Malaysia Pauses Carbon Tax Plans

Carbon tax put on hold amid global tensions.

Malaysia has postponed its planned carbon tax to avoid adding pressure on households and businesses as geopolitical tensions in the Middle East drive up economic uncertainty. The tax, announced in Budget 2025, was meant to target high-emission sectors like iron, steel, and energy as part of the country’s shift toward a low-carbon economy.

Despite the delay, Malaysia remains committed to its climate goals, including cutting emissions and reaching net zero by 2050. Our Deputy Director of Research, Yin Shao loong, highlights that carbon taxes can raise costs especially for energy, suggesting that incentives and support for cleaner alternatives may be a more effective way to drive the transition without increasing the cost of living.