KUALA LUMPUR: The Ministry of Investment, Trade and Industry (MITI) is looking into carbon tax implementation to encourage green investment in the country, particularly involving sectors that produce high carbon emissions.
Its minister, Tengku Datuk Seri Zafrul Abdul Aziz said the carrot and stick approach (reward and punishment) is crucial in ensuring transparency and a fair environment for businesses.
In term of punishment, he said all developed countries are more towards carbon tax.
"We are discussing with the Finance Ministry (MoF) and Natural Resources and Environmental Sustainability Ministry (NRES) to see how this can be implemented."
"In fact, this was discussed at the National Investment Council and the MoF has been given a timeline to look into this matter and they need more time to study it holistically," he said.
For example, Tengku Zafrul said, only one sub-sector of the manufacturing sector already contributes almost 25 percent of the country's carbon emissions.
"Of course, if we have a stick approach, we need to make sure that companies are ready to comply," he said at a media conference after presenting the Green Investment Strategy here today.
According to Tengku Zafrul, if the carbon tax is not implemented, companies will not have much incentive to carry out investments to reduce their respective carbon emissions, as it involves higher costs.
"Businesses that investsto improve their carbon emission will definitely be incurring higher costs. So they'd be less competitive than (a business) that was not investing in reducing their carbon emission," he added.
During the presentation, Tengku Zafrul said the Green Investment Strategy (GIS) aspires to make Malaysia a major green investment destination by 2030 based on the goal of net zero and socio-economic prosperity in the NETR and New Industrial Master Plan (NIMP) 2030.
According to him, 65 per cent of the green investments achieved in Malaysia are dominated by domestic investment and hence, the GIS is anticipated to increase the foreign investment portion.
He said the GIS anticipates to contribute RM80 billion to the gross domestic product (GDP) by 2030 and will create 350,000 high-skilled jobs to boost the nation's socio-economic development.
Tengku Zafrul said the GIS will increase investment competitiveness, with Malaysia's Global Competitiveness and Global Opportunity Index standing expected to be in the top 20 by 2030.
The GIS also aims to reduce the nation's carbon intensity as much as 45 per cent by 2030 from 33 per cent in 2021 while gaining Grade A in the Sustainalytics Rating from Grade C, he said.