Blockchain To Be Implemented In Malaysia’s Three Biggest Industriesbr>
The Malaysian government is planning to implement blockchain technology in three of the country’s largest industries – renewable energy, agriculture sector, and Islamic finance.
The Malaysian Industry-Government Group for High Technology (MIGHT) will be in charge of the blockchain initiative. The government is hoping that blockchain will not only help boost the country’s economy but also increase transparency and sustainability in the aforementioned sectors.
“Blockchain is interesting because it allows small players to have a say about what’s going on,” said Mastura Ishak, Programme Director at Malaysian Industry-Government Group for High Technology.
For the renewable energy sector, MIGHT will hold discussions with energy firms to understand how they can use blockchain to drive transformation in the sector. MIGHT said it is currently monitoring the progress of energy companies that are trialling the blockchain tech under ‘proof of concept’ initiatives, such as Tenaga Nasional Berhad (TNB), Malaysia’s sole utility provider.
MIGHT believes that using blockchain would both increase renewable energy adoption as using an immutable distributed ledger means that sellers must declare how their electricity is generated.
“This transparency allows people to buy electricity on blockchain directly from sources of their choosing, like renewable energy,” MIGHT said. “Buyers can even connect with private solar panel owners to buy their excess electricity. These one-to-one blockchain-based transactions are much more efficient and waste less electrical energy than distributing electric power over long distances from power stations.”
For the the agriculture sector, MIGHT believes blockchain can help grow the sector, especially since Malaysia relies heavily on its agriculture exports. According to the Department of Statistics, agriculture contributed to 8.1% of the country’s Gross Domestic Product in 2016.
“Bringing agriculture onto blockchain is interesting and relevant to Malaysia, as we export a lot of resources,” Ishak said.
Ishak added that they are looking to put produce and certifications on the blockchain, starting with palm oil, which contributes 43.1% of Malaysia’s agricultural income.
Placing certifications for palm oil on blockchain will allow the government to supervise and monitor production and make more sensible regulatory decisions.
In Islamic finance, there are laws that forbid interest collection, and mandate that debt creation must be backed by underlying material goods like gold, rather than intangibles like futures. The strict requirements have created higher legal and administrative costs for major Islamic banks in Malaysia.
Ishak said they will be exploring how blockchain can mitigate these costs, while allowing banks to remain compliant with Islamic laws.
“How do you look at Sharia compliance in Islamic banking? Using blockchain to actually capture this market is important,” Ishak said.