Circular economy opportunities in Malaysia

With fast-developing cities and a population of more than 32 million, Malaysia faces both challenges and opportunities in its transition to a circular economy. The lack of implemented extended producer responsibility (EPR) and the public sector’s limited capabilities in waste management, makes the country miss out on potential value from recycling. Yet, Malaysia has a strong manufacturing base and keeps growing rapidly. Huge company-driven actions on plastic packaging stimulate the country to make room for new market opportunities from design to production, usage to the collection, sorting, recycling, and applying recyclate in new products. With the government’s ambition to reduce greenhouse emissions by 45% in 2030, opportunities for collaboration with The Netherlands as a niche leader in circular manufacturing, seem likely.

Thinking about doing business in Malaysia? Below you will find a summary of the information on policy landscape, circular economy strategy, and selected priority areas. For more information, please click here for the 4-pager PDF file.

An overview of the most important information for business in Malaysia

Facts & Figures

Economic indicators

  • Size: Malaysia is 8 times larger than the size of The Netherlands 
  • Total Landmass: 329.847 square kilometers (Peninsular Malaysia and East Malaysia (Sabah and Sarawak) 
  • Population (2020): 32,79 mln 
  • Nominal GDP (2020): €342.442 bln, world rank: 36th  
  • Import from the NL (2020): €884,6 million
  • Economic growth (2021 ): 3-4% 
  • Ease of doing business rank (2020): 24 
  • Corruption index (2021): 65/198 
  • Unemployment rate (2020): 4,55% 
  • Currency: Malaysian Ringgit 
  • Time difference NL: + 6/7hrs 

Circular economy indicators

  • Global innovation index (2020): 33/133 
  • Recycling rate of municipal solid waste (2020): 30,67% 
  • Renewable energy consumption (2018): 5,3% 

Solid waste composition in Malaysia (2019)

Policy Landscape

Malaysia is a country with a federal constitutional monarchy, which has 13 states and 3 federal territories. Malaysia has a King as the head of the country, while the executive power is held by the Prime Minister of the cabinet. Manufacturing is now the Malaysian core sector with several primary industries, such as electrical & electronics (E&E), petroleum products and petrochemicals, semiconductors and machinery, and equipment. Other sectors supporting the country’s economy are palm oil and forestry. 

Malaysia has set ambitious goals towards sustainability and circular transition:

  • The target of recycling rate in 2025: 40% 
  • A reduction of gas emissions in 2030: 45%

Malaysia has also developed some actions toward circularity:

“We see four priority areas when it comes to circular economy opportunities and needs: Manufacturing, plastics, biomass, and waste management"

Dutch Embassy in Malaysia

Manufacturing industry

Malaysia’s Investment Performance Report on 2019 shows that remanufacturing the top Malaysian industries (electrical and electronics, vehicle components, chemical, rubber, plastics) can generate three times the current value to the Malaysian economy. Establishing refurbishment and remanufacturing for those industries can be key strategies for Malaysia and for Dutch business partners.

In addition, there is a new market opportunity on electric vehicles (EVs) as the Malaysian government announced on their 2022 National Budget to eliminate all taxes on EVs in Malaysia. The support from the Malaysian government is expected to increase the demand for sustainable batteries.

Adopting a smart industry strategy and enhancing digitization can be beneficial to build a data matching platform for data collection and analysis. Furthermore, combining servitization and smart technologies will make resource efficiency more valuable for industries. Implementing digitization on vehicle components, ICT, medical devices, and aerospace industries can help them to create a more effective production system.

Lastly, the district cooling energy system can be seen as a new strategy as well. Currently, the Malaysian government seeks companies that can provide energy from other renewable energy sources, like biomass and hydropower, or waste-to-energy projects linked to cooling installations. 


In 2019, WWF Malaysia reported that the country, compared to China, Indonesia, the Philippines, Thailand, and Vietnam, was the biggest consumer of used plastics per year, with 16,78 kg per person. However, only 24% of it was recycled. The loss of material value in the plastics sector creates economic consequences as the country would potentially lose up to €887 million per year in the plastics recycling market. 

Meanwhile, plastics recycling in Malaysia is mostly done by voluntary initiatives, driven by FMCG multinationals in Malaysia. The multinationals started the projects to collect and recycle their plastic packaging waste. Malaysia has room to scale the initiations further and professionalize closed plastic value chains. Dutch product designers in packaging can see this as an opportunity to offer their knowledge in redesigning product packaging.

Technologies such as repurposing non-bottle-PET waste products, training on waste segregation, and certifications on sustainable initiatives are other solutions for the Malaysian plastic waste problem which can be explored.


As a leading country in agriculture, Malaysia produces more than 103 million tons of biomass, including agricultural waste, forest residues, and municipal waste. More than 90% of the biomass is derived from palm oil mill residues. Organic residues of the palm oil industry are partly converted into biogas in digesters. 

Local companies, mostly based in Sabah and Sarawak face challenges to develop the biomass industry. New technologies and expertise are difficult to find. In addition, Malaysia has the need to sustain its electricity generation mix and pursue new methods to generate from domestic sources. This offers opportunities for collaborative research in the agriculture sector. Combining the expertise fields of biomass, water waste- and energy management offers opportunities for Dutch experts in the palm oil industry. 

Further digitalization of the biomass industry at large to identify available and utilized residues can be one of the newer opportunities. Another potential market rises in biogas trapping and methane capturing activities from POME (palm oil mill effluent) treatment. Engaging Dutch entrepreneurs and experts in this field will create business opportunities for renewable biomass energy projects and services.

Waste Management

The Department of Statistics Malaysia stated that the country generated about 38.000 metric tonnes of waste daily in 2019. Overcoming the problem, the government set big ambitions to raise the recycling rate. Lack of information and skills on the waste flows, segregation and recycling become challenges. Furthermore, civil society organizations and academics have limited data on volume waste generation and waste treatment. 

Dutch businesses can provide technology and equipment supplies for waste sorting and segregation. Providing digital technology to identify the types of plastics in MSW is expected to be the winner technology. In addition, organic and food waste valorization from MSW is still underutilized. Experts are needed to develop the strategy for that sector.

Lastly, business opportunities evolve in Selangor Maritime Projects. The state wants to rehabilitate the ecosystem along the Klang River and needs assistance. Several actions are possible: developing methods on river waste management, sharing knowledge on renewable energy solutions, building circular economy strategies, and knowledge transfer on biodiversity preservation. 

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