KUALA LUMPUR (June 24): The government is in the final phase of formulating Malaysia’s carbon tax policy, though the mechanism and total projected revenue have yet to be finalised, according to Deputy Finance Minister Liew Chin Tong.
“These [revenue] will depend on the tax rate, the emissions threshold and the emissions scope that will be announced by the government,” Liew told the Dewan Rakyat on Wednesday.
“Nevertheless, the carbon tax rate will be implemented in phases to not burden industries, particularly small and medium enterprises, amid market uncertainties arising from the conflict currently taking place in West Asia,” he said, adding that the policy aims for carbon pricing rather than revenue generation.
He reiterated that the policy will begin with the iron, steel and energy sectors, as these sectors are among the main contributors to greenhouse gas emissions.
“The purpose of the carbon tax is not to generate more revenue. The purpose of the carbon tax is carbon pricing, namely to establish a level or price at which carbon emissions must be paid for by those sectors,” he said.
Drafting of the Carbon Tax Bill will take into account the National Carbon Market Policy and the National Climate Change Bill (RUUPIN), which will be tabled by the Ministry of Natural Resources and Environmental Sustainability (NRES), Liew noted.
RUUPIN will serve as the foundation for the policy and legal framework in implementing the carbon tax.
RUUPIN, which will introduce a monitoring, reporting and verification system to underpin carbon pricing and Malaysia’s shift to a low-carbon economy, is expected to be tabled in Parliament in July.
The carbon tax was announced in Budget 2025 in October 2024. Its introduction is to align with the EU’s Carbon Border Adjustment Mechanism.
For more Parliament stories, click here.