Malaysia’s move towards extended producer responsibility (EPR) must go beyond voluntary commitments by companies and establish a mandatory framework that provides regulatory certainty and attracts investment into recycling infrastructure, according to experts who spoke at annual sustainable finance forum Unlocking capital for sustainability 2026 in Kuala Lumpur on 23 July.
Malaysia began implementing a voluntary EPR framework for packaging this year as part of a phased approach towards mandatory compliance for major producers from 2030, with the government currently developing the broader policy framework.
Speaking at a panel discussion of the forum on financing Malaysia’s circular economy transition, Annupa Mattu Ahi, head of Asia and Middle East and public affairs at Norway-based recycling technology firm TOMRA, said while voluntary initiatives by companies demonstrate leadership, they are insufficient to drive systemic change across the wider economy.
“Voluntary participation from companies like Nestlé or Coca-Cola is a great idea because they can then become leaders. But this can be shaky ground in the sense that you have the right to also pull back when you want,” said Ahi.
Her remarks came after fellow panellist Pauline Goh, former general manager of the Malaysian Recycling Alliance (MAREA), outlined Malaysia’s proposed EPR framework that would allow producers to either manage the collection of post-consumer packaging themselves, transfer the responsibility to a Producer Responsibility Organisation (PRO), or adopt a hybrid approach.
However, for EPR systems to deliver meaningful impact, Ahi said policymakers need to create a framework that establishes clear responsibilities and a level playing field for all producers.
“We are talking about policy and law that is implemented and creates a level playing field for everybody,” Ahi said.
EPR holds producers accountable for managing post-consumer waste, requiring companies that introduce packaging into the market to help fund collection, sorting and recycling systems.
As voluntary schemes often struggle to attract the scale of investment needed for recycling infrastructure, Ahi stressed that the long-term success of EPR in Malaysia will depend on regulatory certainty.
“Voluntary EPR does not necessarily attract the level of recycling investment and drive that you need because predictability is largely missing,” she said.
While EPR provides a pathway towards shifting responsibility to producers, industry stakeholders also pointed to Malaysia’s existing waste management challenges and highlighted the need for stronger regulatory coordination and enforcement.
Goh, who is also a member of the industry advisory board at Sunway University, said the structural gaps in Malaysia’s current waste management system, including fragmented legislation and inconsistent implementation is a main contributor to its waste crisis.
Malaysia currently generates about 39,000 tonnes of solid waste every day, with the majority ending up in landfills.
The country has more than 100 landfill sites, but only 22 are sanitary landfills, while the rest are open dumpsites. According to projections by the Ministry of Housing and Local Government (KPKT), annual waste generation is expected to continue rising, reaching 17 million tonnes by 2035 as consumption grows alongside economic development.
Goh also pointed to the Solid Waste and Public Cleansing Management Act 2007 (Act 672), which requires separation at source, but is only applies to seven states and federal territories in Peninsular Malaysia, while other states continue to operate under Local Government Act 1976 (Act 171).
“Legislation is a big problem in Malaysia. It is not uniform, so nobody understands and knows what to do,” she said, referring to inconsistent regulations have resulted in confusion among households and businesses.
Goh added that although households in states under Act 672 are required to separate waste at source, penalties ranging from RM50 to RM500 (US$12 to US$122) per offence have had limited impact due to weak enforcement.
From left: Lawrence Peters, programme analyst at United Nations Development Programme (UNDP) Malaysia and Pauline Goh, member of the industry advisory board at Sunway University. Image: Eco-Business
Technology is an enabler, not the answer
While strengthening regulations and enforcement will form the foundation of Malaysia’s transition, panellists said the success of the country’s EPR framework will ultimately depend on how effectively policy, technology and financing work together.
As Malaysia develops its EPR framework, policymakers are evaluating different implementation models, including producer-led collection systems, PROs, as well as investments in sorting and recycling infrastructure to improve the recovery of post-consumer packaging.
Against this backdrop, Ahi cautioned against viewing technology as a silver bullet.
“One of the biggest challenges I see when I work with other Asian governments is that it is assumed that technology is the answer,” she said.
While technologies such as automated sorting systems can improve the speed, accuracy and traceability of recycling operations, they remain only one component of a much broader ecosystem.
“Technology is not the answer alone. It’s an enabler. It gives you accuracy. It gives you speed. It gives you reporting. It gives you data. But on its own, it cannot achieve anything,” she added.
Instead, she argued that technology investments should follow a clearly defined national vision for resource recovery rather than drive policy.
Drawing on international experience, Ahi said Malaysia should learn from pioneers such as the European Union, which has spent years developing comprehensive circular economy frameworks covering areas from taxonomy and product design to producer responsibility and regulatory principles.
She stressed that these models should not simply be replicated but redesigned according to the vision of the country and the existing infrastructure and service models that it is used to.
Beyond regulation, speakers also highlighted that financing will be critical to building the infrastructure needed for Malaysia’s circular economy.
Lawrence Peters, programme analyst for the climate change portfolio at United Nations Development Programme (UNDP) Malaysia, said a well-designed EPR system could eventually become financially self-sustaining, as producer fees collected through the scheme would help fund collection and recycling operations.
The bigger challenge, however, he said, lies in financing the upfront investment required to establish the system.
To bridge that gap, governments could leverage blended finance, public-private partnerships and international development finance to reduce investment risks and crowd in private capital.
Peters also pointed to growing interest in thematic bonds that link financing to measurable environmental or social outcomes.
“There is some very interesting work happening on thematic bonds… where you’re tying the bond issuance to a positive environmental outcome or a positive societal outcome,” he said.
Goh echoed the need for complementary financing beyond EPR fees, noting that external capital would still be required to develop large-scale recycling and waste management infrastructure.
She said multilateral institutions such as the World Bank, the International Finance Corporation (IFC) and the Asian Development Bank, as well as initiatives like the European Union’s Global Gateway programme, could play an important role in supporting major infrastructure projects.
However, she said mobilising private investment would ultimately be just as important.
“Bank Pembangunan has already shared with us that they are playing the catalytic role… they will fund maybe 20 per cent, and then with their funding the rest of the banks can come in,” she said, adding that Malaysia also needs greater participation from venture capital and private equity investors to accelerate innovation and build the infrastructure needed for a functioning circular economy.
