Malaysia puts its 2026 CBAM steel bill at USD 237 million, the first official ASEAN costing

Malaysia is the first ASEAN government to publish an official costing of its CBAM exposure. The Ministry of Investment, Trade and Industry (MITI), in a parliamentary reply, cited a Malaysian Steel Institute estimate putting the 2026 CBAM compliance bill for the country's iron and steel industry at roughly MYR 970.7 million, about USD 237 million, and rising in subsequent years. The figure concerns every Malaysian steel producer shipping into the EU and every EU importer sourcing steel from Southeast Asia, because it converts a regulatory abstraction into a national cost line.

The reply, answering a question from Senator Sheikh 'Umar Bagharib Ali according to The Edge Malaysia, was published on Parliament's website and reported by The Edge Malaysia and Xinhua on August 5, 2026, then picked up internationally by Carbon Pulse and GMK Center on August 6. Alongside this story, our new CBAM Malaysia country guide goes live, covering the export profile, the compliance options, and the policy response in detail.

What MITI told Parliament

MITI told Parliament that CBAM compliance could cost Malaysia's iron and steel industry roughly MYR 970.7 million (about USD 237 million) in 2026, citing a Malaysian Steel Institute study, with costs expected to rise progressively in subsequent years. The ministry did not dispute the estimate. "The government acknowledges that the implementation of the EU-CBAM from Jan 1, 2026, will have implications for carbon-intensive industries, including the iron and steel sector," the reply states, as reported by The Edge Malaysia. The reply also compresses the mechanism into one sentence: "The mechanism imposes a carbon cost based on the embedded carbon emissions of products exported to the EU market."

MITI framed the mechanism as a challenge and an opportunity at once, saying CBAM can accelerate the transformation of Malaysian steelmaking toward more competitive, sustainable low-carbon production. That framing signals Malaysia intends to adapt to the mechanism through data and decarbonisation, not only to contest it diplomatically.

Malaysia's EU steel exposure in numbers

Malaysia exported about 752,000 tonnes of steel worth MYR 3.23 billion to the EU last year, roughly 12.5 percent of its total steel exports of around 6 million tonnes valued at approximately MYR 24 billion. The table below sets out the figures from the parliamentary reply.

The reply does not break down what the estimate covers, and the gap between the headline number and pure certificate cost is worth noting. Certificate purchases alone would come to roughly €2.8 million for 752,000 tonnes of blast furnace steel in 2026: about 2.0 tCO₂ of embedded emissions per tonne, a 2.5 percent CBAM factor while free allocation still covers 97.5 percent, and published certificate prices of €75.36 for Q1 and €75.28 for Q2. At full phase-in, the same tonnage implies an annual certificate cost above €110 million at current prices, and our mid-quarter check has the Q3 certificate price tracking six to eight euros above Q2. An estimate above both figures is consistent with a costing that includes monitoring, reporting, verification, and decarbonisation spending alongside certificates, but that reading is inference; the reply does not itemise.

The four-part response: MRV, decarbonisation, support, and negotiation

MITI's response rests on four measures: a national MRV system, accelerated industrial decarbonisation, political and financial support for affected producers, and negotiation with the EU for "fair treatment for developing countries". The four measures, as described in the reply and the subsequent reporting, are listed below.

• A national MRV system. A Malaysian measurement, reporting and verification framework would give steel producers installation-level emissions data in a form EU declarants can use, the raw material of every CBAM cost-reduction strategy.
• Accelerated decarbonisation. The ministry points to energy efficiency improvements and greater renewable energy use in the steel sector, which cut embedded emissions and therefore the certificate liability attached to each tonne.
• Support for affected producers. MITI says the government will back the industry's transition politically and financially; the reply attaches no budget figure to that commitment.
• Negotiation with the EU. The government is pressing for "fair treatment for developing countries" in how the mechanism is applied, per the Carbon Pulse and GMK Center reports.

The negotiation track places Malaysia inside the wider argument over CBAM and developing countries, which runs through UN climate talks, WTO litigation, and bilateral diplomacy. India showed what the bilateral route can yield when, per a senior official, it secured a dedicated CBAM annexure in its FTA work plan with the EU.

Why the first official ASEAN costing matters

No ASEAN government had published an official costing of CBAM exposure before this reply; the region's numbers had come from industry bodies and consultancies. An official figure carries different weight. It commits a government to a position on the size of the problem, anchors budget requests for the response measures, and gives the EU a counterpart number in any bilateral discussion.

The regional context makes the precedent significant. Our CBAM Vietnam guide tracks circumvention monitoring and the new 2025 ETS, and the CBAM Indonesia guide covers steel and aluminium exposure under the 2023 carbon market; in both countries, the published exposure estimates so far trace to industry and analyst work rather than a government costing. Other ASEAN capitals now face an obvious question from their own steel industries: what is our number? Further north, the scale is larger still, as Korean steel faces a USD 4 billion CBAM exposure with a narrow window to reduce it.

What the number means for exporters and importers

Verified actual emissions data is the main cost lever for Malaysian steel exporters, because Malaysia has no qualifying domestic carbon price and therefore no basis for a deduction under Article 9. Without a carbon price paid at home to offset, the liability equation reduces to embedded emissions multiplied by the certificate price, and embedded emissions is the only variable a producer controls. Where a supplier provides no verified actual data, the EU declarant falls back on CBAM default values, which are set with a mark-up precisely to make actual data worth collecting. The corrected default values Excel the Commission posted on August 10, 2026 lowered nearly every value it corrected, but verified actuals from an efficient installation still typically undercut the defaults. This is exactly the gap a national MRV system is designed to close.

EU importers sourcing Malaysian steel can act on the reply in three steps, listed below.

1. Request verified, installation-level emissions data from Malaysian suppliers now; the first declaration covering 2026 imports is due September 30, 2027.
2. Compare supplier actuals against the applicable default values per CN code to quantify the saving; the CBAM steel guide covers codes, emission factors, and calculation for the sector.
3. Budget certificate purchases at the published quarterly prices ahead of the February 1, 2027 sales opening, using the CBAM cost calculator.

What happens next

Three developments will show whether the MYR 970.7 million estimate falls or climbs: the build-out of Malaysia's national MRV system, the EU-Malaysia engagement on developing-country treatment, and the certificate price path into 2027. Certificate sales open on February 1, 2027, and the first annual declaration, covering calendar year 2026, is due September 30, 2027. MITI's own reply expects costs to rise as the CBAM factor grows and free allocation phases out toward 2034, so the 2026 figure is a floor, not a ceiling. The CBAM Malaysia guide tracks the MRV rollout, the export data, and the negotiation track as they develop.