Malaysia has unveiled a national carbon market policy designed to regulate carbon trading and support the country’s transition to a lower-carbon economy, while signaling that a planned carbon tax remains on hold as the government assesses current economic and geopolitical conditions, local news source Free Malaysia Today (FMT) has reported.
Natural Resources and Environmental Sustainability Minister Arthur Joseph Kurup announced the policy on Tuesday at a local climate change and sustainability conference, describing it as part of the National Climate Change Policy 2.0 approved last September.
The framework covers both voluntary and compliance carbon markets, with the goal of positioning Malaysia as a credible participant in international carbon trading.
“To underpin these systems, we are strengthening our carbon market framework and ecosystem, backed by data, to ensure that every tonne of carbon reduced or traded is backed by integrity and trust,” the minister was quoted as saying.
Speaking at a subsequent press conference, Kurup said coordination between the federal government and Malaysia’s states will be critical, noting that a special joint committee is to be established to align rules across jurisdictions.
Sabah and Sarawak—the country’s two largest states, located on the island of Borneo—have already introduced their own carbon-related policies.
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On the question of carbon taxation, the minister said a proposed carbon tax—initially expected as early as this year—remains under review.
The government intends to establish a functioning carbon credit system before imposing any penalty tax, to avoid placing an unfair burden on industries. The carbon tax falls under the jurisdiction of the finance ministry, he noted.
The sequenced approach reflects a broader strategy of building market credibility before adding compliance costs.
Kurup said the government does not want to impose additional burdens on industries or consumers at this time, and expressed hope that the new policy would draw active participation from both the private and public sectors to create a more complete and complementary climate ecosystem.
