Shots in the arm from 13MP and tariffs

Borneo Post

5 hours ago

Unveiled by Anwar, the 13MP sets out the country's development roadmap for 2026 to 2030. — Bernama photo
KUCHING (August 10): Analysts hail the back-to-back announcements of the 13th Malaysia Plan (13MP) and lower tariffs from the US as a timely boon to the economy, injecting fresh impetus for a necessary recharge.
Unveiled by Prime Minister Datuk Seri Anwar Ibrahim, the 13MP sets out the country's development roadmap for 2026 to 2030. With the theme 'Redrawing Development,' it aims to drive sustainable growth and push Malaysia towards becoming a high-income, globally competitive nation.
As the final phase of Malaysia's Sustainable Development Goals (SDG) agenda, the plan continues key reforms under the Madani government.
The 13MP sets a bold and transformative vision for Malaysia's development over the next five years, aiming to build a high-income, inclusive, and sustainable nation. It outlines strategic reforms to deepen economic complexity, strengthen governance, and uplift social well-being, anchored by transition to a value-based economy powered by innovation and digitalisation, and the principles of a MADANI society.
Under 13MP, the government projects Malaysia's GDP growth between 4.5 and 5.5 per cent from 2026 to 2030, driven by strong domestic demand, a rebound in net exports, and solid manufacturing growth.
While the outlook is optimistic, achieving high-income status and higher productivity gains will require deeper structural reforms and resilience against global uncertainties.
Inflation is projected to average 2.0–3.0 per cent between 2026 and 2030, as subsidy reforms and wage policies drive modest price pressures. Cash assistance and food security initiatives helping to contain volatility.
Barring major shocks and with growth projected above 4.5 per cent, the current OPR of 2.75 per cent is likely to serve as the policy floor.
Fiscal deficit is targeted below 3.0 per cent of GDP by 2030, supported by stronger revenue and modest increase in development spending. While the goal is realistic, it hinges on sustained fiscal discipline and long-overdue reforms, particularly in tax structure and subsidy rationalisation, which remain politically sensitive.
Debt sustainability remains a priority, with the debt-to-GDP ratio targeted below 60 per cent by 2030.
The team with Maybank Investment Bank Bhd (Maybank Research) said the timing of the 13MP 'could not be more timely considering we are at a cross roads to balance external headwinds despite having strong domestic tailwinds'.
'The 13MP is set to raise development spending to boost domestic demand as the country's key growth engine,' it commented in its review of the new plan. 'It is also set to raise development spending to boost domestic demand as Malaysia's key growth engine.
'These are built on government initiatives already outlined including the National Energy Transition Roadmap (NETR), New Investment Master Plan (NIMP), National Semiconductor Strategy (NSS) while leveraging on the Johor-Singapore Special Economic Zone (JSSEZ) as well as identified industrial parks.
'Key domestic-centric drivers include energy transition, tech and AI, boosting home ownership, public infra projects and industrial parks, education and healthcare. Aside from education (minimal listed proxies), these sectors are aligned with our investment themes and equity market sector weightings.'
On the other hand of the spectrum, the team over at TA Securities Bhd (TA Research) viewed the 13MP as ambitious, like its predecessors — not only because of its scale, but also due to the uncertainties that can unfold over a five-year horizon.
For context, the previous 12MP was tabled during the height of the COVID-19 pandemic, which significantly altered the country's economic trajectory.
'Since this is a broad framework for long-term development, we expect that more specific policies, allocations, and implementation details will be unveiled progressively through annual Budgets.
'For example, the government is scheduled to table Budget 2026 on 10 October, which will likely serve as the first fiscal vehicle to operationalise the 13MP agenda.'
With the theme 'Redrawing Development,' the 13MP aims to drive sustainable growth and push Malaysia towards becoming a high-income, globally competitive nation. — Bernama photo
Devil in the details: A closer look at Malaysia's tariff strategy
Dominating the other end of the business news frontline is the US' reduction of its reciprocal tariff on Malaysian exports to 19 per cent. After months of negotiations, the US agreed to a rollback to 19 per cent effective 7 August.
