How Malaysia's steel industry escapes emissions accountability

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.

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:

Hence, in addressing the governance gaps and emissions challenges in Malaysia’s steel industry, C4 Center recommends the following actions: