Budget 2025: A Green Future for Malaysia’s Economy

Introduction

The recent announcement of a new carbon tax in Budget 2025 marks a pivotal moment for Malaysia’s oil and gas services and equipment (OGSE) industry. This move by the government is a call to action for the industry to embrace the energy transition and shift towards low-carbon technologies.

Opportunity for Growth in the OGSE Industry

Malaysia Petroleum Resources Corporation (MPRC) president Mohd Yazid Ja’afar sees the carbon tax as an opportunity for the OGSE industry to elevate itself on the green value chain. This bold regulatory move aims to accelerate the adoption of low-carbon solutions like Carbon Capture, Utilisation, and Storage (CCUS) ahead of the upcoming CCUS Bill.

Key Highlights of Budget 2025

• Carbon Tax Implementation: The carbon tax will be introduced on the iron and steel, and energy industries by 2026 to promote low-carbon technologies.
• Funding Green Research: The proceeds from the carbon tax will be used to fund green research and technology programmes.
• National Energy Transition Fund: The allocation for the National Energy Transition Fund has been increased from RM100mil to RM300mil to support the energy transition.
  

  Impact on OGSE Companies
  

  The increase in funding and tax incentives for downstream carbon products under the New Investment Incentive Framework underscores Malaysia’s commitment to achieving net-zero emissions. This initiative will push OGSE companies to adapt to the demands of a low carbon economy and position Malaysia as a key player in the global carbon management market.

  Support for Sustainability
  

• Green Technology Financing: Continued funding from Bank Negara Malaysia’s green technology financing facilities and the extension of tax exemptions and incentives will benefit OGSE companies in complying with sustainability standards.
• Technology and Digital Allocations: Investments in digital and technology-focused initiatives will foster collaboration between industry and academia, driving innovation and commercialization in the OGSE sector.
  

  Focus on Skilled Workforce
  

  The government’s increased investment in technical and vocational education and training (TVET) will ensure a skilled workforce capable of meeting the evolving demands of the OGSE sector. This will not only benefit low-income workers but also enhance the industry’s competitiveness in the global market.

  Conclusion
  

  Overall, Budget 2025 sets the stage for a green, digital, and resilient future for Malaysia’s economy. The focus on sustainability, innovation, and workforce development in the OGSE sector will play a crucial role in driving economic growth and transitioning towards a more sustainable and low-carbon economy.

  By embracing these initiatives and adapting to the changing landscape of the energy industry, Malaysia is poised to lead the way in green technology and environmental stewardship, shaping a brighter future for generations to come.