Is Malaysia Ready to Close the Loop?
THE concept of Circular Economy (CE) has gained global momentum as an alternative to the traditional “take, make, dispose” linear model. Instead of relying on systems that deplete natural resources and generate excessive waste, CE emphasises keeping materials and products in use for as long as possible.
This approach plays a vital role in reducing environmental impact and enhancing resource efficiency. Central to sustainability efforts, CE invites a critical question: how does Malaysia position itself in this transformation, and is CE truly embedded within its sustainability agenda?
What is Circular Economy and Why Does it Matter?
CE is often described as an umbrella concept that encompasses a variety of approaches aimed at mitigating environmental harm while generating economic and social value. Despite growing prominence, it lacks a universally agreed-upon definition.
Two dominant perspectives stand out: one views it as a systemic redesign of production and consumption to reflect natural cycles while the other emphasises closing material loops through reuse, recycling and resource recovery.
At its most basic level, CE is associated with the familiar principles of ‘Reduce, Reuse and Recycle’. However, advanced frameworks expand this into more complex hierarchies involving ten strategies, such as ‘Refuse, Repair, Refurbish, and Remanufacture’, alongside the traditional three Rs.
CE is not an isolated concept; it intersects with sustainable development goals, eco-innovation, industrial ecology, and a shift toward service-based economies.
These linkages make it a critical tool in addressing both environmental and economic challenges, particularly in an era of resource scarcity, climate change and global competition for sustainability leadership.
Malaysia’s CE Journey: Progress and Challenges
Malaysia has begun to incorporate CE principles into its national development plans as part of a broader commitment to sustainability.
The 12th Malaysia Plan (2021-2025) explicitly positions CE under its ‘Advancing Sustainability’ theme, underscoring the government’s intention to use CE as a driver of structural transformation. Several supporting policy initiatives reinforce this objective. The New Industrial Master Plan 2030 sets ambitious goals for net-zero manufacturing and green industrial growth.
The National Energy Policy (2022-2040) promotes industrial energy efficiency, and the use of bioenergy derived from agricultural waste, while the National Energy Transition Roadmap emphasises renewable energy adoption, carbon capture technologies and improved waste management systems.
Similarly, the Malaysia Plastics Sustainability Roadmap (2021-2030) targets increased circularity in plastic usage through measures like extended producer responsibility and design innovation.
The National Climate Change Policy 2.0, introduced in 2024, aims to guide Malaysia toward a low-carbon economy by integrating waste reduction and self-regulation within key industries. Thus, it is important for policymakers to identify these key industries.
Most recently, the Circular Economy Blueprint for Solid Waste was launched in 2024 to transform the country’s waste management system into a circular model, focusing on design, recycling and resource recovery across entire value chains.
While these policies reflect a growing awareness and strategic commitment, challenges remain. Industrial emissions are projected to double by 2030 if decisive action is not taken and Malaysia continues to struggle with high volumes of plastic waste and limited recycling infrastructure.
The depletion of critical natural resources poses another serious concern, as does the potential failure to meet net-zero targets without stronger engagement from the private sector. Compared to regional counterparts such as Singapore and Vietnam, Malaysia’s progress on CE is moderate.
Both countries have demonstrated stronger institutional support, more robust financing mechanisms and clearer performance benchmarks, setting a competitive standard that Malaysia must work hard to match.
Linking CE and Sustainability: The Road Ahead
Malaysia’s strategic adoption of the Circular Economy (CE) marks a transformative step in advancing sustainability, economic resilience, and global competitiveness.
Micro, Small and Medium Enterprises (MSMEs) in Malaysia are central to this evolution, contributing RM613.1 billion to the national economy in 2023 – representing 39.1 per cent of the Gross Domestic Product (GDP) and employing 7.86 million people, or 48.5 per cent of the total workforce.
With the services and manufacturing sectors accounting for 84.8 per cent of MSME output, the diversity and scale of Malaysian businesses – from tech-driven microbrands like Shoppertise and iMoney to agile SMEs like Supplycart and Synapse Innovation, and major corporations such as SIRIM QAS International, YTL Land & Development, and Sime Darby – demand tailored CE implementation.
National strategies now emphasise sector-specific CE definitions, measurable environmental targets, green financing, tax incentives, digital support tools and collaborative public-private platforms to drive consistent and scalable adoption across the business ecosystem.
Leading corporations are turning CE principles into measurable progress.
YTL Power International Bhd’s subsidiary, YTL DC South Sdn Bhd, is building a 48MW hyperscale green data centre in Kulai, Johor, financed by a RM1.10 billion Islamic term loan jointly arranged by Maybank and OCBC Bank (Malaysia). This project underscores the emerging role of ESG-linked financing in circular infrastructure.
In energy, Tenaga Nasional Bhd is transitioning to clean power and smart grids while diversified groups like Sunway and Boustead Holdings integrate CE into construction and real estate development. Manufacturing leaders such as Top Glove and Supermax have adopted resource-efficient processes and earned global sustainability certifications.
Retail brands, MR.DIY and Mydin, are reducing packaging waste and installing solar panels while digital tools like MyGreenlight are streamlining ESG reporting across sectors.
These initiatives illustrate how CE serves as a tactical blueprint and sustainability a visionary compass, enabling Malaysian businesses – whether corporate giants like PETRONAS and Maybank or digital innovators like JobStreet.com – to reshape the economy through low-carbon growth, environmental stewardship and inclusive development. To accelerate Malaysia’s CE transition, businesses must go beyond compliance and engage in collaborative learning and adaptive innovation.
Corporations like PETRONAS – with its Supplier Sustainability Hub – and Genting Group – through its carbon neutrality roadmap – offer replicable models for benchmarking and peer learning. Microenterprises should adopt digital CE toolkits and join community-based initiatives to reduce resource use affordably.
SMEs can leverage modular systems and partnerships to scale innovation. Larger corporations must deepen ESG integration and support smaller suppliers to build inclusive circular supply chains.
By observing successful strategies, localising best practices and investing in creative solutions, Malaysian businesses can lower both economic and social transition costs.
A future-ready economy will emerge not only from policy but from shared commitment, sectoral mentorship and a whole-of-business approach to sustainable transformation.
● Dr Ali Faridzad, School of Business, Faculty of Business, Design and Arts, Swinburne University of Technology Sarawak Campus
The views expressed here are those of the writer and do not necessarily represent the views of Sarawak Tribune. The writer can be reached at mvoon@swinburne.edu.my.
