RM270 Million EFT Fund A Strategic Move To Safeguard Environment, Strengthen Economy

By Suraidah Roslan and Balkish Awang

KUALA LUMPUR, Oct 15 (Bernama) -- The increase in the Ecological Fiscal Transfer (EFT) fund to RM270 million is seen as a strategic move to ensure environmental sustainability while strengthening economic well-being and national resilience in the face of climate change.

Malaysia's sustainability and environmental expert Prof Dr Mohd Fadhil Md Din said conservation efforts now went beyond tree planting and wildlife protection to encompass flood management, water security and the restoration of coastal ecosystems.

He said the fund could help state governments expand habitat protection and develop sustainable economic activities for local communities based on natural resources.

“EFT fund should increasingly emphasise outcome indicators, including the extent of habitats genuinely protected, reduced deforestation, improved biodiversity health and the protection of water catchment areas.

“In this regard, EFT can serve as a mechanism to link environmental conservation with state economic development without excessive reliance on the exploitation of natural resources,” he told Bernama.

Mohd Fadhil also proposed that Malaysia strengthen its approach to Natural Capital Accounting and the Natural Ecological Balance Sheet to translate the value of natural assets, such as forests and rivers, into measurable economic benefits.

“This would ensure that environmental conservation is no longer viewed merely as a cost, but as a strategic investment to reduce disaster-related losses, protect the nation's resources and safeguard the well-being of future generations,” he said.

Meanwhile, Universiti Putra Malaysia (UPM) Faculty of Forestry and Environment senior lecturer Assoc Prof Dr Siti Suriawati Isa described the increase in the EFT fund as a progressive step by the federal government to provide direct incentives to states that preserve protected areas.

However, she said the amount should still be regarded as seed funding and would require close monitoring to prevent leakages in its implementation.

“Through EFT cash grants, state governments receive compensation or fiscal incentives for refraining from clearing forests for development or commercial agriculture. However, the fund remains insufficient to meet the actual needs of forest conservation,” she said.

Siti Suriawati proposed that EFT be provided through statutory grants enshrined in legislation, rather than through annual budget allocations, to ensure the continuity of the country's environmental conservation efforts.

Universiti Malaysia Kelantan (UMK) Centre for University Strategic Networking (CNET) director Assoc Prof Dr Mohamad Faiz Mohd Amin said efforts to conserve forests, mangroves and peatlands must continue, given their important role in storing carbon.

He said such efforts were also essential to strengthening ecosystem resilience, with benefits extending to environmental protection, public health and economic activities.

Mohamad Faiz also described the RM100 million allocation for the construction of retention ponds and river maintenance in the Klang Valley as a timely measure to reduce the risk of flash floods.

“For Kelantan, I welcome the Lebir Dam project as part of long-term efforts to strengthen flood management and water resource security.

“The project has the potential to improve raw water security and, when supported by efficient treatment facilities and distribution system, contribute to efforts to improve the supply of clean water to the people,” he said.

When tabling Budget 2027 on Oct 9, Prime Minister Datuk Seri Anwar Ibrahim announced an increase in the EFT allocation to support state governments in conserving the nation's natural heritage, while promoting community-based economic activities and ecotourism.

-- BERNAMA