24/07/2025

THURSDAY | JULY 24, 2025

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How tariffs, taxes can derail climate ambitions A T a time when Malaysia must accelerate its climate transition, can we afford foreign and C L I M A T E V O I C E

COMMENT

by Sandy Liew Mei Xuan

and more energy efficient. Lastly, the junction of Persiaran Forest Heights 1 and 2 urgently requires the installation of traffic lights. The heavy traffic during peak hours makes it extremely dangerous for motorists attempting to exit from Persiaran Forest Heights 2 onto Persiaran Forest Heights 1. I hope the Seremban City Council will seriously consider these requests to help prevent avoidable accidents caused by impatient or reckless drivers. Powering next wave of MSME with AI IT is early morning in Kuala Lumpur. The city begins to stir as shopfronts open, food stalls prepare their first orders and delivery vans roll through narrow lanes. Notifications appear on screens. Chatbots reply to customers instantly. Inventory updates arrive before a single word is spoken. Artificial intelligence (AI) is now part of the micro-, small and medium sized enterprises’ (MSME) morning routine. Not futuristic, not far away, but happening here and now. From neighbourhood cafes to independent logistics firms, AI is steadily becoming a partner in growth. There are 1.2 million enterprises that form the foundation of Malaysia’s economy. They create jobs, serve local communities and shape the pulse of our cities and towns. But to compete and thrive, they are no longer asking how to grow bigger; they are asking how to grow smarter. AI is no longer just for tech giants; it is now within reach for everyone. Start small by using AI for a repetitive task like replying to enquiries or sending reminders. You may be surprised how much time it saves. Explore the tools you already use, such as accounting or email platforms. There is no need to buy anything new. Most importantly, stand out by learning through action and asking questions. Join a short class or attend a local session. To voice out, AI is not about replacing people. It is about reclaiming time. It reduces repetitive tasks, sharpens decisions and frees up owners to focus on creativity, strategy and service. We need to reflect and recognise that the future of enterprise is not reserved for the large and well funded. In Malaysia, support for this transformation is growing. The SME Digitalisation Grant and Mdec’s Go Digital initiative are opening new doors for MSME to adopt digital tools that are affordable, intuitive and scalable. But technology alone is not enough. The transition requires belief. Many business owners hesitate not because they lack ambition but because they lack guidance. The fear of complexity must be met with mentorship. The digital divide must be addressed through accessible training, peer learning and support that feels human, not technical. Building a future-ready MSME sector is a shared responsibility. It is about embedding trust, equipping every entrepreneur to ask better questions, make sharper decisions and step into the future with confidence. AI will not take away the soul of Malaysian MSME; it will refine and help tradition reach further, personal stories scale wider and local businesses operate with global intelligence. Let there be commitment to empower every business owner with tools that can elevate, simplify and inspire. LiewMei Xuan is a lecturer at Sunway Business School, Sunway University. Comments: letters@thesundaily.com

domestic policy shocks that will destabilise our climate finance and green technology agenda? The recent announcement by

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US President Donald Trump to impose a sweeping 25% tariff on “any and all Malaysian products” starting Aug 1 has jolted Malaysia’s economy and potentially, its entire energy transition trajectory. This move not only threatens our US$80 billion (RM338 billion) annual trade relationship with the US but also risks undercutting the financial and industrial scaffolding needed to meet our net-zero ambitions by 2050. For a country that has pledged a 45% reduction in carbon intensity by 2030, this is not just an economic setback but also a stress test of our climate governance, resilience and readiness. The potential impact is immense. Sectors like electrical and electronics (E&E), which comprise nearly 40% of our exports, stand particularly exposed. With the Green Technology Master Plan relying heavily on E&E to drive decarbonised manufacturing, this development will place our climate-linked industrial strategy in jeopardy. At the same time, Malaysia’s expanded Sales and Service Tax (SST), which came into effect on July 1, adds pressure from within. Over 4,800 previously exempt items, including industrial equipment and low-emission machinery, are now taxed at 8%, up from the previous 6%. While the SST expansion is projected to yield RM3 billion in additional revenue, its timing could not be worse. The Federation of Malaysian Manufacturers warns that these cascading tax burdens will inflate costs, shrink margins and deter future investment, especially in capital-intensive green infrastructure. The National Energy Transition Roadmap (NETR), launched in 2023, sets ambitious targets: increasing renewable energy in the national mix to 70% by 2050, developing CCUS (carbon capture, utilisation and storage) and attracting RM435 billion in investments. But these goals rely on a strong private sector, foreign direct investment and investor confidence. Reduced export earnings due to tariffs, paired with higher domestic operating costs from the SST, could stall clean energy adoption, battery storage scaling and smart grid investments. Small and medium green-tech enterprises already navigating tight financing margins may pivot to survival mode, postponing research and development or abandoning green upgrades entirely. This fiscal constriction directly threatens the creation of 23,000 green jobs forecasted under E S H S

