The International Finance Corporation ( IFC ) has provided a US$70 million financing package to XSD International Paper of Malaysia, including a US$28 million green loan, to finance the planned construction of a co-generation plant in Kulim in the state of Kedah that will use biomass to produce electricity and steam.

The funding, announced on December 18, will support XSD’s efforts to boost environmentally responsible paper production using recycled materials and renewable energy. Part of the financing package will be used for the construction of a third production line for duplex board paper, which will enable XSD to produce an extra 300,000 tonnes of paper per year, bringing the company’s capacity to 800,000 tonnes annually.

The project is expected to generate economic benefits by creating an estimated 750 direct jobs and 1,810 indirect and induced jobs, boosting employment opportunities and lifting incomes for local communities in Kedah.

XSD chairman Li Shengfeng describes the collaboration with IFC as an important milestone in advancing sustainable growth in Malaysia’s paper industry. “By expanding recycled paper production and adopting cleaner, renewable energy, we are strengthening the circular economy and reducing our environmental footprint,” he says. “This partnership reflects our shared belief that responsible manufacturing can drive meaningful progress, and XSD remains committed to contributing to a greener, more resilient industry for future generations.”

Carsten Mueller, regional industry director for manufacturing, agribusiness and services in Asia-Pacific at IFC, says the partnership with XSD reflects the IFC’s commitment to creating jobs and promoting best practices, while simultaneously promoting inclusive and sustainable growth in Malaysia.

XSD International Paper is one of Malaysia’s leading paper manufacturers, specializing, among others, in coated duplex board, grey board, and composite paperboard for both domestic and international markets. The company promotes sustainability through energy efficiency, renewable energy, circular-economy practices, and investments in innovation, talent and community engagement.