IFC invests $70m in Malaysia’s XSD to boost green paper production and jobs

The collaboration underscores IFC’s broader commitment to strengthening environmentally responsible manufacturing sectors across Asia.

The World Bank Group, through the International Finance Corporation (IFC), has announced a major partnership with XSD International Paper Sdn Bhd (XSD) to drive sustainability, expand production capacity, and support job creation in Malaysia’s rapidly growing paper industry. The collaboration underscores IFC’s broader commitment to strengthening environmentally responsible manufacturing sectors across Asia.

$70 Million Financing Package to Advance Green Growth

IFC has approved a $70 million financing package, including a $28 million green loan, to support XSD’s strategic investments in cleaner production and renewable energy. The funding will enable:

• Construction of a biomass-powered cogeneration plant in Kulim, Kedah, producing electricity and steam from sustainable sources

• Expansion of XSD’s facilities to add a third duplex board paper production line

• Increased annual production capacity by 300,000 tons, raising total output to 800,000 tons per year

The cogeneration plant will reduce reliance on fossil fuels, lower greenhouse gas emissions, and support XSD’s transition toward more sustainable industrial practices.

Boosting Malaysia’s Circular Economy

XSD, a leading Malaysian manufacturer of coated duplex board and grey board, uses recycled materials in its production processes. The IFC partnership strengthens this circular approach by scaling up recycled paper output and integrating renewable energy solutions.

XSD Chairman Li Shengfeng said the collaboration represents a major step forward for green industrial development:

“By expanding recycled paper production and adopting cleaner energy, we are strengthening the circular economy and reducing our environmental footprint. This partnership reflects our shared belief that responsible manufacturing can drive meaningful progress.”

Significant Job Creation for Local Communities

The project is expected to deliver substantial socio-economic benefits:

• 750 direct jobs

• 1,810 indirect and induced jobs

These employment opportunities will support local communities in Kedah, enhance skills development, and stimulate economic growth in the region.

Supporting Malaysia’s Manufacturing Sustainability Goals

IFC’s Regional Industry Director for Asia Pacific, Carsten Mueller, emphasized that the investment aligns with Malaysia’s broader efforts to strengthen industrial competitiveness while advancing environmental sustainability.

“Supporting Malaysia’s ambitions to enhance the sustainability and competitiveness of its manufacturing sector is a key priority for IFC. Our partnership with XSD reflects our commitment to creating jobs, promoting best practices, and driving inclusive and sustainable growth.”

Strengthening Regional Competitiveness

The partnership positions Malaysia as a regional leader in sustainable paper manufacturing by:

• Scaling renewable energy integration

• Strengthening recycling-based production systems

• Accelerating green technology adoption

• Boosting export competitiveness through efficient, low-emission production

With global demand rising for environmentally certified paper products, XSD’s expansion is expected to increase Malaysia’s market share and contribute to regional sustainability goals.