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With the Green Technology Master Plan relying heavily on E&E to drive decarbonised manufacturing, tariffs will place our climate-linked industrial strategy in jeopardy. – REUTERSPIC

NETR and it risks reducing Malaysia’s contribution to global clean energy supply chains at a time when demand is rising. On the other hand, Malaysia’s voluntary carbon market (VCM), launched via the Bursa Carbon Exchange in late 2022, was one of Southeast Asia’s most promising climate finance innovations. With a projected market value of US$237 million by 2030, it was expected to fund reforestation, conservation and industrial decarbonisation projects. However, the VCM and the upcoming carbon tax and Emissions Trading Scheme under the National Climate Change Bill are all sensitive to macroeconomic conditions. Historically, economic downturns or trade disruptions often lead governments to delay carbon pricing reforms in the name of economic recovery. Malaysia is no exception. Unless insulated, our carbon governance mechanisms may stall or regress under fiscal and political pressure just when they are needed to drive long-term decarbonisation and attract green capital. Climate change disproportionately affects the poorest and most vulnerable communities in Malaysia, from coastal erosion in Sabah to urban flooding in Kuala Lumpur. But so too will economic instability. Tariff-related export losses could result in job cuts in key industrial areas while SST inflation will raise living costs. When people are forced to choose between short-term survival and long-term sustainability, the environment always loses. Without targeted support, our vision of a “just transition” risks becoming rhetorical. The National Climate Change Bill framework, which emphasises equity and protection for vulnerable populations, must be backed by resilient fiscal policy and progressive social safety nets and not sacrificed in budget cuts driven by external shocks. In this regard, what can Malaysia do? Firstly, school and a college, have had to endure the dangers posed by reckless drivers speeding through what should be a safe residential area. The excessive speeds of negligent road users have been a constant source of anxiety for the community. Tragically, just a few months ago, a fatal road crash occurred along this stretch of road. Since the introduction of the road humps, there has been a noticeable and welcome reduction in vehicle speeds. This has greatly enhanced the safety of our streets and, hopefully, will restore a sense of peace to our neighbourhood. This is a testament of effective

Malaysia must demand clarity on the tariff scope and seek exclusions for clean technology, solar components and environmental goods, aligning with the World Trade Organisation environmental exceptions. Next, allocate funds from the new SST intake to fund VCM capacity-building, CCUS pilots and green job retraining programmes. SST exemptions or rebates for low-emission equipment, energy-efficient machinery and carbon audit services must also be provided to incentivise clean industrial investments. Additionally, as the Chair of Asean this year, we also have an upper hand in using this moment to lead within Asean, pushing for regional carbon border adjustments and green mutual recognition agreements that support decarbonised exports. Lastly, fast-track funding for climate policy education, especially in carbon markets, climate law and environmental economics, to prepare the next generation of climate experts. In conclusion, economic shocks will come and go but the climate crisis is permanent and intensifying. As floods grow more frequent, air pollution worsens and biodiversity collapses, the cost of inaction will grow steeper each year. Trade and tax policies must serve and not sabotage our climate goals. Malaysia must not retreat from climate ambition in the face of tariffs or taxes. We must instead use these shocks to recalibrate our economic tools, reaffirm our global leadership in climate governance and build a greener, more resilient Malaysia that does not trade short-term relief for long-term collapse. Mogesh Sababathy is a youth climate advocate, National Consultative Panel member to the Natural Resources and Environmental Sustainability Ministry and PhD candidate at Universiti Putra Malaysia. Comments: letters@thesundaily.com traffic management and a clear demonstration that the concerns of the community were heard and acted upon. I commend the developer and Seremban City Council for taking this crucial step to prioritise the safety and well-being of residents. We understand that City Council also played a crucial role by approving these humps, and we extend our thanks to them as well. Additionally, the existing sodium vapour streetlights along Persiaran Forest Heights 2 are too dim, making it difficult to see clearly at night. City Council should look into replacing these streetlights with LED lights, which are brighter

Safety upgrades in Seremban Forest Heights welcomed

LETTERS

letters@thesundaily.com

I AM writing to express my sincere appreciation for the recent construction of road humps along Persiaran Forest Heights 2 in the Seremban Forest Heights residential area carried out by the developer MCL Land. This measure has made a significant and positive impact on our community. For too long, residents of this neighbourhood, which includes a primary

Michael Ng Seremban