Manoeuvring Malaysia’s circular economy crossroads
By Professor Dato Dr Ahmad Ibrahim
The global drumbeat for the circular economy grows louder, fuelled by the twin crises of resource scarcity and climate chaos. Where extraction and disposal once defined progress, the new paradigm demands regeneration: keeping materials in use, designing out waste, and restoring natural systems. For resource-rich Malaysia, poised at a pivotal development juncture, the question isn’t whether to embrace circularity, but how urgently and how effectively. The uncomfortable truth? While the intent is emerging, true readiness remains a work in progress.
Why Malaysia isn’t quite circular-ready yet. Decades of thriving on resource extraction and linear manufacturing have ingrained a “take-make-dispose” mentality. Our infrastructure – from waste management dominated by landfills to industrial parks designed for one-way material flow – is fundamentally linear. Shifting this requires massive, coordinated investment and systemic redesign, not just policy tweaks. Initiatives like the 12th Malaysia Plan, the NIMP, and the Solid Waste and Public Cleansing Management Act (Act 672) are commendable starting points. However, they often lack the stringent regulations, robust enforcement mechanisms, and economic incentives, like significant Extended Producer Responsibility schemes or landfill taxes, needed to force a systemic shift.
We pat ourselves on the back for recycling rates hovering around 30%, but this masks reality. Much “recycling” involves low-value down cycling (e.g., plastic to lower-grade products) or relies heavily on informal waste pickers facing precarious conditions. True circularity demands high-value material recovery, design for disassembly, and closed-loop systems – areas where we lag significantly. Contamination and poor separation at source cripple efficiency. Circularity thrives on collaboration – industrial symbiosis where one factory’s waste becomes another’s feedstock, urban-rural nutrient cycling, and shared logistics for reverse supply chains. Yet, government agencies, industries, and academia often operate in silos. The necessary platforms for deep cross-sectoral collaboration and knowledge exchange are underdeveloped.
Transitioning requires upfront capital: for SMEs to adopt circular design and processes, for building advanced recycling infrastructure, for R&D into biomaterials and remanufacturing. Access to patient, risk-tolerant capital tailored for circular business models remains a significant hurdle. Green financing is growing but still insufficiently focused on the specific needs of the circular transition. While awareness is growing, translating concern into consistent consumer demand for circular products/services and active participation in waste reduction schemes needs far more effective and widespread education and engagement.
Moving beyond blueprints requires bold, systemic action. Here’s how Malaysia can truly practice circularity: Implement stringent, sector-specific Extended Producer Responsibility regulations, forcing producers to financially and physically manage the entire lifecycle of their products. Make them invest in collection and recycling infrastructure. Introduce significant landfill and incineration taxes to make waste disposal the expensive last resort. Redirect these funds to subsidise circular innovation and infrastructure. Offer substantial tax breaks, grants, and preferential procurement for certified circular businesses. Integrate circular design principles, durability, repairability, recyclability, into national product standards and building codes.
Transform industrial parks into circular hubs. Facilitate rigorous waste stream mapping and create platforms, digital & physical, to connect businesses for material exchanges. Learn from models like Kalundborg, Denmark. Develop a transparent platform tracking material flows, waste generation, recycling rates, and carbon impacts across key sectors. Data is crucial for targeted interventions and measuring progress. Establish powerful, high-level task forces involving key ministries (Environment, Energy, Trade, Finance, Local Government), industry leaders, academia, and NGOs to drive coordinated strategy.
Create a dedicated public-private fund providing patient capital, de-risking investments in advanced sorting/recycling tech, biomaterial development, remanufacturing facilities, and circular start-ups. Attract green bonds and international climate finance. Prioritize interventions in sectors with massive waste footprints: Construction, Agriculture, Plastics, and Electronics. Leverage universities and research institutions to become regional leaders in circular material science, bio-based alternatives, and circular business model innovation. Launch a sustained, multi-channel campaign (schools, media, and communities) explaining why circularity matters for jobs, environment, and national resilience, and how citizens can participate effectively. Invest heavily in modernizing municipal waste collection with efficient source separation systems. Formalize and empower the waste picker community, integrating them into the formal recycling economy with fair wages and safe conditions. Support social enterprises and businesses focused on repair, refurbishment, and product-as-a-service models. Encourage “zero-waste” communities and markets.
Malaysia stands at a critical circular crossroads. The drivers – resource vulnerability and decarbonisation imperatives – are undeniable. While the foundations of intent are being laid, true readiness demands moving beyond comfortable policies into the realm of disruptive regulation, bold investments, and unprecedented collaboration. The linear economy is a dead-end street. Embracing genuine circularity isn’t just an environmental necessity; it’s Malaysia’s most promising pathway to future-proofed economic competitiveness, resource security, and a sustainable, low-carbon legacy. The blueprint exists. Now, Malaysia must find the collective will to build it. The time for incrementalism is over; the era of the circular breakthrough must begin.
The author is affiliated with the Tan Sri Omar Centre for STI Policy Studies at UCSI University and is an associate fellow at the Ungku Aziz Centre for Development Studies, Universiti Malaya.