Malaysia to Implement Carbon Pricing and Explore Carbon Tax, Deputy Minister Says

Malaysia to Implement Carbon Pricing and Explore Carbon Tax, Deputy Minister Says - Carbon Herald
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Malaysia is set to introduce carbon pricing shortly to facilitate carbon trading and will explore the implementation of a carbon tax, according to Deputy Minister for Investment, Trade, and Industry, Liew Chin Tong, as cited by national daily The Sun.

Liew emphasized that revenue from these initiatives should be directed towards green investments, particularly in the green steel sector.

“Carbon pricing, trading, and taxation are critical aspects of the decarbonization agenda,” the government official said, citing the European Union’s (EU) plan to introduce a Carbon Border Adjustment Mechanism (CBAM) in 2026.

The implementation of CBAM means that unless Malaysia imposes a similar tax, exports of steel and other items from Malaysia will be taxed by the EU, he explained at the launch of the Malaysian Iron and Steel Industry Federation’s (MISIF) 15th report on the industry’s status and outlook, held on July 1.

Liew reaffirmed the Ministry of Investment, Trade, and Industry’s dedication to collaborating with the industry to tackle challenges such as scrap metal shortages and to create a sustainable ecosystem, shifting from a vicious to a virtuous cycle.

Furthermore, he pointed out the low utilization rate of Malaysia’s crude steel production capacity, which was 39.1% in 2023, compared to the global average of 75.7% and the ASEAN+6 average of 60.1%.

However, he noted that flat products might have better prospects due to the relocation of supply chains from China to Southeast Asia.

Relevant: Bursa Malaysia To Hold Its First Carbon Credit Auction In July

Datuk Lim Hong Thye, president of MISIF, stated that the federation recognizes the need to align with the government’s goal of achieving net-zero carbon emissions by 2050.

He observed that more regions and countries are adopting mechanisms similar to the EU’s CBAM to prevent carbon leakage and promote greener production processes.

“It is imperative for the industry to proactively engage and leverage all available support to enhance green initiatives and align with the government’s aspirations,” Lim concluded.

The ASEAN+6 group comprises the ten member countries of the Association of Southeast Asian Nations (ASEAN), namely Brunei, Burma, Cambodia, Indonesia, Philippines, Malaysia, Laos, Singapore, Thailand, and Vietnam, and six other countries in the Asia-Pacific region: Australia, China, India, Japan, Korea and New Zealand.

Read more: Malaysia Officially Launches Carbon Exchange

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