FMM seeks swift diplomatic and domestic interventions to counter US tariff impact
KUALA LUMPUR: The Federation of Malaysian Manufacturing (FMM) has called on the government to intensify its diplomatic and policy response following the United States' announcement of a 25 per cent blanket tariff on Malaysian exports.
Its president, Tan Sri Soh Thian Lai, said these efforts must be escalated to secure an immediate deferral of the Aug 1, 2025, implementation and work toward a longer-term exemption or rollback.
He said the newly announced 25 per cent blanket tariff, if implemented as scheduled, is expected to intensify these pressures across the board, particularly for companies operating on thin margins or bound by long-term supply contracts.
"Malaysia's case must be urgently elevated at the highest levels of US policymaking, supported by strong data and strategic positioning that highlight our value to US supply chains.
"At the same time, domestic countermeasures must be rolled out to support affected industries, including targeted financial relief, strengthened export promotion, and fast-tracked structural reforms to enhance cost efficiency and competitiveness," said Soh in a statement today.
To support exporters in weathering current shocks and repositioning for growth, he recommended enhancing export facilitation by increasing the Market Development Grant ceiling, removing the Malaysia External Trade Development Corporation (MATRADE) administrative fees for trade missions led by associations, and providing targeted incentives for branding, certification, and digital market access.
Soh noted that Malaysia must drive productivity-led growth by accelerating Industry 4.0 adoption through tax incentives, digitalisation grants for small and medium entrepreneurs (SMEs), and low-interest financing for technology upgrades.
"These incentives must be backed by workforce upskilling programmes and inclusive access to government support funds, ensuring all firms can participate in the transition.
"In addition, foreign worker levy collections should be redirected into dedicated funds to support apprenticeship schemes and high-tech investment," he said.
Soh highlighted that Malaysia should lead efforts under its ASEAN chairmanship to establish a regional ASEAN Supply Chain Coordination Council.
He said that this will ensure cohesive regional responses to global trade shocks, reduce overreliance on external supply chains and enhance intra-ASEAN production linkages, policy alignment, and supply chain resilience.
"At the strategic level, Malaysia must actively expand its trade architecture by accelerating the conclusion of the Malaysia-European Union Free Trade Agreement and intensifying negotiations with new and emerging markets, including in Africa, Latin America, and the Middle East.
"A broader and more diversified trade base is essential to reduce reliance on any single export destination and reinforce Malaysia's global competitiveness amid continued external shocks," Soh emphasised.
The federation also urges the government to review and reform the Sales and Service Tax (SST) structure by introducing a business-to-business (B2B) service tax exemption for licensed manufacturers, automatically applied upon provision of a valid sales tax licence number.
He said the long-term solution must be the creation of a tax framework that fully removes the tax-on-tax element and restores neutrality across the manufacturing supply chain. - Bernama
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