Balancing Growth and Sustainability: The Role of Carbon Tax in Malaysia

Siti Nurhazwani Kamarudin, Noor Emilina Mohd Nasir, Azmira Abdullah and Quihong Liu

Information Management and Business Review, 2025, vol. 17, issue 2, 39-50

Abstract: This concept paper discusses the important role of carbon tax as an innovative policy tool to strike a balance between economic development and environmental sustainability in Malaysia. The primary objective of this paper is to investigate the potential of carbon taxation to curtail carbon emissions in Malaysia without compromising its economic growth. This study adopts a qualitative approach, incorporating an extensive review of existing literature on carbon taxation, its implementation experiences in other countries, and Malaysia's current environmental and economic landscape. The analysis reveals that carbon taxation has the potential to incentivize carbon-emitting industries to adopt cleaner technologies and sustainable practices while generating revenue for environmental initiatives. The findings suggest that a carefully designed and well-implemented carbon tax policy can lead to a more sustainable development path for Malaysia. This paper contributes to the body of knowledge by presenting a comprehensive analysis of carbon taxation's potential to address climate change issues in the country. The originality lies in bridging the gap between economic growth imperatives and the need for sustainable environmental practices, particularly in the context of an emerging economy. This paper offers valuable guidance to policymakers, businesses, and other stakeholders involved in shaping Malaysia's environmental and economic policies. By understanding the potential benefits and challenges of carbon taxation, policymakers can design effective and efficient policies that foster economic growth while mitigating the adverse impacts of climate change. Moreover, businesses can strategize for a greener future, ensuring long-term competitiveness and sustainability in the global market.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:rnd:arimbr:v:17:y:2025:i:2:p:39-50

DOI: 10.22610/imbr.v17i2(I)S.4564

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