KUALA LUMPUR (Sept 26): Malaysia aims to raise the manufacturing sector’s contribution to economic output while reducing harmful gas emission under a new policy launched on Thursday.

The government is seeking to lift the sector’s contribution to gross domestic product from its current baseline of 24% but via more “sustainable pathways”, according to Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz. He did not provide a target.

“This is an opportune forum to launch the circular economic policy framework, which aims to reformulate fossil-fuel-based industrial models and catalyse green growth practices across the manufacturing value chain,” he said in his speech at a petrochemical conference.

The framework also aims to ensure the sector reduces its carbon dioxide and greenhouse gas emissions from the current 20% contribution to Malaysia’s national climate change reporting for both Scope 1 and Scope 2.

Scope 1 emissions are directly emitted from a company’s own production processes, while Scope 2 covers emissions from the fuel or energy bought or used by a company.

Malaysia had earlier unveiled a series of economic plans, including the New Industrial Master Plan 2030 (NIMP 2030) and the Green Investment Strategy (GIS), in a bid to support economic growth and accelerate the transition away from fossil fuel.

The new policy is expected to complement the ambitions of the plans, Zafrul said, noting that the circular economy in particular is featured prominently as one of the levers towards decarbonisation under both the NIMP 2030 and GIS.

“We will strive to seek investments in areas such as remanufacturing and refurbishment, industrial waste management and advanced recycling,” he said.

Blessed with abundant natural resources and feedstock, some one billion tonnes of natural resources are projected to be extracted annually in Malaysia by 2030 if production continues under the same conventional methods.

Malaysia can expect a “significant” amount of industrial waste and pollution risks, he warned, stressing that Malaysia needs an industrial ecosystem that will ensure sustainability and resilience of its economy over the long term and achieve net zero by 2050.

The new circular economic framework will “leverage the role of manufacturers with a strategic focus on material, heat and water input”, he continued, “particularly from a life cycle perspective comprising the design, manufacturing, distribution and retirement stages of a product, followed by how much of it can be recycled”.