KUCHING: Carbon tax should help businesses transition to a low-carbon economy rather than simply increase government revenue.
Sarawak Business Federation (SBF) president Jonathan Chai said the federation backs the Premier’s proposal for Sabah and Sarawak to receive 70 per cent of carbon tax revenue, arguing that the funds should be reinvested into the state’s economy.
“A significant portion should be directly reinvested into the business ecosystem, particularly to support SMEs and local industries in adapting to new carbon requirements.
“Without meaningful reinvestment, carbon taxation risks becoming a punitive measure rather than a policy that supports economic transition,” he told Sarawak Tribune.
Chai said Sarawak and Sabah deserve a larger share because both states have spent decades protecting forests, peatlands and biodiversity that function as Malaysia’s carbon sinks.
“These natural assets are not only national treasures but also global environmental contributions.
“It is therefore only just that any carbon tax framework must recognise and reward the regions that bear the responsibility of preserving these resources.”
He said retaining more revenue would allow Sarawak to accelerate investment in renewable energy, green infrastructure and sustainable industries while correcting longstanding fiscal imbalances.
“Sarawak must not be treated merely as a resource base. It must be positioned as a driver of the nation’s green growth agenda.”
At the same time, Chai cautioned that businesses remain worried about higher operating costs, energy prices and reduced competitiveness if the carbon tax is poorly designed.
He warned that exportoriented industries could be particularly affected, with investment potentially shifting to competing markets without adequate safeguards.
SBF is therefore calling for a phased carbon tax framework that includes cost-mitigation measures, incentives for green transition and long-term policy certainty.
“The objective must be to reduce emissions without undermining economic resilience and growth.”
