Malaysia’s towards mandatory Extended Producer Responsibility will require behavioral and structural change
The Circular Economy Blueprint for Solid Waste 2025-2035, launched by the Ministry of Housing and Local Government (KPKT), identifies extended producer responsibility (EPR) as one of its major initiatives, with the current implementation trajectory of voluntary EPR beginning this year, 2026.
With that in frame, if Malaysia is to move towards mandatory EPR for major producers by 2030, the country would require real recycling and recovery infrastructure to exist.
Right now, voluntary EPR commitments are not able to attract the investment needed as investors are not confident to commit capital to infrastructure resting on a commitment a company can reverse at will.
The glaring question is who finances the infrastructure that the initiative assumes will already exist by 2030.
Industry voices
A major issue with EPR is whether the downstream system has the capacity to receive, sort, process and create value from plastic packaging.
In a media release from July this year, five industry associations including: the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), the Federation of Malaysian Manufacturing (FMM), Malaysian Recycling Alliance Berhad (MAREA), the Malaysian Plastics Manufacturers Association (MPMA), and the MALAYSIA PLASTICS RECYCLERS ASSOCIATION (MPRA), said that they are working on this together by combining action on the ground with advocacy at the industry level.
It is believed that the 2026 voluntary EPR stage is a valuable window for the industry to prepare, with collection infrastructure, consumer awareness and supply-chain alignment now setting up Malaysia’s readiness for mandatory EPR in 2030.
The signatory associations also held roundtables behind the submission, specifically around the practical realities facing recyclers and manufacturers, from SST tax treatment to gaps in collection infrastructure, as well as improvements to existing government incentives.
However, the recycling infrastructure is only as useful as the material flowing into it. For Malaysia, the challenge is therefore not simply building more recycling capacity, but also building a system that can reliably move packaging waste from households and businesses into collection, sorting and processing facilities.
This is where the EPR model matters. If producers are expected to finance the recovery and recycling of the packaging they place on the market, there needs to be a traceable chain between that packaging and the recycled material produced from it.
That chain starts with collection and separation, also known as separation-at-source (SaS).
Collection and separation
Looking to the East, Japan could be a potential model to adopt when it comes to SaS but it requires a change in consumer behaviour.
While Japan initially took a voluntary route just like Malaysia, its Containers and Packaging Recycling Law splits responsibility across three parties: consumers sort and reduce waste, municipalities collect the sorted waste, and businesses carry the recycling obligation.
Critically, producers finance the recycling of the waste that municipalities have already collected and sorted, either individually or by paying into a shared body, that being the Japan Containers and Packaging Recycling Association, which handles compliance on their behalf.
For a similar model to function in Malaysia, SaS would need to become a consistent household habit.
SaS has technically been mandatory as early as 2015 across seven states in Malaysia, yet enforcement remains inconsistent and still has not gathered much buy-in nationwide. As a result, much of the country’s recent recycling gains have come from informal collectors, not households sorting at home.
Closing that gap will take consistent enforcement across states rather than partial rollout, and visible proof that sorted waste is actually recycled, not landfilled anyway.
Without that trust, there is little reason for the habit to stick.
Capital difference
Malaysia’s EPR transition will ultimately need more than policy. It will need capital willing to back the infrastructure, businesses and systems that can make circularity work at scale.
The challenge is mainly finding opportunities where environmental outcomes and commercial viability can reinforce each other – beginning from collection and recovery infrastructure to businesses solving gaps in sorting, processing, traceability and the use of recycled materials.
This is potentially where responsible investment can have a role to play.
For instance, with LGG’s Corporate Responsible Investment (CRI) approach, the opportunity is not simply to invest in businesses because they are “sustainable”, but to identify where capital can help build capabilities that the market will increasingly need while still creating a pathway to sustainable returns such is the case with Nuplas Solutions.
As Malaysia moves from voluntary EPR towards a more structured system, the businesses that can help make that transition commercially viable could become increasingly important parts of the circular economy.