A feebate policy for the shipping industry is a market-based mechanism designed to reward the reduction of GHG emissions. Under this system, ships or shipping companies that emit more GHGs than a set benchmark would pay a fee, while those that emit less would receive a rebate. This policy encourages investment in cleaner technologies and practices by creating a financial incentive structure. So far, Malaysia has not implemented a feebate policy for the shipping industry due to a combination of economic, regulatory, and practical challenges. Economically, the costs associated with such a policy could affect the competitiveness of Malaysia’s shipping sector, potentially affecting trade volumes and economic growth. Politically, establishing a robust regulatory framework for monitoring, enforcing emissions standards, and managing fees and rebates is complex and resource-intensive. Unilateral action may place Malaysian shipping companies at a competitive disadvantage in the global market, necessitating international coordination through bodies like the International Maritime Organization (IMO). Practical challenges include the need for advanced emissions monitoring systems and ensuring compliance and enforcement across the industry. Resistance from the shipping industry, due to potential cost increases and operational changes, further complicates policy adoption. Alternatively, Malaysia might favor voluntary measures, providing incentives for adopting cleaner technologies through subsidies, tax incentives, or grants. The country may also seek to address shipping emissions through international agreements and collaborations, offering a more coordinated and potentially effective approach. In summary, while a feebate policy holds promise for effectively reducing emissions in Malaysia’s shipping industry, the accompanying economic, regulatory, and practical challenges have prompted the country to consider alternative strategies and international cooperation to achieve its environmental goals in the interim.