‘Tariffs, taxes could derail Malaysia’s climate ambitions’
Climate finance expert says Malaysia must demand clarity on tariff scope in trade negotiations with United States
KUALA LUMPUR, Malaysia (MNTV) – Malaysia must demand clarity on the tariff scope and seek exclusions for clean technology and environmental goods in trade negotiations with the United States, says Mogesh Sababathy, a National Consultative Panel Member to the Ministry of Natural Resources and Environmental Sustainability of Malaysia.
The government should also allocate funds from the new Sales and Service Tax (SST) intake to support green initiatives and provide incentives for clean industrial investments, he writes in an article for Malay Mail.
He says Malaysia, as the Chair of ASEAN, has the opportunity to lead the region in pushing for regional carbon border adjustments and agreements that support decarbonized exports.
Sababathy says that Malaysia must not retreat from its climate ambitions in the face of economic shocks. Instead, it should use these challenges to recalibrate its economic tools, reaffirm its global leadership in climate governance, and build a greener, more resilient future.
Malaysia’s climate transition is facing significant challenges due to foreign and domestic policy shocks. The recent announcement by the US President to impose a 25% tariff on Malaysian products, starting August 1, 2025, has sent shockwaves through the economy, potentially destabilizing the country’s climate finance and green technology agenda.
The tariff threatens Malaysia’s $80 billion annual trade relationship with the US and risks undercutting the financial and industrial scaffolding needed to meet the country’s net-zero ambitions by 2050. The electrical and electronics sector, which accounts for nearly 40% of Malaysia’s exports, is particularly vulnerable.
To make matters worse, Malaysia’s expanded SST, which came into effect on July 1, 2025, adds pressure from within. The tax increase will inflate costs, shrink margins, and deter future investment in green infrastructure, says Sababathy.
Malaysia has pledged to reduce carbon intensity by 45% by 2030 and achieve net-zero emissions by 2050. However, these goals rely on a strong private sector, foreign direct investment, and investor confidence, he adds.
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