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Malaysia plans to introduce a carbon tax in 2026, but are companies ready? (Photo: unsplash)
Malaysia plans to introduce a carbon tax in 2026. As the new year begins, the clock is also starting to run on how prepared Malaysian companies are for carbon pricing. “I would say Malaysian companies’ carbon readiness is still quite low,” Jia Xin Ng, an ESG and sustainability consultant at Bernard Business Consulting, told RECCESSARY.
While key details are still being finalized, government signals over the past year have begun to narrow the range of uncertainty. In November 2025, policymakers floated an initial carbon tax rate of RM 15 (USD 3.58) per tonne of emissions, while Prime Minister Anwar Ibrahim confirmed in his October budget speech that iron, steel and energy companies would be among the first sectors covered when the tax takes effect in 2026.
These signals have shifted the carbon tax from a distant policy concept to a near-term business consideration. For companies, that shift is making carbon readiness, the ability to measure, report and manage emissions, a prerequisite for dealing with future carbon costs.
The pressure is twofold. Beyond Malaysia’s domestic climate targets, the country’s role as a manufacturing hub also exposes it to the EU’s Carbon Border Adjustment Mechanism (CBAM), which took effect on Jan. 1 and places a carbon cost on imports from countries without carbon pricing. Companies that lag in decarbonization risk losing supply-chain contracts, making early action necessary even for firms outside the initial scope of the tax.
