DECEMBER 25 — The development of a national circular economy framework for Malaysia is not just another policy document; it is an acknowledgment that the “take-make-dispose” economic model is untenable. The country has long aspired to invigorate its green economy, often using the language of circularity. Now, the challenge is to move from isolated achievements to a systemic transformation. Malaysia’s journey toward a greener economy has laid a necessary, if incomplete, foundation. There are key achievements.

The launch of the Green Technology Master Plan (2017-2030) and the National Policy on Industry 4.0 (Industry4WRD) explicitly link green growth with technological modernisation. These have set targets for carbon reduction, green technology adoption, and renewable energy. The energy sector has seen significant progress. Malaysia is steadily diversifying its energy mix. The commitment to achieving 40 per cent renewable energy capacity by 2035 is a strong signal to investors.

In specific sectors, circular principles are already profitable. The palm oil industry has been a frontrunner. Waste products are now seen as resources for creating bio-compost, bio-pellets, and more. Driven by global supply chain demands and domestic advocacy, Malaysian businesses are increasingly adopting Environmental, Social, and Governance (ESG) principles. Large publicly listed companies are now publishing sustainability reports, creating transparency.

Despite these strides, the path has been fraught with challenges. Green initiatives have often been fragmented. Different ministries oversee energy, environment, industry, and housing, leading to uncoordinated policies and conflicting incentives. A true circular economy requires seamless integration across these domains. The most visible failure is in municipal solid waste management. Over-reliance on landfills and a sluggish rollout of large-scale, effective separation-at-source programs persist. Without a modern and efficient waste collection, sorting, and recycling infrastructure, circular loops for everyday materials remain closed.

The linear economy is entrenched and subsidised. Virgin materials are often cheaper than recycled alternatives due to existing subsidies and the high cost of reverse logistics. For SMEs, which form the majority of Malaysian businesses, the upfront cost of adopting circular models is a significant barrier. A culture of convenience and single-use, exacerbated by cheap plastic products, is deeply ingrained. Public awareness of circular economy concepts is rising but has not yet translated into widespread behavioral change.

The new national framework must be bold and actionable. It should focus on integrated, national legislation: Move beyond master plans to enact a Circular Economy Act. This would provide the legal backbone to harmonize policies, set mandatory targets for waste reduction and recycled content, and assign clear accountability across government agencies.

Next is to catalyse market demand: Implement Extended Producer Responsibility (EPR) schemes decisively. Make producers financially and physically responsible for the end-of-life of their products and packaging. This will instantly create a market for recycled materials and drive eco-design innovation. Introduce a powerful mix of carrots and sticks.

This includes tax incentives for companies using recycled content, green public procurement policies, and levies on virgin materials and landfilling to level the playing field. The government must partner with the private sector to invest in a network of material recovery facilities, composting plants, and recycling hubs. 

The inevitable roadblocks require strategic circumvention. Transitioning economies is a long-term project that outlasts political cycles. Frame the circular economy not as an environmental cost, but as an economic opportunity — a driver of resilience, job creation (in recycling, repair, remanufacturing), and national competitiveness.

Secure cross-party buy-in by demonstrating its value to economic security. Established industries may lobby against EPR and stricter regulations. Engage industry early as partners, not adversaries. Provide transition support, pilot projects, and showcase how circular models can reduce their long-term resource risks and operational costs. Highlight the competitive advantage for exporters accessing green-minded markets. 

The capital required for new infrastructure and technology is vast. Develop innovative financing models. Issue sovereign green bonds specifically for circular economy projects. Create de-risking mechanisms to attract private investment and venture capital into circular start-ups and SMEs.

A transition must be just and inclusive, considering waste pickers and communities dependent on linear industries. Formally integrate the informal waste sector into the new system, providing them with better working conditions and stable income. Launch re-skilling programmes to prepare the workforce for new circular jobs.

Malaysia has the pieces: policy experience, pioneering industries, and a strategic location in a green-hungry global economy. The national circular economy framework is the chance to put that puzzle together. It requires moving beyond pilot projects and embracing a systemic, whole-of-nation overhaul.

The roadblocks are significant, but the cost of inaction—environmental degradation, resource scarcity, and economic vulnerability—is far greater. By marrying strong regulation with smart economics and inclusive policies, Malaysia can truly transition from a linear past to a circular, prosperous, and resilient future.   

* Professor Datuk Dr Ahmad Ibrahim is affiliated with the Tan Sri Omar Centre for STI Policy Studies at UCSI University and is an Adjunct Professor at the Ungku Aziz Centre for Development Studies, Universiti Malaya. He can be reached at ahmadibrahim@ucsiuniversity.edu.my.  

** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.