14/10/2025

BIZ & FINANCE TUESDAY | OCT 14, 2025

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Carbon tax to bring short-term pressures, long-term positives?

Strong intent to future-proof economy with digital infra and advanced tech: Equinix

PETALING JAYA: Budget 2026 demonstrates strong national intent to future-proof the economy with digital infrastructure and advanced technologies at the core, said Equinix Malaysia managing director Cheam Tat Inn ( pic ). “We welcome the government’s forward-looking allocations such as the RM2 billion investment to develop the Sovereign AI Cloud by the Malaysian Communications and Multimedia Commission and the Madani Submarine Cable System (Salam), which will enhance nationwide connectivity. These initiatives will not only strengthen the nation’s digital foundations but also accelerate innovation across industries,” he said in a statement to SunBiz. Cheam said the continued prioritisation of investments in artificial intelligence (AI) and digital connectivity through initiatives such as Salam, Sovereign AI Cloud and talent development allocation for AI and semiconductor sectors through the RM650 million Skills Develop ment Fund Corporation is especially critical, as enterprises require both cutting-edge infrastructure and highly skilled talent to compete globally. “By coupling digital infrastructure with talent development and AI focused initiatives, Malaysia is laying the groundwork to become a true regional hub for technology and interconnection,” he said, adding that at Equinix, their mission is to power the world’s digital leaders with trusted and globally interconnected infrastructure in a sustainable manner. “Through our recent investment in Johor and Kuala Lumpur, as well as our ongoing expansion across Asia Pacific, we are enabling Malaysia to access the same AI-ready, cloud connected ecosystems as other leading economies. Our data centres Chief operating officer Yau Chyong Lim ( pic) said the measures outlined in the Budget reflect the government’s focus on uplifting livelihoods and improving the rakyat ’s quality of life, a vision that aligns with Measat’s mission to bridge the digital divide through satellite-based connectivity. “We commend the government’s investment in digital infrastructure, including Jendela 2, to expand high speed, affordable internet nation wide. As Malaysia’s leading space tech provider, Measat supports balanced development through multi-orbit satellite solutions, ena bling access to essential services such as healthcare, education and financial aid,” Yau said. He noted that Measat’s CONNECTme satellite broadband service has already connected over 500,000 underserved

o Mixed opinions from experts on costs, revenue and effectiveness of proposed levy

Datuk Seri Anwar Ibrahim, which included plans to roll out a carbon tax in 2026. The economist said that to protect Malaysia’s competitiveness, the rate should be low and cautioned that it might not push down emissions. He added that revenue raised could be redirected into clean energy incentives, but these are already in place so it is not obvious that this would move the needle. Anwar said the introduction of the tax is aimed at strengthening Malaysia’s commitment to sus tainable development and climate action. The government will align the mechanism with the National Carbon Market Policy and the upcoming Climate Change Bill to ensure effective implementation. “The carbon tax mechanism will be synchronised with our national carbon market framework and the legislation to be tabled, to guarantee efficient enforcement,” Anwar said, adding that this would support the country’s transition towards low carbon growth. Williams also questioned the timing of the measure, arguing that the National Energy Transition Roadmap already provides a compre hensive framework for balancing growth with environmental sus tainability. “There is no obvious economic justification for a carbon tax at the moment and there is an obvious contradiction in taxing carbon from industrial production while sub sidising carbon produced at power plants and from subsidised petrol and diesel,” he said. Offering a different perspective, Taylor’s University research cluster lead for innovative management practices Prof Dr Poon Wai Ching said the introduction of the carbon tax is strategically aligned with Malaysia’s climate commitments and regional market developments. “Given the rapid development of carbon markets across the region, particularly with the UNFCCC’s operationalisation of Article 6.4 establishing a common global carbon registry in the early part of this year, it is imperative for Malaysia to proactively define its own carbon market strategy. The introduction of a national carbon tax would enable the government to maintain sovereign control over domestic carbon pricing, rather than allowing it to be dictated by external demand dynamics inherent in cap-and-trade systems,” she said. Poon acknowledged that the implementation of the tax would add

