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Malaysia to roll out carbon tax in 2026, targeting steel, cement, and energy. (Photo: iStock)
Malaysia unveiled its USD 111 billion budget for 2026 on Oct. 10, which includes plans to introduce a carbon tax next year, initially targeting the steel, cement, and energy sectors. Experts are divided over its impact: Some warn it could undermine industrial competitiveness, while others say it aligns well with the country’s long-term climate goals.
Prime Minister Anwar Ibrahim said the carbon tax aims to strengthen Malaysia’s commitment to sustainable development and climate action. To ensure effective implementation, the carbon tax mechanism will be integrated with the National Carbon Market Policy and the postponed Climate Change Bill.
The proposed tax marks a turning point in Malaysia’s climate policy, but analysts warn that the transition may be challenging for businesses in the near term.
Short-term pain: higher costs across the supply chain
In the short term, the carbon tax could send shock waves through the supply chain, while bringing about only limited changes in emissions and revenue generation.
