The renewable energy (RE) industry in Malaysia began in 2001 in the context of the growing concern about future depletion of conventional fuels and the global environmental concerns about greenhouse gas emissions. The Small Renewable Energy Programme (SREP) is a tool that was first designed to drive the development of the industry based on the abundance of oil palm biomass reserves and other identified renewable energy resources. Due to the slow uptake of this scheme, a new system, the Feed-in Tariff (FiT) was introduced in 2011 to stimulate the industry. By considering the deficiencies of the previous scheme, this paper examines the sustainability of the FiT policy framework in steering the future expansion of small-scale biomass renewable energy businesses in Malaysia. Resulting from the evaluation of the current policy settings and a market based appraisal, this work outlines strategies for enhancing the scheme and suggests future studies aimed at improving the flaws in the present system. (C) 2014 Elsevier Ltd. All rights reserved.