The recently tabled 12th Malaysia Plan 2021-2025 sets an ambitious goal for the country to achieve net zero carbon emission "as early as" 2050, ahead of Singapore and Indonesia.

Part of the equation involves the introduction of carbon pricing, which is meant to incentivise clean energy adoption, encourage better energy efficiency and ultimately reduce greenhouse gas (GHG) emissions.

According to Tai Lai Kok, Head of Tax at KPMG in Malaysia, "In so far as the government is concerned, it should be, 'If I don't collect anything, even better' as it means the tax is effective in pushing businesses to reduce their carbon footprint.”

Phang Oy Cheng, Executive Director of Sustainability Advisory at KPMG in Malaysia points out "Carbon tax should not be viewed as an additional cost but an incentive to facilitate innovation and investments. When a company calculates its cost of investment versus the costs on carbon, that carbon tax should be high enough to encourage all companies to embark on greener technology. If the rate is too low, it is just viewed as an additional tax burden, as the comparative return on investment does not make it viable to invest in technology change."

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The Edge