Chip sector may dodge tariff shock
PUTRAJAYA: Malaysia's semiconductor industry is unlikely to be severely affected by the revised tariffs announced by the United States, says Datuk Seri Anwar Ibrahim.
The Prime Minister said Malaysia was grateful to secure a 19% tariff rate following recent negotiations, which is a relatively favourable outcome compared to neighbouring countries.
Anwar added that the positive outcome could also possibly be due to the country's success in mediating the Thailand-Cambodia conflict.
'Tariff concerns, particularly in the semiconductor industry, have caused significant unease recently.
'Previously, these were mostly exempted.
'However, most of these companies are US-based or already have commitments to continue their investments and production in the US, so they won't be severely affected,' he said in his speech during the 2026 Budget Consultation Council at the Finance Ministry here yesterday.
However, Anwar said there are some exceptions such as Infineon, a German semiconductor manufacturer that mainly caters to the needs of Germany and Europe, as well as other countries.
'So, we're monitoring the situation,' said Anwar.
Earlier, US President Donald Trump announced sweeping new tariffs on many countries, with plans to impose 100% tariffs on semiconductors imported from countries that do not produce, or do not plan to produce, chips within the United States.
Reportedly, only companies that have invested in or are building chip-manufacturing facilities in the United States would be exempt.
On the event, Anwar said in his closing speech the 2026 Budget will be adjusted to align with the larger framework of the 13th Malaysia Plan (13MP), which stresses the importance of 'raising both the ceiling and the floor', which illustrates the emphasis on inclusive growth while upholding good governance.
'We cannot talk about growth and investment without also addressing the lower end ... which is the floor.
'Inflation won't simply go away; prices will rise gradually. But if wages rise proportionately or higher, the cost of living burden will be less painful than what many are experiencing now,' he said.
Finance Minister II Datuk Seri Amir Hamzah Azizan also reiterated that the 2026 Budget will be formulated to align with the objectives of the 13MP, with a strong focus on accelerating high-growth sectors such as the semiconductor industry, energy transition initiatives, and the Islamic economy.
The government, said Amir Hamzah, will outline key measures that will produce inclusive growth.
'These include the semiconductor industry, energy transition initiatives, and the Islamic economy, all of which will continue to receive strong government backing.
'I am confident that the many industry representatives present today will be able to contribute constructive proposals.'
The engagement session was attended by more than 300 participants from the private sector, chambers of commerce, non-governmental organisations, economists, industry players, and civil servants.
According to Parliament's meeting agenda, the 2026 Supply Bill (Budget) is scheduled to be tabled in October.
Amir Hamzah added that the government will continue to empower micro, small and medium enterprises as well as start-ups to become producers of products and services proudly labelled 'Made by Malaysia'.
The minister said the digital and artificial intelligence (AI) agenda will also remain a key focus area, in line with efforts to foster a culture of innovation and drive value-based economic growth.
On a separate matter, Anwar also signalled his support to raise tobacco tax following calls from certain quarters to end the decade-long moratorium on excise duty hikes.
'I agree with the spirit of that proposal. I myself not only do not smoke, but also fully support anti-smoking campaigns,' said Anwar.
The last major increase in tobacco excise duty was in 2015, when the government raised it by 42.8%. Tobacco taxes have remained unchanged since then.
On July 31, the Prime Minister announced that pro-health taxes will be expanded to cover tobacco, vape and alcohol products.
Anwar stressed the need to handle health risks, stressing that it is not solely for tax revenue.
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