A business cuts waste costs in a circular economy by keeping recyclables out of the general bin. A circular economy keeps materials in use by reusing and recycling them, instead of burying them in landfill. Each tonne you separate avoids a disposal charge. Disposal costs from RM95.50 a tonne, the rate our partner collectors are charged at the Jeram landfill, passed on at cost. Separated ferrous scrap, such as iron and steel, can also sell for RM500–900 a tonne.
The Ministry of Housing and Local Government (KPKT) launched the Circular Economy Blueprint for Solid Waste (2025–2035) in August 2024. It is a 10-year plan to change how Malaysia handles waste. Of the rules around it, only separation at source binds an ordinary business today. That rule applies in the states under Act 672, Malaysia's solid waste law.
Related: Understand how circular economy ties into Malaysia's waste management regulations and ESG (environmental, social and governance) reporting requirements.
Here is what each rule asks of your business, and from when
The Blueprint is a plan, not a law. The duties sit in the rules around it. Each one binds a different business from a different date.
| Rule | Who it binds | From when | What to keep on file |
|---|---|---|---|
| Circular Economy Blueprint for Solid Waste (KPKT's document) | No business directly. It is a government plan that gives direction to stakeholders | Launched by KPKT on 6 August 2024. It runs from 2025 to 2035 | Nothing is required by the Blueprint itself |
| Separation at source under Act 672 | Shops, factories, offices, restaurants, schools and hospitals in Kuala Lumpur, Putrajaya, Johor, Kedah, Melaka, Negeri Sembilan, Pahang and Perlis | Since 2020 for commercial, industrial and institutional premises. Households since 1 September 2015 | Your collector's licence and your disposal records. The rule asks you to separate waste, appoint a licensed collector and keep those records |
| Act 672 in Selangor | Premises in all 12 of Selangor's local authorities, once it starts | Announced on 29 July 2026. No start date or phase order has been published | Your collector's approval from the local council, and your disposal records. Councils and KDEB Waste Management still run solid waste in Selangor today |
| Extended Producer Responsibility (EPR) | Producers, as the Blueprint defines them: those who make or import a covered product and sell it in Malaysia. KPKT says the first phase covers six types of packaging | No start date in law is confirmed. KPKT announced on 21 January 2026 that the Circular Economy Council for Solid Waste had approved the EPR policy framework. In a Bernama report of 9 September 2025, KPKT said a voluntary first phase would start in 2026, with EPR mandatory by 2030 | The packaging you put on the market, by material and by weight |
| Sustainability reporting for listed companies (National Sustainability Reporting Framework, NSRF) | Listed companies, and non-listed companies with annual revenue of RM2 billion and above. A supplier has no duty of its own, but a listed customer may ask it for waste figures | Launched on 24 September 2024 and phased in: Main Market companies with a market capitalisation of RM2 billion and above in 2025, other Main Market companies in 2026, ACE Market and large non-listed companies in 2027 | Waste by weight and by where it went, for each site and each month |
| Carbon tax | Nobody today. It was aimed at iron, steel and energy, and waste was not in scope | Due in 2026, but on hold since April 2026. No rate or new start date is confirmed | Nothing for the tax |
Of these six, only separation at source binds an ordinary business today, and only in the Act 672 states. The reporting framework binds listed companies. The rest are announced, planned or on hold. Most rows come back to one record: your waste by weight, and where it went.
One site shows what that record looks like. At Signature Market, a Malaysian e-commerce company, 68.598 of the 93.09 tonnes generated in 2025 stayed out of landfill. That is 73.69%, mostly carton. Every kilogram was weighed and recorded in GarGeon Connect, our online portal that logs every pickup's weight, time and photo.
If you run several sites, one partner for collection, recycling and reporting keeps that record the same way at every site. To see where your own business stands, our zero-waste ladder places it in four questions.
What Is the Circular Economy — And Why It Matters Now
The circular economy replaces the traditional linear model (take → make → dispose) with a closed-loop system where materials stay in use as long as possible:
Linear Economy: Raw Materials → Production → Use → Landfill Circular Economy: Design → Production → Use → Reuse/Recycle → Raw Materials
This isn't just an environmental concept. It's an economic one. When businesses divert waste from landfills, they reduce disposal costs (from RM95.50 a tonne, the rate our partner collectors are charged at Jeram, passed on at cost) and can generate revenue from recyclable materials (ferrous scrap metal fetches RM500–900 a tonne).
Malaysia generates 39,078 tonnes of solid waste daily. 82.5% of collected waste went to landfill in 2021, and the national recycling rate stood at 37.9% in 2024; the two are different years and different measures, so they do not add up to 100%. The country has about 135 landfills, but only 22 meet sanitary standards. A sanitary landfill is lined, and captures the polluted liquid and gas from the waste. These numbers are why the government launched the Blueprint.
