KUALA LUMPUR: The government is considering implementing a carbon tax in the country, says Nik Nazmi Nik Ahmad (pic).

The Natural Resources and Environmental Sustainability Minister said discussions between the Finance Ministry and the World Bank are ongoing.

“For us, the feasibility of implementing a carbon tax in the country is one of the factors being considered in drafting the current national climate change legislation. If we have such a framework, the pricing will be better compared to the current voluntary market reality, where prices are relatively low,” he told the Dewan Rakyat during the question and answer session on Tuesday (July 2).

He said this in response to a supplementary question by Datuk Mohd Shahar Abdullah (Barisan Nasional-Paya Besar), who wanted to know the government’s intention to move towards carbon pricing similar to Singapore and measures to empower the Bursa Carbon Exchange.

Nik Nazmi added that the government would continue to provide state governments with advice, technical assistance, training, research, and development in the forestry sector to support carbon trading initiatives and policies.

In December 2022, the Bursa Carbon Exchange was launched as the first Shariah-compliant carbon exchange in the world.

On June 15, Nik Nazmi said the government would accelerate the establishment and adoption of decarbonisation initiatives by setting up a National Decarbonisation Committee.

On a similar development, Nik Nazmi said the ministry is developing a national carbon market policy and has already begun engagements with state governments and the private sector to facilitate its growth.

“The policy is also designed to facilitate the involvement of relevant stakeholders in the local carbon trading industry and to enable its expansion,” he said when asked about the ministry’s actions to coordinate the jurisdictional processes between the federal and state governments for generating carbon credits from Malaysian forests.

“The government acknowledges that the policies and initiatives to address climate change issues, particularly those implemented by state governments, are crucial. The actions taken to reduce or absorb greenhouse gases will directly contribute to the country’s emission reduction targets and reflect the nation’s commitment to contributing to climate change action at the international level,” he said.