While the team at Kenanga Investment Bank Bhd (Kenanga Research) cite this move as not being 'ideal', it nevertheless sets a clearer and more stable path forward in the near term.
'The adjustment was formalised through an Executive Order: Further Modifying the Reciprocal Tariff Rates, following direct engagement between Anwar and US President Donald Trump,' its said in its analysis.
'In reality, however, it reflected the culmination of months of behind-the-scenes negotiations led by both US and Malaysian trade negotiating teams.
'While the headline tariff remains relatively high, this outcome was largely within expectations and reflects Malaysia's strategic use of bargaining chips, namely, its pivotal role in US semiconductor supply chains, its critical rare earth processing capabilities, growing healthcare export base, and Asean chairmanship in 2025.'
The adjustment was formalised through an Executive Order: Further Modifying the Reciprocal Tariff Rates, following direct engagement between Anwar and Trump. — AFP photo
Kenanga Research noted that the US' tariff rollback represents a defensive success rather than a stimulus catalyst.
'In short, Malaysia managed to preserve its economic sovereignty, protect key policy domains — like excise duties, import licensing, and foreign equity caps — and avoid deeper liberalisation or fiscal concessions.'
Before Trump's 2025 'reciprocal tariff' shock on 2 April 2025, Malaysia enjoyed very low US applied tariffs, often at zero per cent on key export goods such as semiconductors, electronics, and pharmaceuticals. These preferential rates were a result of longstanding Most Favoured Nation (MFN) status and global trade norms, Kenanga Research noted.
Only about 55 per cent of Malaysia's US-bound exports were subject to ordinary tariffs. When the US announced a 24 per cent flat tariff across non-exempt goods in April 2025, the trade-weighted average tariff spiked to about 14-15 per cent.
Kenanga Research observed that Malaysia's final tariff deal with the US reflects a careful balancing act, demonstrating openness to fair trade while drawing clear boundaries to protect strategic sectors.
'The result is a policy package that's pragmatic, measured, and investor-friendly without surrendering national interests,' it underscored.
'Malaysia's final offer to the US covered 98.4 per cent of tariff lines (total of 11,444), signalling a firm commitment to open trade. According to the Ministry of International Trade and Industry's (Miti) press briefing on 1 August, 6,911 (61 per cent) tariff lines will be reduced to zero, but not without safeguards.
The safeguards are no elimination of excise duties, especially for autos and tobacco; no blanket exemptions for US import licensing—ensuring regulatory oversight remains intact; and no full equity liberalisation in strategic sectors like energy, telecommunications, and infrastructure.
Malaysia also agreed to ease non-tariff barriers (NTBs) to improve US market access, without compromising its core standards such as simplified halal and facility registration for US agri-food imports; JAKIM-recognised US halal certifiers; lifting of bans on US sorghum and rice; regionalised animal disease protocols; and reinforced labour and environmental commitments.
Critically, MITI reaffirmed that Malaysia's halal standards are non-negotiable, quelling public concern that religious or food safety norms were sacrificed.
While increased US beef imports could weigh slightly on the trade balance, the impact is minimal, while they also offer greater consumer variety, especially beyond traditional suppliers like Australia and New Zealand.
Researchers say this selective liberalisation strategy allowed Malaysia to appear flexible without compromising its industrial base.
'It sends a clear message: Malaysia won't dismantle critical policy tools for short-term gains,' Kenanga Research affirmed. 'Looking ahead, the government may explore excise duty reforms in the automotive sector, a potential lever to improve consumer choice and reduce vehicle prices.
While the headline tariff remains relatively high, this outcome was largely within expectations and reflects Malaysia's strategic use of bargaining chips. — AFP photo
A relatively better deal among Asean peers
Comparing Malaysia to its neighbouring countries' treatment, its 19 per cent tariff outcome is both notable and regionally competitive. It aligns with peers on tariff rates, without major concessions. In contrast, Vietnam and Indonesia had to offer broader liberalisation to secure similar outcomes.
