PETALING JAYA: The new carbon tax announced in Budget 2025 is a call from the government for the oil and gas services and equipment (OGSE) industry to participate in the energy transition.
Malaysia Petroleum Resources Corporation (MPRC) president Mohd Yazid Ja’afar stated that this presents an opportunity for the OGSE industry to move further up the green value chain.
On Friday (Oct 18), during the tabling of Budget 2025, Prime Minister Datuk Seri Anwar Ibrahim mentioned that carbon tax will be introduced on the iron and steel, and energy industries by 2026 to encourage the adoption of low-carbon technologies.
The proceeds will be used to fund green research and technology programmes.
Mohd Yazid described the carbon tax as "a bold but necessary regulatory move to accelerate the adoption of low-carbon solutions like Carbon Capture, Utilisation, and Storage (CCUS) in Malaysia ahead of the CCUS Bill scheduled for tabling in November."
"MPRC commends Budget 2025’s focus on a green, digital, and resilient future that includes all Malaysians as we aim for high-income status. Many of the initiatives announced under Budget 2025 will create opportunities for the OGSE sector, especially as we continue to tackle the energy transition and move higher up the green value chain," he said.
"In particular, the increase in the National Energy Transition Fund from RM100mil to RM300mil shows the government’s clear intent to accelerate the energy transition."
"This significant allocation highlights a serious commitment to expanding renewable energy and reducing reliance on fossil fuels, signalling to OGSE companies in the oil and gas supply chain to adapt to the demands of a low carbon economy."
"Expanding tax incentives for downstream carbon products under the New Investment Incentive Framework underscores Malaysia’s understanding of the importance of CCUS in achieving net-zero emissions.
"This initiative, along with plans to facilitate access to sustainable financing and introduce a regulatory framework, strengthens Malaysia’s position as a key player in the global carbon management market," Mohd Yazid added, praising the use of the tax to fund green technology.
"MPRC also supports the continuation and enhancement of funding from Bank Negara Malaysia’s RM2bil green technology financing facilities, RM3bil under the Green Technology Financing Scheme (GTFS), as well as the extension of tax exemptions and incentives under the Green Income Tax Exemption (GITE) and Green Investment Tax Allowance (GITA) programmes."
"These will benefit the OGSE sector in managing the increasing requirements to comply with sustainability, which is crucial for accessing finance and investments," Mohd Yazid said.
He further mentioned that various digital and technology-focused allocations from Budget 2025 are also seen to encourage more collaboration between industry and academia.
"These initiatives will benefit the OGSE Technology Network led by MPRC and participated in by industry, academia, and research and development institutions to bridge research, development, and commercialisation."
"The government’s increased investment in the technical and vocational education and training (TVET) ecosystem could also be pivotal in sustaining the OGSE sector’s growth. Given that TVET-trained personnel form the backbone of the OGSE sector, the increased allocation ensures a skilled workforce capable of meeting the industry’s evolving demands."
"Furthermore, the higher minimum wage and establishment of a reasonable wage for TVET graduates could significantly benefit low-income workers and boost the appeal of TVET programmes, leading to a more equitable and skilled workforce," Mohd Yazid stated.
