Written by Afiqah Zulkifli, Research Manager of the Institute for Democracy and Economic Affairs (IDEAS).

As COP30 ended without agreement on a fossil-fuel phase-out, it is clear that many countries continue to underestimate climate-related risks and their economic and social consequences. The uncommon and unusual Senyar tropical cyclone originating in the Straits of Malacca that soon after brought widespread flooding across Southeast Asia provides a stark reminder. Decarbonisation and adaptation must be seen as the intersection, not trade-off, between climate and wellbeing risks or global green goals will remain out of reach.

Malaysia is among the countries that could better appreciate climate economics. Its updated Nationally Determined Contribution (NDC 3.0) pledges to peak emissions by 2030 and deliver an absolute reduction of 15–30 million tonnes of CO₂ equivalent by 2035. For a country simultaneously pursuing aggressive industrial policy while facing severe flood risks, heatwaves, and agricultural disruption, this ambition appears misaligned with both the scale of vulnerability and the economic opportunity that a faster transition could unlock. Malaysia remains an upper-middle income economy with significant fossil fuel reserves to exploit, but it is also incredibly vulnerable to the damaging effects of global warming.

Yet pledges alone do not decarbonise economies. It requires mobilising coordinated policy interventions across energy, transport, industry, land use, and the built environment. Malaysia’s challenge is not the absence of climate commitments, but the absence of accountability mechanisms to ensure those commitments translate into measurable outcomes.

Budget 2026 represents the government’s most significant attempt to mobilise capital toward its NDC targets, allocating billions across clean energy, green infrastructure, and workforce transition. But without transparent governance systems to track whether these investments actually reduce emissions, build resilience, or benefit marginalised communities, Malaysia risks repeating the same pattern that has plagued its economy: substantial spending with minimal accountability for climate strategy and impacts. The budget’s framework reveals whether Malaysia understands that achieving green growth requires not just green goals, but grey accountability reform.

The GLC/GLIC Stranglehold on Clean Energy

What’s noticeable about the budget is the mobilisation of capital through government-linked (investment) companies (GLCs and GLICs), which risks entrenching the green transition in the grey accountability of the ecosystem. Key state corporations are notorious for monopolising industrial sectors while providing minimal information concerning their operations. Entrusting Budget implementation through these entities engages this inadequate governance infrastructure. There is no process for independent, third-party outcome audits and real-time accountability to verify whether spending translates into measurable social or environmental success.

Persisting with an unaccountable GLC- and GLIC-led approach serves entrenched interests and will fail to build inclusive decarbonisation pathways that benefit the people.

Green investment growth requires corresponding governance reform: transparent tracking, independent audits, and measurable outcomes from the first ringgit spent. Mandatory external audits are needed to ensure that funds reach the intended beneficiaries, instead of reinforcing existing power structures.

Currently, the Auditor-General is only empowered to audit GLCs’ receipt of financial guarantees and not the direct grants, subsidies, and tax incentives that form the backbone of the green transition.

Compounding the problem is the Budget’s silence on data transparency and outcome measurement. Crucial data is missing, including on the distribution of funds across sectors and states, to women and B40/M40 households, and environmental metrics like actual emissions reductions, climate resilience improvements, and equity targets. What Malaysia needs is a National Green Transition Dashboard with real-time, granular, and independently verified data to track progress towards an economically competitive and inclusive green agenda.

HRD Corp: A Case Study in Governance Failure

The risks of poor governance are starkly illustrated by the case of HRD Corp’s alarming record in upskilling Malaysians. The agency is entrusted with managing 3 billion ringgit and 3 million training placements for jobs including for the energy transition. HRD Corp’s track record is alarming, with a Public Accounts Committee (PAC) inquiry last year documenting catastrophic governance failures that lead to the loss of public funds through high-risk investing. The failure is representative of a systematic pattern whereby agencies manage public funds with opacity, weak governance, and no management consequences for wrongdoing.

Coordination Deficits Worsen the Problem

The stranglehold of state entities is worsened by a lack of coordination between government agencies. Climate change is an issue that cuts across multiple ministries, but the Budget and policies contain little evidence of cross-ministry coordination. The history of ministries operating in silos risks duplicative or missing efforts with insufficient or unintended impacts on the economy and society.

What Malaysia Must Do

To back up its commitments abroad, Malaysia must address governance deficits in its climate credentials at home. Malaysia’s green and resilient planning cannot simply provide more money without a corresponding increase in accountability and expect to deliver a green industrial future. The green transition and climate resilient development cannot succeed if it inherits the grey accountability framework. Four critical reforms are essential:

1. Mandate independent third-party audits with real teeth.
2. Establish a National Green Transition Dashboard.
3. Fix HRD Corp and human capital governance.
4. Create binding cross-ministerial coordination with public accountability.

The Malaysian people deserve proof and accountability to ensure these billions do not merely reinforce the systems of inequality and inefficiency that have historically impeded national progress.

This article was featured in The Edges, 18 December 2025

The views expressed in this article are solely those of the authors and do not necessarily represent the views or positions of IDEAS Malaysia. All opinions are the author’s own.