KUALA LUMPUR: The one year-period for the implementation of carbon tax would be limited especially for sectors that require large capital expenditure to accommodate new technologies and infrastructures.
Industry experts opined that businesses would need additional time to be prepared for the tax.
Universiti Putra Malaysia head of Social and Development Sciences at the Faculty of Human Ecology Assoc Prof Dr Nik Ahmad Sufian Burhan said notwithstanding the limited time, the carbon tax is a vital step towards Malaysia's more ambitious climate targets and conforms with international patterns whereby countries are progressively implementing carbon pricing systems.
"Although a carbon tax is a useful instrument for encouraging a low-carbon economy, the one-year period for preparation could be limited, particularly for sectors that need large capital expenditure in new technologies and infrastructure." "Clear government policies, possible subsidies or incentives for the acceptance of green technologies, and industry player cooperation will all help to guarantee a seamless transition and hence successful implementation depends on these factors," he told Business Times.
He said that the tax seeks to generate a financial incentive for companies using greener technologies to lower emissions. Among the biggest pollers, the iron and steel sectors will be directly affected as will the energy sector, which mostly depends on fossil fuels.
"If carried out correctly, this tax could encourage Malaysia's businesses towards more environmentally friendly methods and reduce the country's whole carbon footprint. "On the other hand, there could be worries regarding the possible short-term financial effects on sectors trying to change fast enough," he added.
Ernst & Young Tax Consultants Sdn Bhd Malaysia Tax Managing Partner Farah Rosley said that carbon tax is a price that emitters have to pay for each tonne of greenhouse gas emission.
She added that the mention of carbon tax in the 2025 Budget did not come as a surprise as the study on the tax had been mentioned previously in past budgets. "The one year will allow syndication with the industry and study to ensure the carbon tax introduced will achieve the intended outcome of tax to ensure environmental sustainability. In addition time is needed for the businesses to be ready," she added.
A carbon tax on the iron and steel industries, as well as the energy sector will be introduced by 2026.
Prime Minister Datuk Seri Anwar Ibrahim said the move would promote the use of low-carbon technologies.
"Revenue generated from this tax will be used to fund green research and technology programmes," he said in the 2025 Budget in Parliament yesterday.