Posted on 08 Oct 2025
Malaysia’s steel industry has faced both economic and environmental challenges in recent years, with rapidly increasing greenhouse gas (GHG) emissions and rising overcapacity. The Steel Industry Roadmap 2035 (SIR), launched on Sept 29, aims to address both of these challenges.
The SIR contains a range of novel policy ideas, including a push for green steel standards and a green steel public procurement mandate, the creation of a “carbon competitiveness fund” financed through carbon taxes, a pledge to prohibit construction of new blast furnaces, and various other initiatives to encourage high value-added steel production in Malaysia. These are all important measures and in line with the broader aspiration of the Malaysian government to achieve net zero GHG emissions by 2050.
The way in which the SIR and other “roadmaps” are presented, suggests that there is clarity of where we are today (the starting line), the end goal (the destination), and how to get there (the instruments and execution timeline). It is therefore important to ask what data and assumptions back documents like the SIR, and if the proposed strategies are credible — and likely to be implemented.
The report follows a typical strategy consulting framework, and is relatively light on real data, details, and specifics: there are no appendices to support claims, nor a reference list. This is not an issue of the SIR alone, but also found in other roadmaps, blueprints and masterplans, commonly written with the help of international strategy consultants.
The one-page methodology chapter of the SIR states that various government departments and industry groups were consulted, and that unnamed “research, white papers and economic studies” were reviewed. Table 4-1 names four specific sources, which are presumably considered to be the most authoritative by the authors. They include the Foresight Study on the Iron and Steel Industry and the 2024 report from the Independent Committee on the Iron and Steel Industry.
However, none of these reports is publicly available, so the public (including academics) cannot know on which facts and deliberations the SIR is based.
This lack of transparency matters, because some of the data in the SIR raises questions. For example, the SIR states that steel production capacity utilisation in Malaysia is 69.9%, whereas industry sources note a far lower utilisation rate of 39.1%.
In terms of renewable energy (RE) use, the SIR uses figures from the National Energy Transition Roadmap (NETR), citing 31% RE for 2026, 40% by 2035 and 70% by 2050.
However, the NETR figures refer to installed capacity, not to actual generation. As Malaysia’s growth in RE is expected to come primarily from solar energy, 70% RE capacity will only lead to 22% RE generation.
Without the necessary RE, it is not possible to produce low-emissions steel, and 22% RE is clearly insufficient to meet the demand of the sector and the whole economy under a net zero target.
The SIR also notes a 45% reduction in emission intensity by 2030. However, this goal does not appear to refer to the steel industry at all. It likely refers to Malaysia’s national GHG emission reduction target. This target is based on a 2005 baseline, a period when emissions from Malaysia’s steel industry were still very low. The inclusion of such figures is confusing at best.
Carbon pricing is an integral part of any decarbonisation strategy. By pricing emissions, steel producers can make a business case for producing low-carbon steel, thus unlocking private-sector investment.
Although carbon pricing was again announced in Budget 2025, the SIR states that carbon pricing will be introduced as early as 2026…or as late as 2035. The SIR also makes no mention of how high the carbon price will be, nor about the size of the proposed “carbon competitiveness fund” for the steel industry.
Our own research suggests that a carbon price of around RM200 per ton can lead to meaningful shifts towards low-carbon steel production. Such a tax could raise RM3 billion in annual revenue.
For investors, clarity about the timeline and quantum of carbon pricing are critically important when deciding to invest in low-carbon steel production, as are the availability of upstream inputs like RE and green hydrogen. The SIR appears to provide no clarity on these points. Thus, while the roadmap provides a direction of travel, its limited transparency makes it difficult to discern if the starting line has been correctly identified.
The SIR contains many positive and genuinely exciting proposals about transforming the steel sector. To realise the full potential described in the document, it needs to be followed by a credible execution strategy. Despite being described as a “national contract”, roadmaps, blueprints and masterplans like the SIR or NETR, are essentially a wish list. Their real impact lies in deploying policy instruments to align investment decisions made in the present (and in the immediate future) with the stated goals.
At this point, there are no references to specific budget allocation to fund the transition. Timelines are vague. There are no projections of future GHG emissions, or RE and green hydrogen demand. Regulatory agencies will be reformed to increase their effectiveness, but it is unclear from the document how this will be done. There is no framework to monitor the implementation of the roadmap and guarantee its execution (and revisions based on new data) across multiple years (and governments), as required for an industry of long-term investments like steel. Without such information and openness, investors will likely stay on the sidelines. The SIR introduces innovative ideas that could serve as a model for decarbonising Malaysia’s heavy industry, which makes it all the more important that it be underpinned by transparent data, robust assumptions, and clear strategies for full implementation.
Source:The Edge
