Existing governance gaps in Malaysia’s steel industry pose significant risks of undermining the country’s climate commitments, unless stronger transparency and regulatory reforms are implemented.
While contributing over RM28bn to gross domestic product (GDP) and employing more than 280,000 workers, the steel industry remains highly carbon-intensive, standing as one of Malaysia’s largest greenhouse gas contributors within manufacturing and construction.
Malaysia is committed to the Paris Agreement and has outlined its climate targets through the ‘nationally determined contribution’ (NDC) since 2016. However, meeting these targets remains challenging due to persistent emissions from heavy industry, particularly the steel sector.
Ongoing governance gaps, limited transparency, weak data disclosure and restricted enforcement continues to hinder decarbonisation.
Worryingly, the growing presence of foreign-owned steel companies further raises questions about oversight, industrial policy alignment and the risk of omission in greenhouse gas reporting, which may weaken regulatory accountability.
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Hence, the Center to Combat Corruption and Cronyism (C4 Center) has published a report titled Malaysia’s Steel Industry & Climate Commitments: Governance, Gaps, and Pathways, examining governance, regulatory and policy gaps surrounding greenhouse gas emissions in Malaysia’s steel industry, including issues linked to foreign ownership.
The report highlights weaknesses in data disclosure, enforcement and corporate accountability that could hinder Malaysia’s ability to meet its nationally determined contribution target.
Furthermore, the involvement of state interests and foreign direct investment from China have brought in large-scale steel mills that operate with limited public scrutiny over emissions disclosure, often shielded by private corporate structures.
The report finds that Malaysia’s climate commitments are at risk of being undermined by existing structural weaknesses embedded within the steel industry.
These weaknesses are driven by overarching issues including, a lack of disclosure requirements, fragmented emissions governance and possible political interference.
The key findings from the research include:
- Malaysia’s steel industry lacks mandatory, publicly accessible company-level greenhouse gas emissions data and reporting, undermining the credibility of national emissions reporting
- Industry reluctance to disclose data reflects systemic opacity and minimal regulatory pressure for transparency
- Existing environmental regulations do not impose enforceable greenhouse gas limits on steel producers, and disclosure requirements across companies are uneven, allowing high-emissions practices to continue largely unchecked and creating accountability gaps across the industry
- Fragmented mandates across ministries and agencies weaken policy coordination and stifle effective emissions governance
- Foreign-owned steel producers increasingly dominate the sector while operating carbon-intensive technologies with limited public scrutiny
Hence, in addressing the governance gaps and emissions challenges in Malaysia’s steel industry, C4 Center recommends the following actions:
- Mandate public, standardised, and verified greenhouse gas emissions disclosure for all steel producers – listed, private limited, domestic and foreign-owned – to close transparency gaps and strengthen national emissions accounting.
- Enact and implement a binding climate change law that establishes enforceable emissions thresholds, reporting obligations and penalties for non-compliance in hard-to-abate industries such as steel.
- Strengthen institutional coordination by establishing a central climate governance mechanism to align industrial, energy and climate policies across ministries and regulatory agencies.
- Introduce a right to information law and an independent Malaysian ombudsman to guarantee public access to environmental data and to provide oversight over regulatory failures.
- Reform investment incentive frameworks to ensure tax benefits, industrial approvals, special economic zone privileges must be conditional on verified emissions performance and compliance with climate obligations.
- Address political–business influence by requiring publicly accessible beneficial ownership disclosures, independent audits and transparent governance for all strategic industrial projects.
- Establish a dedicated just transition fund, financed through carbon pricing and environmental penalties, to support technological upgrading, workforce reskilling and equitable decarbonisation in the steel sector.
- Center to Combat Corruption & Cronyism (C4 Center)
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