KUALA LUMPUR, Oct 1 (Bernama) — Malaysian Gas Association (MGA) today urged the Government to strengthen fiscal support and incentives for the natural gas industry in Budget 2026, so that the industry can sustain its contribution to the economy while helping Malaysia accelerate its energy transition and safeguard energy security.
Budget 2026, the first under the 13th Malaysia Plan (13MP), comes at a critical juncture as Malaysia implements its National Energy Transition Roadmap (NETR) in 2023 and continues with the National Energy Efficiency Action Plan (NEEAP). Fiscal measures that align with these ambitions will be essential to unlocking new investments and maximising Malaysia’s existing strengths.
Natural gas has been recognised as a critical energy source for Malaysia, providing a secure and affordable energy supply while facilitating decarbonisation, even as renewable energy sources continue to grow. According to the IGU Global Gas Report 2025, global gas demand rose by 78 bcm in 2024 and is projected to grow by another 71 bcm in 2025, with Asia driving much of this growth. With ASEAN economies continuing to expand, demand for gas and LNG is expected to grow rapidly as the region seeks to balance development with decarbonisation. For Malaysia, this presents a clear opportunity to leverage its robust gas infrastructure and position itself competitively, while supporting the region’s broader transition.
The natural gas industry today contributes around RM52 billion annually to Malaysia’s Growth Domestic Product (GDP) and has long been a cornerstone of socioeconomic development. Beyond powering industries and households, the industry directly supports over 80,000 jobs and anchors supply chains across manufacturing and services. Gas’s role extends far beyond energy supply; it sustains livelihoods, creates opportunities for local OGSE businesses and supports national development.
With the right policy support, natural gas can also strengthen Malaysia’s sustainability agenda. As the cleanest fossil fuel, it produces up to 50% fewer CO₂ emissions than coal, and technologies such as cogeneration, biogas and biomethane and low-carbon marine fuels can further reduce emissions in the hard-to-abate sector.
“We believe Budget 2026 must act on three immediate priorities for the gas industry. First, reinstate full eligibility for cogeneration systems under GITA to restore alignment with the NETR and support proven energy efficiency technology. Second, strengthen incentives for biogas and biomethane, including capex support and higher tax exemptions for service providers so they can scale as part of Malaysia’s renewable energy mix. And third, recognise low-carbon marine fuels, including LNG bunkering, as a strategic investment sector, backed by structured incentives and a clear regulatory framework to strengthen Malaysia’s ports and competitiveness,” says Abdul Aziz Othman, President of MGA.
Abdul Aziz added that, “As Prime Minister Anwar Ibrahim stated at Energy Asia 2025, greater investment in energy efficiency and emissions reduction is essential for Malaysia’s future. We suppose MGA’s calls on the three focus areas are in direct alignment with that vision by combining sustainability with competitiveness.”
The urgency is real. As ASEAN Chair in 2025, Malaysia must show leadership by making the most of the capabilities it already has. The sectors highlighted above may not dominate headlines, but as strategic investment sectors, they carry long-term impact in reducing emissions, driving economic spillovers and reinforcing Malaysia’s credibility in the region. Across ASEAN, countries are already moving ahead based on their respective strengths, from Singapore’s LNG bunkering trials to Vietnam’s rapid renewable energy growth. Malaysia cannot afford to stand still.
For more than 40 years, natural gas has underpinned Malaysia’s growth to where we are now. With the right fiscal support in Budget 2026, the industry can continue lighting up homes today, driving economic growth tomorrow, and advancing Malaysia’s transition towards a competitive, low-carbon future.
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