BIMB Securities Research said the carbon tax is expected to generate revenue that can be channelled into decarbonisation support and innovation.
PETALING JAYA: BIMB Securities Research believes that Malaysia’s decision to implement a national carbon tax in 2026 will mark a “defining moment” in the country’s transition toward a low-carbon economy.
The government announced that a carbon tax will be introduced by 2026, initially targeting the iron, steel and energy sectors.
The research house, in a report, said this landmark fiscal policy is not only a climate measure, but also “a financial instrument that will influence corporate cost structures, capital allocation and investor sentiment across Malaysia’s capital markets”.
“The initiative aligns Malaysia with the global trend of carbon pricing being adopted by jurisdictions worldwide.
“According to the World Bank, direct carbon-pricing instruments now cover about 24% of global greenhouse-gas emissions, and the number of national and sub-national pricing mechanisms continues to rise.”
BIMB Securities Research said this trend reflects the growing recognition that climate externalities must be internalised through market-based mechanisms.
From a policy perspective, it said the carbon tax is expected to generate revenue that can be channelled into decarbonisation support and innovation. “This sets the stage for structural changes in corporate behaviour and investor frameworks.”
From an investor perspective, the research house said this policy introduces both risks and opportunities.
“Companies with significant direct emissions will face increased operational costs once the carbon levy takes effect – particularly those in energy-intensive sectors such as iron, steel, and energy.
“Conversely, organisations that have proactively improved energy efficiency, switched to renewable energy, or adopted internal carbon-pricing mechanisms may benefit through reduced tax exposure and enhanced environmental, social and governance or ESG credentials.”
BIMB Securities Research said Malaysia’s forthcoming carbon tax positions the country as a proactive participant in South-East Asia’s decarbonisation efforts, following Singapore’s implementation of a carbon tax in 2019 and ahead of other Asean peers.
“Although the carbon tax is not yet in force, its expected introduction will likely increase investor scrutiny of climate strategies and ESG disclosure quality, particularly for FTSE4Good Bursa Malaysia constituents,” it noted.
