‘Tough decisions ahead’: Malaysia must harmonise state and federal jurisdictions over carbon ahead of climate change bill

Over the next three months, Malaysia’s environment ministry will consult state and federal actors, as well as industry and civil society groups as it prepares a draft of the bill.

Nik Nazmi CC Bill
Malaysia's minister for natural resources and environmental sustainability Nik Nazmi Nik Ahmad (centre) said at a dialogue session on the national climate change bill that discussions are ongoing over whether carbon budgets should be divided according to federal ministries or states. Image: Ministry of Natural Resources and Environmental Sustainability/ Facebook

As Malaysia’s ministry of natural resources and environmental sustainability (NRES) races to table a national climate change bill in Parliament next year, contentions about carbon regulation and how much the federal or state governments should be responsible for decarbonising the country has surfaced as a leading concern.

At a dialogue session on the climate change bill in Kuala Lumpur on Thursday, civil society and state government representatives questioned the minister on how the federal government planned to engage and secure the support of state actors. As a federation, Malaysia comprises 14 states, 13 of which have elected governments independent of the federal government.

“Globally, we speak about common but differentiated responsibilities … but even within Malaysia, we are like a mini-United Nations with many smaller [states]. How would the new framework consider equitability when it comes to issues like carbon budgets?” asked Santini Guna Rajan, national policy lead at WWF-Malaysia.

A representative from the economic planning unit of Negeri Sembilan, a state bordering Peninsular Malaysia’s most populous state of Selangor, raised a similar concern, saying that smaller and less developed states in the country should not be expected to sacrifice economic development to meet the same benchmarks for lowering emissions as more developed ones. “Every state is going to respond differently (to the proposed bill), so how are you going to make it suitable for all?” she asked NRES minister Nik Nazmi Nik Ahmad.

NRES, as part of the federal government, is responsible for ensuring the country meets its net-zero emissions target by 2050 as part of Malaysia’s Nationally Determined Contribution (NDC) under the Paris Agreement. However, state governments hold legislative power over their own land and natural resources, which state officials contend should include oversight and management of carbon sinks such as forests.

“I’ve been to state government engagements where the state [officials] wrote in large, red letters “Karbon Milik Negeri” (Carbon Belongs to the State), by virtue of land belonging to the state,” said Nik Nazmi, acknowledging the tension between federal and state governments on the matter.

To address this, the ministry is embarking on a three-month, cross-country “roadshow” from March to May, which will include dialogue sessions with state governments and local authorities, focus groups with other federal ministries and roundtable sessions with industries, associations as well as civil society organisations.

“(This is) the most critical part of our consultative approach,” said Nik Anira Nik Mohd Zain, partner and executive director at Deloitte Southeast Asia. Deloitte Malaysia was appointed in August last year to assist the ministry in developing the climate change bill, and has thus far consulted all departments of the environment ministry, studied state policies and plans, as well as conducted 21 comparative benchmarking studies, said Anira.

Nik Nazmi added that the consultations with state governments will be crucial in securing their buy-in on the bill. “We don’t want this to be a back-and-forth [of arguing who has power over what] and as a result, nothing moves,” he said. “We will try our best to harmonise this at engagement sessions as well as through the Malaysia Climate Action Council.”

The council, which is chaired by the prime minister and includes representatives from other federal ministries as well as state governments, had previously agreed on the federal government being the “focal point” for emissions-related matters. It will further deliberate on the division of climate and carbon-related responsibilities between federal and state when they meet after the three-month consultation has been completed, said Nik Nazmi.

In the meantime, the government will look into how other federations such as Australia, Canada and the United States have approached the issue in drafting their own climate related bills, he said.

We need your buy-in and sense of belonging to what we are doing, because there will be a lot of tough decisions ahead in dealing with climate change.

Nik Nazmi Nik Ahamad, Minister of Natural Resources and Environmental Sustainability, Malaysia

More inclusivity, please

In questioning how the federal government would ensure coherence between national and state policies, Meena Raman, head of programmes at independent advocacy organisation Third World Network observed that there had been a lack of public engagement in the development of Sarawak’s climate change bill. The East Malaysian state had been the first in the country to pass a climate change bill in its state assembly, ahead of the federal government.

“From what we understand, there was actually no consultation [in the drafting process of Sarawak’s climate change bill] with anyone at all. That’s what we hear from the non-governmental organisations (NGOs) in Sarawak, many of whom are concerned, and also the local state assembly representatives,” she said.

Representatives from other environmental advocacy groups also called for greater inclusivity and civil sector participation in developing and reviewing the draft of the bill. The Association to Raise the Voice of The People (KUASA) called for emphasis to be placed on access to justice for communities affected by violations of the bill, as well as the right to information to be considered as a component of the proposed law.

Nik Nazmi assured them that consultations with NGOs would be an important part of the drafting process. [We want to] have a meaningful consultation, not just to tick a box but to actually listen to your concerns and include them within the text of the legislation.”

“We recognise the need for those outside the ministry to be part of this journey. We need your buy-in and sense of belonging to what we are doing, because there will be a lot of tough decisions ahead in dealing with climate change,” he said.

Attendees at the dialogue also questioned how the climate change bill would interact with existing and potentially conflicting laws. A 2021 study, spearheaded by Malaysia’s CEO Action Network and Climate Governance Malaysia, found that there were inconsistent objectives between different environmental laws, such as the 1972 Protection of Wildlife Act and 1982 National Forestry Act. The study recommended these laws be harmonised under a single regulation, and that states be encouraged to participate in developing biodiversity legislation.

“Enacting climate policy at state government level should be a primary focus, building on federal level policies,” it said. “State level climate policy should account for the protection of forests as carbon sinks.”

The study pointed out that historically, state governments were pressured to exploit their natural resources for income, which involved clearing forests for logging, mining and agribusinesses.

However, the federal government has moved to address these gaps in 2019 by implementing ecological fiscal transfers (EFTs), in which a budgeted amount of federal funds was doled out to state governments based on how well they conserved their forests. Nik Nazmi pointed out that the total allocated amount for EFTs in Malaysia has increased steadily since then, most recently being raised to RM200 million (US$42 million) in last year’s federal budget compared to just RM60 million (US$12.6 million) when the mechanism was first introduced.

“Of course, when we check in with the state governments, they tell us they need more (money). But at the end of the day, there needs to be a bottom line (so that) we can move forward,” he said. 

“We have to recognise that it cannot be business as usual,” said Nik Nazmi. “There will be changes at every level that we have to make to address climate change.”

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