Malaysia broadens trade horizons amid global tensions and US tariffs

New Straits Times

06-05-2025

KUALA LUMPUR: Malaysia is stepping up efforts to strengthen trade ties with emerging markets in a bid to reduce reliance on traditional partners like the United States, said Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz.
Speaking at the launch of the Ministry of Investment, Trade and Industry's (MITI) Q1 2025 Performance Report Card, Tengku Zafrul said Malaysia is deepening engagement with BRICS nations (Brazil, Russia, India, China, South Africa), the MERCOSUR bloc in South America, and fast-growing regions in Africa.
This strategic shift is aimed at diversifying the country's export destinations, reducing exposure to external shocks, and opening new revenue streams for Malaysian businesses, he said.
Malaysia is tapping into the steady growth of these emerging economies over the past three years to create alternative markets for goods traditionally exported to the US. The approach also supports broader efforts to narrow the trade deficit and ensure long-term export sustainability.
Despite global trade tensions and fresh US tariffs on selected goods, Malaysia's export sector outperformed expectations in 2024, showing strong momentum going into 2025.
Tengku Zafrul noted that Malaysia's electrical and electronic (E&E) exports alone reached RM601.21 billion in 2024, with a 19.7 per cent year-on-year increase in the first quarter of 2025.
The machinery and equipment sector recorded RM69.01 billion in exports, up 10.2 per cent, while medical devices exports hit RM37.03 billion, reflecting a 9.9 per cent increase.
Tengku Zafrul said that these figures reveal the underlying strength and competitiveness of Malaysia's manufacturing base at a time when global trade tensions have intensified.
Addressing the impact of the US's latest round of tariffs, Tengku Zafrul identified eight industries bearing the brunt of the measures: E&E, machinery and equipment, medical devices, furniture, palm oil and rubber, pharmaceuticals, automotive, and aerospace.
Despite this, he remained cautiously optimistic. "More than 50 per cent of our E&E products, particularly those outside the semiconductors category have been exempted from the additional US tariffs."
Tengku Zafrul also stressed Malaysia's vital role within the US manufacturing ecosystem. "In 2024, 60.3 per cent of Malaysia's exports to the US comprised E&E products valued at RM119.86 billion, and 65 per cent of these were produced by American companies operating in Malaysia."
This synergy, he said, is rooted in complementary strengths: Malaysia excels in chip testing, assembly, and packaging, while the US maintains its edge in design, IP licensing, and advanced semiconductor fabrication.