ABSTRACT:
The Malaysian palm oil (MPO) industry, an important economic pillar and the nation’s third-largest export contributor, generating RM84.22 billion in revenue, faces escalating global pressure from sophisticated non-trade barriers (NTBs) and scrutiny of greenhouse gas (GHG) emissions. This study evaluates the complex implications of implementing carbon pricing instruments (CPIs) through a strategic governance lens, examining their economic, environmental, and social impacts within the high-stakes environment of international trade. Utilising a qualitative approach and the Transparency, Accountability, Participation, Integrity, and Capacity (TAPIC) framework, the study investigates how CPIs can resolve existing governance deficits, such as the “Participation Paradox” and the “Continuity Crisis”, while enhancing market competitiveness and policy resilience. Key findings highlight that while CPIs introduce immediate cost implications for producers, they serve as a critical defensive mechanism against international regulatory shifts, such as carbon border adjustments. The analysis emphasises the necessity of the MPO Trade Governance Framework (MPO-TGF) and an enhanced Malaysian Sustainable Palm Oil (MSPO) certification to institutionalise carbon-related technical justifications within Free Trade Agreements (FTAs). Ultimately, this study highlights the transformative potential of CPIs to position MPO as a global leader in sustainable, low-carbon production, ensuring long-term national economic resilience and global competitiveness.