Energy Transformation for Sustainable Future: Issues and Challenges for Malaysian Micro, Small and Medium Enterprises

The effort of transition to more environmentally friendly energy is required recently due to awareness on severe climate change, environmental damage, and to ensure a long-term environmental, economic and social sustainability. In Malaysia, Micro, Small and Medium Enterprises (MSMEs) type of business are importance in supporting and accelerating the national economic development. This type of business make up a large part of the country’s human workforce and contributed to more than 90 percent on the gross domestic product (GDP). Unfortunately, MSMEs have many reasons and experience several challenges to adopt energy transformation practices. Thus, the aim of the study is to explore the challenges and barriers faced by MSMEs in adopting sustainable energy solutions. A review from literature finds that among of these problems include high initial investment costs of renewable energy technologies, insufficient government support, lack of skilled workforce and poor knowledge on energy efficiency measures. The study also wishes to examine the role of policy, frameworks, financial incentives and capacity building in assisting MSMEs to transform their energy efficiency. This research also intend to assess the current state of energy use among Malaysian MSMEs and understand their needs to provide recommendations to overcome these obstacles. Implementation of renewable energy and elevation of energy-efficient practices by Malaysian MSMEs can contribute significantly to carbon emissions reduction. This will lead to a more sustainable low-carbon economy and hence achievement of Malaysian Net Zero target by 2030. Besides, stakeholder collaboration such as government agencies, industry players, regulatory bodies and financial institutions, are also critical in expediting a impactful energy transformation for small business in Malaysia.

energy transformation, sustainability, SDGs, climate change, MSMEs

1. Abd Aziz, A. J., Baharuddin, N. A., Khalid, R. M., & Kamarudin, S. K. (2024). Review of the policies and development programs for renewable energy in Malaysia: Progress, achievements and challenges. Energy Exploration & Exploitation, 42(4), 1472-1501. [Google Scholar] [Crossref]

2. Chachuli, F. S. M., Ludin, N. A., Jedi, M. A. M., & Hamid, N. H. (2021). Transition of renewable energy policies in Malaysia: Benchmarking with data envelopment analysis. Renewable and Sustainable Energy Reviews, 150, 111456. [Google Scholar] [Crossref]

3. Coy, D., Malekpour, S., Saeri, A. K., & Dargaville, R. (2021). Rethinking community empowerment in the energy transformation: A critical review of the definitions, drivers and outcomes. Energy Research & Social Science, 72, 101871. [Google Scholar] [Crossref]

4. Gielen, D., Boshell, F., Saygin, D., Bazilian, M. D., Wagner, N., & Gorini, R. (2019). The role of renewable energy in the global energy transformation. Energy Strategy Reviews, 24, 38–50. [Google Scholar] [Crossref]

5. Nepal, R., Liu, Y., Dong, K., & Jamasb, T. (2024). Green financing, energy transformation, and the moderating effect of digital economy in developing countries. Environmental and Resource Economics, 87(12), 3357-3386. [Google Scholar] [Crossref]

6. Phuang, Z. X., Lin, Z., Liew, P. Y., Hanafiah, M. M., & Woon, K. S. (2022). The dilemma in energy transition in Malaysia: A comparative life cycle assessment of large scale solar and biodiesel production from palm oil. Journal of Cleaner Production, 350, 131475. [Google Scholar] [Crossref]

7. Rose, S. K., Kriegler, E., Bibas, R., Calvin, K., Popp, A., van Vuuren, D. P., & Weyant, J. (2014). Bioenergy in energy transformation and climate management. Climatic Change, 123(3), 477-493. [Google Scholar] [Crossref]

8. Salin, A. S. A. P., Ghuslan, M. I., Mahmud, N. M., Zawawi, M. M., Che Hasan, H., Halid, S., Abd. Wahab, R., & Abdullah, W. R. W. (2026). The impact of green tax incentives on ESG performance of SMEs. Advanced International Journal of Business Entrepreneurship and SMEs, 8(28), 137-149 [Google Scholar] [Crossref]

9. Vaka, M., Walvekar, R., Rasheed, A. K., & Khalid, M. (2020). A review on Malaysia’s solar energy pathway towards carbon-neutral Malaysia beyond Covid’19 pandemic. Journal of Cleaner Production, 273, 122834. [Google Scholar] [Crossref]

• A Review of the Relationship Between Sustainable Energy and the Principle of Energy Resilience: A Case Study of Malaysia
• Artificial Neural Network-Based Modeling for Monthly Average Global Solar Radiation Estimation in South East Nigeria
• The Asymmetric Nexus: Energy Efficiency and Total Factor Productivity in Nigeria’s Manufacturing Sector
• Assessing the Feasibility and Implementation of Smart Grids in Malawi: Challenges and Solutions
• Public–Private Partnership Practices and Performance of Geothermal Energy Projects in Kenya