Ministry of Investment, Trade and Industry of Malaysia unveils steel industry roadmap on August 29. (Photo: MITI)
Malaysia has released its Steel Industry Roadmap 2035 (SIR2035), prioritizing the resolution of industry overcapacity while planning to cut carbon emissions through carbon pricing mechanisms such as a carbon tax, with the aim of achieving full decarbonization by 2050.
The government also intends to establish ASEAN-wide green steel standards and position Malaysia as a regional leader in industrial transformation.
Tackling overcapacity as the first reform
The roadmap was launched on Aug. 29 by the Ministry of Investment, Trade and Industry (MITI) at the 2025 ASEAN Iron and Steel Forum and ASEAN Policymakers Conference on Steel.
It outlines a 10-year strategy for Malaysia’s steel sector across three phases and 15 strategies: resetting the trajectory (2025–2026), investing in the foundations (2027–2034), and accelerating the green ecosystem (from 2035 onward).
SIR2035 outlines a 10-year strategy for Malaysia’s steel sector across three phases and 15 strategies. (Chart: MITI)
MITI Minister Tengku Zafrul Abdul Aziz said the immediate priority is to address overcapacity by tightening licensing requirements, cracking down on illegal operators, and safeguarding domestic raw material supply, laying the groundwork for long-term decarbonization.
Carbon pricing and green steel demand
To drive steel sector decarbonization, the government would like to roll out a carbon tax as early as 2026, according to SIR2035. Proceeds would be allocated to a new Carbon Competitiveness Fund to finance low-carbon technology adoption, market expansion, and export competitiveness.
From 2027, additional carbon pricing tools such as an emissions trading scheme (ETS) and cap-and-tax system are expected to be rolled out, creating a domestic carbon market. Steel producers will also be required to disclose emissions and comply with internationally aligned green steel standards.
Market demand for low-carbon steel is forecast to grow 2.5 times in the next five years, reaching over 40% of total steel procurement. To support this, MITI plans to introduce a “Buy Made-in-Malaysia, Buy Low-Emissions” initiative, adjusting public infrastructure procurement rules and developing guidelines for private companies to boost local green steel use.
Malaysia also aims to spearhead regional cooperation by establishing an ASEAN steel capacity and utilization database and developing a regional decarbonization framework, including full monitoring, reporting and verification (MRV) systems and environmental product declarations (EPD). This would position Malaysia as a leader in ASEAN’s green steel transition.
Source: MITI, Reuters, Edge Malaysia(1), (2), The Sun
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