed in condominiums with the support of government grants (capped at S$4,000 for each charger) has more than doubled between March 2023 and August 2023. The singular legislation, the EV charging act, has further accelerated the installation process at strata-titled developments, for example, where the threshold needed to pass resolutions to install EV chargers has lowered from 90 per cent to 50 per cent.

However, subsidising the right amount is key. A recent study showed that providing operation and construction subsidies for charging point operators at unreasonable prices could lead to a heavy fiscal burden or an overallocation of charging resources. A necessary first step, though, is coming up with a centralised legislation that serves as a guideline for charging point operators.

Such a legislation should include a comprehensive list of agencies that EV charging operators and users need to register with in different cases of land- and building-ownerships, a detailed end-to-end process of obtaining licensing and approvals, as well as safety guidelines and enforceable penalties for non-compliance. These elements can be incorporated and enhanced from existing guidelines. To do so, agencies will need to come together to smoothen out any competing guidelines, especially with regards to rights to land use and differing state- and federal-level requirements.

As the Ministry of Investment, Trade and Industry maintains the 10,000 EV charging stations by 2025 target despite slow progress, private sector initiatives like the recent cross-border partnerships are the only concrete efforts thus far that chart a way forward. Even so, until the procedural and financing issues in Malaysia can be addressed, efforts by the private sector alone are insufficient, subject to complex procedures and high upfront costs.

2024/165