'Carrot-and-stick approach important in managing industrial carbon emissions'

The government is looking to implement a carbon tax to incentivise local companies to reduce carbon emissions, said Investment, Trade and Industry Minister Tengku Zafrul Abdul Aziz today.

He said the Investment, Trade and Industry Ministry is in discussion with the Finance Ministry as well as the Natural Resources and Environmental Sustainability Ministry to determine how a carbon tax would be implemented in Malaysia.

“In fact, this was discussed with the National Committee on Investment, and the Finance Ministry was given a timeline to look at this. I think the Finance Ministry needs more time because it needs to study (this) holistically," he told a media conference on green investment strategy in Kuala Lumpur today.

However, the implementation of a carbon tax would not be in the near term as the preparation would need at least a year, he added.

Zafrul was responding to a question on how transparent his ministry would be when using the carrot-and-stick approach to promote green investments.

“For example, one sector under the manufacturing sector contributes close to 25 percent of carbon emissions. That is just one sector of the manufacturing sector. So what do we do? Of course, we have the stick approach; we need to make sure that companies are ready to comply," he added.

Zafrul said the carrot approach would be more straightforward in terms of fiscal and non-fiscal incentives to encourage more participation from local companies.

“But we need to have both at the same time. We can't have just the stick without the carrot, and neither can we have a carrot without the stick,” he noted, adding that the local companies would not be on a level playing field if the carbon tax were not implemented.

- Bernama

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