Vietnam retained 20 per cent tariff, slightly above the Asean norm, reflecting its higher initial exposure and slightly weaker bilateral leverage, in line with earlier expectations of a 46 per cent escalation risk.
Malaysia shares its 19 per cent flat rate with Thailand, Cambodia, the Philippines, and Indonesia, largely a result of last-minute trade diplomacy. Malaysia's standout role in brokering peace between Thailand and Cambodia boosted its diplomatic standing and negotiating capital.
The Philippines and Indonesia struck earlier deals, avoiding the full brunt of 25–36 per cent tariffs. Meanwhile, Singapore remains at 10 per cent, despite having bilateral free trade agreements (FTAs) and trade deficit with the US but still affected by the Trump-era reciprocal tariff wave.
Brunei, Laos, and Myanmar saw no tariff adjustments, an implicit sign of limited strategic leverage or trade exposure in US supply chains.
So far, Malaysia has stepped up trade enforcement, shoring up its reputation in Washington and global supply chains. These include steps such as Miti being the sole issuer of Non-Preferential Certificates of Origin (NPCO) since May 2025 to curb transshipment and origin fraud, key US concerns.
AI chip exports are now monitored under the Strategic Trade Act's 'catch-all' controls, aligning Malaysia with US expectations on tech security.
On rare earths and critical minerals, Malaysia confirmed no export restrictions on processed goods, cementing its position as a reliable supplier in the global mineral ecosystem.
'The tariff reset is not a macro game-changer, but a well-executed geopolitical hedge. Malaysia avoided high-cost liberalisation while securing fairer access, sending a clear message to investors: the country can defend its strategic interests without isolating itself from key markets.
Malaysia's response handling of the US tariff threat was calculated and composed. It strategically leveraged its role in global tech supply chains, rare earth processing, and its ASEAN leadership to avoid deeper economic concessions.
Looking ahead to Budget 2026 and ongoing fiscal reforms, the deal marks a shift in Malaysia's economic diplomacy—more assertive, less reactive, and focused on long-term resilience over short-term relief. Barring external shocks, the macroeconomic effects are expected to normalise by 2H26.
'More importantly, Malaysia retains its regional competitiveness. With a relatively lower average tariff structure—second only to Singapore—it strikes a credible balance between sovereignty and openness, reinforcing its image as a reliable and strategically resilient investment destination.'
BIG TITLE: Sectoral gains from 13MP and US tariffs
Construction
Public-private partnership projects continue to be implemented via the Public-Private Partnership Master Plan 2030, with the government projecting RM61 billion worth of private sector funding under the 13MP. — Bernama photo
The 13MP was tabled with RM430 billion worth of gross development expenditure (DE) targeted for the 2026-2030 period against RM415 billion annual average of gross DE budgeted for the 12MP (2021-2025).
Therefore, analysts believe the 13MP DE should continue to facilitate infrastructure growth in the country.
The total RM430 billion gross DE is earmarked for the economic sector, including infrastructure, info-structure, public transport, flood mitigation, affordable housing, and capacity-building projects, amongst others.
Specific projects highlighted under the 13MP include the Sarawak-Sabah Link Road, Pan Borneo Highway, the Central Spine Road from Bentong (Pahang) to Kuala Krai (Kelantan), Trans Borneo Highway (formerly known as Pan Borneo Phase Two of the SarawakSabah Link Road), widening of the PLUS highway for the Senai Utara-Machap stretch, Light Rail Transit (LRT) 3, and Penang LRT.
Public-private partnership (PPP) projects continue to be implemented via the Public-Private Partnership Master Plan 2030 (PIKAS 2030), with the government projecting RM61 billion worth of private sector funding under the 13MP.
PIKAS 2030 has outlined a list under the 'Strategic Thrust 3: Expanding PPP models to diversify projects' of the plan, which includes (among others) the West Ipoh Span Expressway, Putrajaya-Bangi Expressway, Ipoh Sentral Transit Oriented Development, and East Coast Expressway Phase 3.
Notably, analysts with RHB Investment Bank Bhd (RHB Research) noted that there was a strong emphasis on flood mitigation projects.