For Malaysian businesses specifically, the circular economy matters now because:
- Regulatory pressure is building — EPR and ESG reporting mandates are being phased in, while the carbon tax planned for 2026 has been on hold since April 2026
- Landfill capacity is shrinking — disposal costs will only increase as landfills fill and close
- Clients are demanding it — multinational customers (MNCs) require sustainability data from Malaysian suppliers for their Scope 3 reporting. Scope 3 counts emissions you cause but do not control, like landfill gas from your waste
Malaysia's Circular Economy Blueprint 2025–2035
Launched by the Ministry of Housing and Local Government (KPKT) in August 2024, the Blueprint provides a 10-year roadmap built on five strategic pillars:
Pillar 1: Governance and Legislation
Strengthening the legal framework for waste management, including mandatory recycling requirements and enforcement mechanisms under Act 672.
Pillar 2: Guidelines and Procedures
Standardising waste management practices across industries with clear operating procedures for separating, collecting and recycling waste.
Pillar 3: Digitalisation and Technology
Promoting digital waste management systems for tracking, reporting, and optimisation — moving businesses from paper-based waste tracking to auditable digital records.
Pillar 4: Infrastructure and Facilities
Expanding recycling facilities, material recovery centres, and waste-to-energy plants. The government aims to have a waste-to-energy plant in every state by 2035.
Pillar 5: Market Creation
Building demand for recycled materials through green public procurement, product standards for recycled content, and industry partnerships.
The Blueprint includes 20 Circular Economy Initiatives spanning these pillars, with measurable targets including improved national waste diversion rates and zero-waste-to-landfill certification for manufacturers.
Extended Producer Responsibility (EPR)
Extended Producer Responsibility makes producers pay to collect and recycle their products after use.
What EPR Means for Businesses
| EPR Element | What It Requires |
|---|---|
| Packaging waste | Producers fund collection and recycling programmes for packaging they put into the market |
| E-waste | Take-back requirements for electrical and electronic equipment |
| Recycling targets | Mandatory recovery rates for specific product categories |
| Financial contributions | Fees to Producer Responsibility Organisations (PROs) that manage collection |
Who Is Affected
KPKT has said the first phase of EPR covers six types of packaging: plastic, paper, aluminium, glass, ferrous metal and carton. It falls on producers, the companies that make or import the packaged goods. But the ripple effect extends to every business in the supply chain — retailers, distributors, and waste service providers all need to adapt.
Businesses should prepare now by:
- Tracking product packaging volumes and material types
- Establishing relationships with licensed recycling partners
- Building waste data collection systems that can report material flows
Financial Incentives for Circular Economy Adoption
The Malaysian government offers several financial mechanisms to encourage circular economy practices:
Green Investment Tax Allowance (GITA)
Capital allowance of 100% on qualifying green assets for businesses investing in approved green technology equipment, including waste recycling infrastructure, composting facilities, and energy-efficient waste processing systems.
Green Income Tax Exemption (GITE)
70% income tax exemption for up to 10 years for companies providing green technology services, including waste management and recycling services that meet qualifying criteria.
Green Technology Financing Scheme (GTFS)
Government-guaranteed financing at preferential interest rates for green technology projects, covering up to 60% of the financing amount with a 2% interest rate subsidy.
Budget 2025 Incentives
- RM2,500 tax relief for food waste composting machines (household use)
- Extended GITA/GITE for qualifying green investments
- Allocation for recycling infrastructure development
Note: Eligibility criteria and application processes vary. Consult MGTC (Malaysian Green Technology and Climate Change Corporation) for current requirements.
The Business Case: Recycling vs. Landfill Economics
The financial argument for circular economy practices is straightforward. Consider the cost comparison for common commercial waste streams. A waste stream is one type of waste kept apart, such as cardboard or food.
| Waste Stream | Landfill Cost (per tonne) | Recycling Revenue (per tonne) | Net Swing |
|---|---|---|---|
| Ferrous metal scrap | RM95.50 (disposal) | +RM500–900 (sale) | RM595.50–995.50 |
| Cardboard | RM95.50 (disposal) | +RM200–350 (sale) | RM295.50–445.50 |
| Old newspaper | RM95.50 (disposal) | +RM450–750 (sale) | RM545.50–845.50 |
| Plastic (clean PET / HDPE) | RM95.50 (disposal) | +RM350–650 (sale) | RM445.50–745.50 |
The sale figures are indicative market ranges, converted to a tonne from the table in our recycling rebate guide; they are not quotes. For the per-tonne fees and a worksheet for your own numbers, see our recycling vs. landfill cost comparison.
