Investing in Green: Bilateral Investment Treaties (BITs) Role in Malaysia’s Renewable Energy Sector

Malaysia is standing at the forefront in Southeast Asia due to its strategic geographical location and huge natural resources in the renewable energy (RE) sector. Malaysia sets an ambitious target to achieve 20% RE capacity by 2025 which shows the country’s commitment to RE, and BITs play a significant role in securing foreign direct investment (FDI) in this sector. To attract more FDI in the RE sector, Malaysia implemented various initiatives and also enacted policies or regulations to establish a more favourable business environment for foreign investors. Since 1960, Malaysia has signed seventy BITs in which sixty-nine of them were signed before enacting the Renewable Energy Act 2011. The initial findings of this study show that all seventy BITs do not have any specific provision related to RE, therefore, in case of any disputes between Malaysia and foreign investors, it would be very challenging for the Malaysian government to prevail over them. By conducting critical analysis of all Malaysian BITs, this study attempts to fill this vacuum through qualitative research, and would provide specific provision on RE to be included in future or renewable BITs.