During the 13MP period, the government targets to complete 55 flood mitigation projects in 2030 from 17 in 2024. Efforts to mitigate floods will continue with 43 high priority flood mitigation projects worth RM12 billion that started last year.
'Some of the flood mitigation projects being executed include those at Kuching; the basins of the Johor, Muar, and Pahang Rivers; Baling in Kedah; Sungai Likas in Sabah; and Sungai Trolak in Perak.'
Meanwhile, the multi-tiered foreign worker levy (MTFWL) initiative is to be implemented in 2026. While no details were disclosed under Budget 2025 with regards to the MTFWL, RHB Research based its hypothetical earnings impact on multi-tiered levy rates proposed for 2021 from the Institute of Labour Market Information and Analysis.
'Our preliminary estimates find that the earnings of contractors will be reduced by less than one per cent.'
Projects wise, analysts with Maybank Investment Bank Bhd (Maybank Research) were disappointed that the Klang Valley Mass Rapid Transit 3 (MRT3) line was not mentioned.
'It appears that the megaprojects of the 13MP are the port expansions of Westports and Port of Tanjung Pelepas coupled with the construction of Carey Island Port,' it saw.
Healthcare
Healthcare reforms are introduced and part of the strategies highlighted will be on controlling this medical inflation, through a few initiatives/plans such as improving social protection and healthcare services for poor households; expanding Rakan KKM as a paid treatment option; and providing basic private health insurance/takaful products (including KWSP's i-Lindung initiative. Other programmes include the improvement and expansion of Skim Perubatan MADANI.
This is expected to reduce out-of-pocket spending for health expenditure to 32 per cent by 2030, commented researchers with MBSB Investment Bank Bhd (MBSB Research).
'These initiatives are expected to address the issue of rising non-communicable diseases (NCDs) among low-income groups that may not be able to afford long-term treatments (such as for diabetes and cancer) and expensive surgeries (organ transplants),' it said in its review.
'While no exact allocation was presented, we noted that these initiatives could be leveraged mainly by healthcare service providers and medical insurance companies.'
Overall, researchers with Hong Leong Investment Bank Bhd (HLIB Research) saw that the increase in the development expenditure in the healthcare sector is expected to primarily benefit public health facilities, with limited direct impact on the private sector.
'Besides, the lack of detailed clarification to reduce out-of-pocket (OOP) expenses makes it difficult to assess any potential implications for private healthcare service providers.
'While initiatives such as Rakan KKM, standardised private insurance/takaful products, the national health fund, strategic purchasing platform, increasing focus on primary healthcare,
accelerating digitalisation of health information system, as well as government support for local pharmaceutical and medical device manufacturing were highlighted, these are already well-known by the market, given the steady stream of related news in recent months. Post-13MP, we stay overweight on the healthcare sector.'
Maybank Research pegged local pharma companies to benefit from commitment to encourage in-house local generic drugs' manufacturing and distribution. Further expansion of public primary
care clinics in an effort to reduce out-of-pocket healthcare payments (prioritisation of preventive care).
'We also note the major constructions of five new public hospitals in Seremban, Johor Bahru, Sg Petani, Sabah and Sarawak to cater for growing healthcare demand. There is a focus on development of national health insurance and Rakan KKM to improve healthcare accessibility.
'There are plans to introduce pro-health taxes such taxes on tobacco, vape and alcohol – to curb non-communicable diseases.'
Plantations
Such measures would likely bring MSPO standards closer to the RSPO equivalence, supporting better compliance with the EUDR implementation in December. — Bernama photo
The government will continue to enhance productivity through modern technologies such as mechanisation, automation, robotics, R&D, and sustainability certification to elevate the plantations sector.
MBSB Research noted that the strong commitment to enhance sustainability certification is important important given past actions by the US Customs and Border Protection (CBP), which
issued Withhold Release Orders (WROs) against SD Guthrie Bhd and FGV Bhd over allegations of forced labour, underscoring the urgent need for stricter enforcement to safeguard market access and uphold Malaysia's global credibility.