Beyond direct cost savings, businesses also benefit from:
- A smaller carbon footprint to report — landfill disposal generates methane, which counts in the Scope 3 waste emissions a business discloses; Malaysia's carbon tax is on hold and did not have waste in scope
- ESG reporting advantages — higher waste diversion rates strengthen sustainability disclosures for Bursa-listed companies
- Supply chain competitiveness — MNC clients increasingly require verified recycling data from Malaysian suppliers
Circular Economy Strategies for Malaysian Businesses
1. Start with a Waste Audit
Before implementing circular strategies, you need baseline data. A waste audit identifies:
- What waste streams your business generates and in what volumes
- Which materials are currently recyclable but going to landfill
- Where waste reduction opportunities exist
- The cost of your current disposal practices
Practical tip: Our waste audit guide covers what an audit measures and how to act on it.
2. Separate Waste at the Source
The single most impactful action is keeping materials apart at the point of disposal. Mixed waste is nearly impossible to recycle economically. Waste that stays separated at the source retains its market value.
At minimum, businesses should separate:
- Recyclables (paper, cardboard, plastics, metals, glass)
- Organic waste (food waste, garden waste)
- General waste (non-recyclable, non-hazardous)
- Scheduled waste (the legal name for hazardous waste, regulated by the Department of Environment under the Environmental Quality Act)
3. Engage Licensed Recyclers
Not all waste collectors actually recycle. Many mix recyclables with general waste to reduce operational costs — what we call "waste management blindness." Verify that your waste service provider:
- Holds valid registration with SWCorp, the federal agency that enforces Act 672, or local council permits
- Provides disposal certificates showing where waste actually goes
- Can demonstrate measurable diversion rates with data
4. Track and Report
Tracking turns a circular-economy goal into numbers you can check. With proper tracking, businesses can:
- Calculate actual waste diversion rates
- Identify cost-saving opportunities in specific waste streams
- Generate audit-ready reports for ESG and regulatory compliance
- Benchmark performance against industry standards
5. Close the Loop
The ultimate circular economy goal is turning waste outputs into inputs for your own or other businesses' operations:
- Food waste → composting or biogas — organic waste can generate energy or soil amendments
- Packaging waste → recycled packaging — source recycled-content materials for your own products
- Construction waste → recycled aggregate — concrete and rubble can be processed into usable construction materials
Carbon Tax and the Circular Economy Connection
Malaysia's carbon tax was due to start in 2026 with the iron, steel and energy sectors. In April 2026 the government put it on hold. No rate or new start date has been confirmed, and waste was not in scope. The connection to waste management is through emissions, not a tax bill:
Landfill disposal generates methane — a greenhouse gas about 28 times as warming as carbon dioxide over 100 years, and about 80 times over 20 years.
Circular economy practices — recycling, composting, waste-to-energy — reduce or eliminate methane emissions from waste. That lowers the Scope 3 waste emissions a business reports today.
Challenges Facing Malaysia's Circular Economy
Limited Recycling Infrastructure
Despite government investment, recycling infrastructure remains concentrated in urban areas. Businesses outside KL, Penang, and Johor face fewer recycling options and higher logistics costs.
Contamination of Recyclables
Poor separation at source means recyclable materials are often contaminated with food waste or other non-recyclables, making them economically unviable to process. This is a behavioural challenge as much as an infrastructure one.
Market Demand for Recycled Materials
Domestic demand for recycled materials is growing but not yet sufficient to absorb all recyclable waste. Export markets have tightened since China's National Sword policy (2018), making quality sorting more important than ever.
Compliance Gaps
Only six Peninsular states and two Federal Territories have adopted Act 672. In remaining states, waste management standards vary significantly under local council jurisdiction.
Conclusion
Malaysia's circular economy transition is no longer optional for businesses. The Blueprint, EPR and ESG reporting all point one way: waste becomes either revenue or a liability.
Businesses that invest in source separation, recycling partnerships, and data tracking now will benefit from lower disposal costs, access to government incentives (GITA, GITE, GTFS), stronger ESG credentials, and readiness for tightening regulations.
The circular economy isn't about perfection — it's about progress. Start with what you can measure, improve what you can control, and build from there.
GarGeon's waste collection and recycling services help businesses move from landfill-dependent disposal to measurable recycling outcomes. We set up the right bins so materials stay separated at the source, have licensed partner collectors take them to recyclers, and document every step so you can track your diversion rate and prove your circular economy progress.
Ready to turn waste into value? Book a Consultation → to discuss your waste management needs.
References
- Circular Economy Blueprint for Solid Waste 2025-2035 — Ministry of Housing and Local Government (KPKT), launched 6 August 2024
- Malaysian Green Technology and Climate Change Corporation (MGTC) — GITA, GITE, and GTFS programmes
- SWCorp — Solid waste management enforcement and licensing
- 12th Malaysia Plan — Circular economy priorities
- Budget 2025 — Carbon tax and green incentives
- Solid Waste and Public Cleansing Management Act 2007 (Act 672) — Federal Gazette
Related GarGeon guides:
- The five challenges holding Malaysian waste management back
- What your recyclables are worth, and how the rebate works
Last updated: October 2026. Policy details change frequently — verify current incentive eligibility with MGTC and regulatory requirements with relevant authorities.
