PETALING JAYA: The imposition of tariffs by the United States is not all doom-and-gloom as it has a silver lining for the nation, say trade groups.
Federation of Manufacturers of Malaysia president Tan Sri Soh Thian Lai said the 24% tariff fixed for Malaysia, though not ideal, presented strategic advantages if viewed against regional peers.
“Many Asean countries – including Vietnam, Cambodia and Laos – as well as China are facing significantly higher reciprocal US tariffs, some nearly double Malaysia’s rate.
“This shift effectively levels the playing field and positions Malaysia as a more attractive export base, especially for buyers seeking to diversify away from higher cost countries
“We will be able to capitalise on this comparative advantage to capture the US market share in selected product categories,” he said when contacted.
While key sectors like semiconductors and pharmaceuticals are exempted from the tariff hike, Soh said other industries also stand to benefit.
“They include rubber gloves, electrical appliances, processed food, aerospace, furniture and medical devices.
“These sectors are where Malaysia has proven capabilities and where competing suppliers from China or Vietnam now face higher tariff barriers,” he said.
Soh noted that the combination of Malaysia’s manufacturing strength, diversified supply base and regulatory credibility could position Malaysia as a reliable substitute in global supply chains that serve the US market.
Associated Chinese Chambers of Commerce and Industry Malaysia treasurer-general Datuk Koong Lin Loong said the higher tariffs slapped on other neighbouring countries in the region could see long term gains for Malaysia.
“The silver lining which we must look at is the potential of developing Malaysia as a regional investment hub.
“Investors would rather invest here instead of in countries such as China and Vietnam which were hit with higher tariffs,” he said.
He said the nation’s lure as an investment hub was further strengthened due to its sound economy, stable government policies and skilled workforce.
“These are important factors that investors consider.
“Although the US tariffs on the Philippines (17%) and Singapore (10%) are lower than Malaysia, investors may find policies in the Philippines not so conducive while Singapore may be too expensive for them to set up operations,” he said.
On the ringgit’s appreciation against the US dollar, Koong said that this was due to the nation’s strong economic fundamentals and the ringgit being undervalued.
“With the tariffs in place, fund managers see the potential of the currency.
“Also our stock market has remained above the 1,500-mark, compared to some others which saw sharp declines,” he said.
SME Association of Malaysia president Chin Chee Seong said the tariffs would have some impact but it would be confined to specific high-tech and high-end petroleum products as compared to other countries in the Asia-Pacific region.
“Compared to some other countries such as Laos, Cambodia, Vietnam and China, we are somewhat still in a better position.
“We export mainly high-tech and high-end petroleum products, which form the bulk of trade with the United States, while our trade deficit is relatively low.
“We stand in a better position as products such as semiconductors are exempted from the tariff, so we likely end up only with a 10% tariff on exports for most other products,” he said when contacted.
Chin noted that Malaysia was taking the right step in not resorting to retaliatory measures against the United States but to instead adopt a friendly engagement approach.
He believed that US President Donald Trump could have a second round of tariff adjustments due to the backlash he is facing from several countries and also domestically.
Asean-India Business Council alternate chairman Nivas Ragavan said Malaysia was spared higher tariffs due to its balanced trade with the United States, particularly in the high-value, high-compliance sectors such as electrical and electronics, medical devices and precision components.
“These sectors are deeply integrated into US supply chains and adhere to international regulatory standards, which may have influenced the United States to impose a lower tariff compared to other regional exporters with different trade profiles,” he said.
Nivas, who is also Federation of Malaysian Business Association vice-chairman, said that a lower tariff for Malaysia would provide a more competitive edge for the nation.
“Several of our Asean neighbours now face steeper costs when exporting to the United States.
“This could direct certain US buyers and investors toward Malaysia, particularly in sectors like manufacturing, electronics and medical supplies,” he said.
He said the country could also leverage its existing free trade agreements and investment-friendly environment to attract supply chain relocations from countries which were more heavily tariffed.
“There’s a window of opportunity here for Malaysian exporters to step up, innovate and fill the gap left by regional competitors,” he added.
As for the ringgit’s recent appreciation, Nivas said that this could be due to the volatility of the US economy due to inflationary pressure.
“In Malaysia’s case, consistent trade surpluses, stronger commodity prices particularly for oil palm and energy, as well as a steady recovery in domestic consumption are supporting confidence in the ringgit,” he added.
Bumiputera Retailers Organisation Malaysia adviser Datuk Ameer Ali Mydin said imported goods from countries which were slapped with higher tariffs could end up being sold here at a lower cost.
“This is because manufacturers in those affected countries may have excess production due to higher export tariffs to the United States.
“However, we must be careful to avoid dumping by these countries, which are now happening through e-commerce platforms, which will affect our retail sector,” he said.