Such measures would likely bring MSPO standards closer to the Roundtable on Sustainable Palm Oil (RSPO) equivalence, supporting better compliance with the EU Deforestation Regulation (EUDR) implementation in December.
Meanwhile, the government is targeting a reduction in foreign labour dependency to 10 per cent by 2030, from 15 per cent currently. In line with this objective, the implementation of the multi-tier levy mechanism on foreign labour has been deferred to 2026 (from the initial timeline of 2025).
This will allow for more comprehensive enforcement and to encourage employers to transition toward automation, mechanisation, and greater reliance on local workers.
HLIB Research maintained their neutral view on this initiative, as the delay in the implementation of multi-tier levy mechanism on foreign labour only provides temporary relief on additional labour cost pressure, not to mention the current mechanisation limitations within the sector.
'Under the 13MP announcement, we identified at least 5 national projects that could benefit selected plantation companies due to the availability of agricultural land that could be easily converted into various industrial, commercial and residential projects in support of the government initiatives.
'We maintain our neutral stance on the plantations sector.'
Ports
The 13MP outlines several initiatives to support the port and shipping industry under the broader blue economy agenda. Federal port governance will be reviewed to address overlapping roles, while policies will support the acquisition of 136 new ships by Malaysian companies, targeting over 840,000 gross tonnage by 2030.
The plan also focuses on developing shipbuilding and repair (SBSR), maritime logistics (ship-to-ship services) and expanding marine fuel infrastructure, among other initiatives, to
strengthen Malaysia's position as a regional maritime and logistics hub.
'Other key priorities include attracting investment in green shipping and promoting low-carbon operations. Infrastructure plans include the proposed Pulau Carey Port, Westports 2,
and PTP expansions, along with capacity upgrades in Sabah and Sarawak,' said Maybank Research.
The 13MP also highlights regional collaboration through R&D, technology transfer, and the development of blue economy hubs in Kelantan, Perak, Sabah, and Terengganu.
The plan also focuses on developing shipbuilding and repair, maritime logistics and expanding marine fuel infrastructure, among other initiatives, to strengthen Malaysia's position as a regional maritime and logistics hub. — Bernama photo
Property
Under the 13th Malaysia Plan, the government has indicated its intention to implement the 'build-then-sell' (BTS) approach through a risk-sharing model.
In Maybank Research's view, the BTS approach not only helps reduce the risk of abandoned projects but also encourages careful planning (including market demand studies) and improves the quality of housing to better attract buyers.
'That said, the BTS model may weigh on developers' balance sheets, as project financing must be secured before construction begins. While details remain limited, we believe that developers with strong financial positions are more likely to benefit from this.
'Several existing and new strategic industrial zones and hubs such as the Kerian Integrated Green Industrial Park, Kulim Hi-Tech Park, Lumut Maritime Industrial City, Kota Kinabalu
Industrial Park, Automotive High-Tech Valley, JSSEZ, and Carey Island were mentioned in the 13MP.
'These industrial parks are set to reshape the industrial investment landscape and could heighten competition as investors gain more options and states offer varying incentives.'
Sharing the same concerns were the team at HLIB Research who believed the BTS model places greater risk on developers as they will need to commit significant capital over a multi-year period without cash inflow, placing pressure on working capital and leading to higher gearing.
'As a result, many developers may become more cautious and scale back on the number of project launches,' it said. 'The reduction in supply could raise house prices, straining housing affordability, especially in the mass-market segment.
'On top of that, earnings would only be recognised upon completion and sale, instead of progressively, causing greater earnings volatility for listed developers.'
Maybank Research said the ripple effect of a BTS mandate would extend beyond developers to the financial sector. With developers bearing more risk, banks may raise financing costs or tighten lending terms. Meanwhile, reduced project launches would weaken overall loan demand.
Contractors, building materials suppliers, and other parts of the supply chain may also see slower order flows and project pipelines.
On a more positive note, HLIB Research said the BTS model should incentivise developers to adopt more prudent and responsible planning.
