Kota Kinabalu: Sabah’s globally significant natural assets, coupled with stronger regulatory reforms, could position the State as one of the Asia-Pacific’s leading destinations for impact investment, according to HSBC Malaysia.
Its Chief Executive Officer, Dato’ Omar Siddiq, said Sabah’s vast protected forests, rich biodiversity and status as Malaysia’s largest carbon sink provide a compelling proposition for investors seeking projects that deliver both financial returns and measurable environmental and social benefits.
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He said Sabah possesses advantages that few jurisdictions in Asia can match, making the State an attractive destination for capital aligned with environmental, social and governance (ESG) objectives.
“Sabah has legally designated close to one-third of its landmass as Totally Protected Areas (TPAs), providing one of the highest levels of biodiversity protection in Southeast Asia.
“Sabah, of course, is also a net carbon sink, contributing more than 35 per cent of Malaysia’s carbon sequestration. As carbon increasingly becomes a tradable and bankable commodity, Sabah is in a very strong position with significant natural assets,” he said.
Beyond carbon sequestration, Omar said Sabah’s marine ecosystems, tropical rainforests and Mount Kinabalu also present opportunities to generate biodiversity and blue economy credits.
He said mobilising capital in a sustainable and equitable manner is consistent with Sabah’s values, adding that the summit’s focus on championing impact investment is timely.
To help Sabah and Sabahans realise their full potential, he said continued investment in rural connectivity, road infrastructure, reliable electricity supply and access to clean water remains essential.
“These are real and substantive projects that traditional federal and state development budgets may not be able to address in their entirety within a short period. This is precisely the gap that impact investment can help fill,” he said.
Omar said impact investment could bridge the financing gap by directing private capital into projects that generate financial returns while delivering measurable social and environmental benefits.
He described Sabah as presenting a unique investment proposition, combining irreplaceable protected natural capital with genuine development needs on the ground.
“So in Sabah, we have, on the one hand, irreplaceable and protected natural capital that global investors are increasingly seeking exposure to, while on the other, we have real development financing needs on the ground.
“This creates a clear opportunity and a strong pipeline of projects where impact investment can be deployed at scale,” he said.
However, Omar stressed that projects must be structured to international investment standards to unlock that potential.
“Impact investment is not about accepting discounted returns. It is not about bolting on an impact structure as an afterthought or as a marketing exercise.
“Rather, it is about deploying the right capital to generate bankable returns with clear, specific and measurable outcomes,” he said.
He said impact investors need projects with clear risk-sharing principles, well-defined legal frameworks covering land, permits, carbon and biodiversity credit pricing, robust infrastructure to support measurement, reporting and verification (MRV) systems, transparent community benefit-sharing mechanisms, and credible long-term buyers and off-take agreements where relevant.
“When these elements are in place, impact investing moves from being an interesting concept to something that is genuinely investable at scale,” he said.
Omar noted that financing instruments such as green bonds, blended finance and venture capital are already gaining momentum, but said further policy reforms are needed to fully unlock the value of Sabah’s natural assets.
While welcoming the Sabah Climate Change and Carbon Governance Enactment as an important milestone and useful piece of legislation, he said additional federal legislation would further strengthen investor confidence.
He identified the proposed Comprehensive Climate Change Bill as a key reform that would provide the legal foundation for a carbon tax, carbon pricing and emissions trading, creating a more mature and investable carbon market for Malaysia.