additional costs and might induce inflation in certain sectors, but said the long-term benefits outweigh the short-term pressures. “For export-oriented industries, especially steel, cement, and energy intensive manufacturing, the ability to demonstrate lower carbon foot prints through verifiable carbon offsets will enhance competitiveness in international markets. This is particularly relevant under the EU’s CBAM (European Union Carbon Border Adjustment Mechanism), where Malaysian exporters could qualify for deductions based on verified domestic carbon pricing and mitigation efforts,” she said. She added that a well-designed carbon tax should be viewed not as a burden, but as a strategic instrument to modernise Malaysia’s industrial base, attract climate-aligned invest ments, and fulfil national climate commitments. “A successful carbon tax in Malaysia requires a strategic and gradual approach to balance environmental goals with business competitiveness. This involves a phased implementation with pre dictable price signals to allow industries time for transformation and investment in cleaner techno logies. Key to its success is revenue recycling, where funds are returned to the economy via green tech nology grants and targeted in centives for energy-intensive sectors,” Poon said. Meanwhile, the Federation of Malaysian Consumers Associations views carbon tax as a long-term positive for households and the environment. Its CEO, Saravanan Thambirajah, said the tax, although targeted initially at heavy industries, would encourage cleaner production and bring wider benefits to consumers. “The government’s plan to introduce a carbon tax in 2026 is another important step. While initially focused on heavy industries, it will encourage a shift towards cleaner production and reduce long term environmental costs. For consumers, this translates into cleaner air, healthier communities, and a more sustainable economy.” Saravanan noted that compl ementary measures such as the Solar Accelerated Transition Action Programme – a rooftop solar ini tiative – rebates for energy-efficient appliances and expanded tax relief for food waste recycling machines would directly help households reduce their bills and adopt sustainable practices.

PETALING Economists caution that Malaysia’s plan to roll out a carbon tax in 2026, with initial focus on the steel, cement and energy sectors, may face challenges, parti cularly in balancing environmental goals with industrial competi tiveness. Prof Geoffrey Williams, economist and founder of Williams Business Consultancy Sdn Bhd, said the policy could result in higher costs for businesses without significantly re ducing emissions or raising meaning ful revenue. “There are two main aims of a carbon tax, first to make production of carbon emissions expensive to encourage cleaner business models, or second to raise revenue. A carbon tax in Malaysia will not raise much revenue and old production models will be difficult to change quickly,” he told SunBiz . He warned that higher costs are likely to be passed down through the supply chain, leading to price increases for consumers and eroding Malaysia’s international competi tiveness. Williams was commenting on Budget 2026 tabled on Friday by Prime Minister and Finance Minister Ű BY DEEPALAKSHMI MANICKAM sunbiz@thesundaily.com JAYA: facilities, which he said will support digital healthcare delivery and telehealth services for local com munities. Through its partnership with Mudah Healthtech, Measat is rolling out the Sihat Xpress telehealth initiative that aims to deploy 2,000 kiosks in rural areas over the coming years, supported by a network of at least 1,000 doctors. “These kiosks allow villagers to monitor vital signs such as oxygen levels, blood pressure and body temperature, and consult doctors remotely, eliminating the need for long-distance travel while contri buting to improved long-term health outcomes,” he said. Yau stressed that Measat remains committed to supporting the government in enhancing con nectivity, strengthening primary healthcare, digitalising public ser vices through telemedicine and electronic health records, and preparing the healthcare system to meet the needs of an ageing population.

are also ready to support sovereign cloud requirements, ensuring that data sovereignty and AI innovation can coexist securely and efficiently,” said Cheam. He noted that these ecosystems will help business innovate, scale, and grow sustainably. The Budget also reinforces Malaysia’s attractiveness to global investors, said Cheam. “By placing digital infrastructure, AI and sustainability at the heart of national planning, Malaysia is positioning itself as a critical node in Southeast Asia’s digital economy. This emphasis is timely, as global investors seek resilient supply chains and AI-ready ecosystems in the region. As the world’s digital infrastructure company, Equinix stands ready to partner with the government, academia, and industry to ensure that these ambitions translate into tangible opportunities for businesses and communities alike,” he added. Cheam said they strive to continue supporting Malaysia in shaping a resilient, inclusive, and sustainable digital future

Measat lauds people-centric approach PETALING JAYA: Measat Global Bhd has welcomed the government’s people-centric approach in Budget 2026, particularly its commitment to expanding digital infrastructure under the Madani Economy Framework.

Malaysians, empowering access to telehealth, e-commerce, online learning and communication with loved ones. Yau also welcomed the Malaysian Communications and Multimedia Commission’s funding to enhance connectivity in public healthcare