'Thorough feasibility studies, careful product-market alignment, and stricter cost control could become the norm. By curbing speculative launches and improving quality, the BTS model could
result in a more stable and sustainable property market over time.
In the short term, once there is clearer certainty on the implementation, developers may rush to launch projects before the BTS rule comes into effect, creating a temporary glut. In the long run, the BTS regime will create a survival-of-the-fittest environment, accelerating industry consolidation.
Only a handful of well-capitalised developers will be able to weather the prolonged cash flow cycles and heightened risk. Developers best positioned to survive and even thrive will be those with diversified income streams (reducing reliance on development profits), robust recurring income (especially from property investment arms), and strong balance sheets and ample debt headroom (to finance upfront construction costs).
Technology
Under the 13MP, the government has prioritised comprehensive reforms to strengthen Malaysia's semiconductor industry in line with the National Semiconductor Strategy (NSS). Strategic collaborations will be established with global and local players across the semiconductor value chain to accelerate the shift towards high-value, complex product manufacturing.
This will be supported by a technology and IP-driven investment model, with GLICs actively involved in nurturing local firms as strategic partners or acquisition targets. The goal is to develop world-class local champions, particularly in IC design, and boost the production of 'Made by Malaysia' high-value, high-tech (HVHT) semiconductor products.
To support this transformation, the investment ecosystem will be enhanced through circular economy practices and AI-driven digitalisation, while investment incentives will favour IP-based ventures and alternative financing such as credit guarantees and venture capital.
The government also aims to develop a skilled talent pipeline, targeting 700,000 skilled workers by 2030, supported by expanded in-industry training programmes. These initiatives will focus on key locations such as the Kerian Integrated Green Industrial Park, Kulim High Technology Park, and the JS-SEZ reflecting a broader effort to position Malaysia as a global hub for advanced semiconductor manufacturing.
'We view this as a constructive policy direction that could elevate Malaysia's position within the global semiconductor value chain,' Maybank Research said.
'That said, the absence of detailed execution plans at this juncture makes it difficult to gauge the near-term impact on the players. While sentiment may improve around semiconductor- related counters, we believe investors will be looking for greater policy clarity and project timelines before re-rating the sector meaningfully.'
Rubber Gloves
The narrow or zero tariff differential against regional peers such as Indonesia, Thailand, and Vietnam provides limited competitive advantage for Malaysia glove makers, especially as China glove makers continue to expand capacity in these countries. — Bernama photo
While Malaysia now enjoys a lower US tariff rate, Maybank Research observed that the narrow or zero tariff differential against regional peers such as Indonesia, Thailand, and Vietnam provides limited competitive advantage for Malaysia glove makers, especially as China glove makers continue to expand capacity in these countries.
These offshore facilities allow China players to bypass US tariffs on China-origin goods, further intensifying competition within Southeast Asia and limiting pricing power.
'Our channel checks indicate China production costs in overseas range from US$14–US$15 per thousand pieces, versus Malaysia's US$15–US$16 per thousand pieces,' it warned.
'With similar tariffs and higher costs, Malaysian glove makers have limited pricing power and could risk losing US market share once the new capacity in these countries comes online by end-2025 to early-2026.'
Competition is intensifying not just internationally but also at home, with a major glove maker in Malaysia aggressively cutting prices to gain US market share ahead of China players re-entering the market via overseas capacity.
Elsewhere, the research house understood that the anticipated restocking in the US post-December 2024 front-loaded orders did not materialise in the first half of 2025 as China glove makers had stocked up their US warehouses in advance, based on our channel checks.
'We suspect some major players in Thailand and Malaysia, with warehouse facilities in the US, could have taken advantage of the three-month 10 per cent tariff window to ramp up shipments to US, at the expense of other Malaysia glove makers who lack such infrastructure.
'By the time meaningful restocking kicks in, new China capacity in Asean would likely be ready, leaving a narrow window for Malaysian players to compete.
'As the regional playing field is narrowing, Malaysia's competitive edge is heavily reliant on cost efficiency, automation and innovation. We thus maintain our negative stance on the Malaysia glove sector.' 13MP Malaysian economy tariff