Trade deals must support economic reforms and growth, says minister
Tengku Zafrul said Putrajaya's negotiating stance with the US is that any deals reached between the two countries must support Malaysia's economic reforms and sustainable growth policies.
'Our negotiating stance is always to ensure that whatever deal we land on will support the country's economic reforms and sustainable growth policies.
'Catchy, feel-good headlines last a few days, a week at the most.
'But poor deals will have long-term consequences on our people, industries and economy.
'I am certain negative long-term outcomes are not what the public wants nor what current and future taxpayers need,' said Tengku Zafrul in his opening remarks at the International Healthcare Week 2025 (IHW 2025) here yesterday.
He also said Putrajaya will never sacrifice the country's sovereignty or sideline other trading partners in trying to close a deal with the US.
'Our people's rights, our country's sovereignty and trust with our valued partners are not bargaining chips,' added Tengku Zafrul.
Malaysia is currently facing a 25% tariff rate for all exports entering the US and Putrajaya has until Aug 1 to negotiate with the US.
According to Tengku Zafrul, trade negotiations are a complex multi-stakeholder process, where relevant ministries and agencies must be consulted to ensure a smooth implementation after negotiations.
'For context, the average duration for a regular trade negotiation is 18 months. For Miti, the fastest on record thus far is 11 months,' said Tengku Zafrul, referring to the recently signed comprehensive partnership agreement between Malaysia and the United Arab Emirates (UAE).
'So, we need to be realistic about trade deals that can be completed within 90 days,' he added.
Tengku Zafrul also said that Putrajaya wants to ensure that any agreement with the US supports an open, rules-based and fair, multilateral trade, with the World Trade Organisation at its core.
'The agreement must also safeguard market access, while recognising the need of emerging countries like Malaysia to develop sustainable supply chains and economies,' said the minister.
He also said that Malaysia values its economic ties with the US, noting that last year, Malaysia-US trade rose to nearly 30% to RM324.9bil, with Malaysia being an important source for products such as electrical and electronics (E&E), machinery, rubber gloves and palm oil.
He said that Malaysia has been an important production base for US investments for at least five decades.
'From 1980-2024, there have been 169 American investment projects in Malaysia (RM77.5bil), in sectors such as E&E, machinery and scientific equipment,' he added.
Tengku Zafrul said that for the past 50 years, these companies have received various investment incentives such as investment tax allowances, automation capital allowance and high-impact grants which are valued at RM4.1bil cumulatively.
Annual incentives, he said, in the recent years have been between RM800,000 and RM1.2bil.
'So, we will continue to uphold the principles of positive reciprocity and fair competition while working alongside industry to innovate, diversify and maintain our resilience in the global market.
'These developments are also strong reminders of how and why we must always be ready, agile and adaptable to external shocks,' said Tengku Zafrul.
Speaking to reporters at the sidelines of IHW 2025, he said that Malaysia is still negotiating a deal to lower tariffs with the United States ahead of the Aug 1 deadline.
The minister said that while US President Donald Trump announced that Indonesia has struck a deal for a 19% tariff rate, he has not obtained further information from the Indonesian government.
'Let's wait for Indonesia's announcement. We are still in negotiations, we have until Aug 1.
'We still have time; most importantly, we must ensure that this is a negotiation that is beneficial to both countries. It must be win-win,' added Tengku Zafrul.
Trump yesterday announced that Indonesian goods entering the US will face a 19% tariff, significantly lower than the 32% rate given to Jakarta earlier this month.
Malaysia is facing a 25% tariff rate, up 1% from the initial 24% rate announced in April.
Earlier this month, Trump announced varying tariff rates on 14 countries to take effect on Aug 1, including a 25% rate on Malaysia, Japan, South Korea, Tunisia and Kazakhstan.
Other countries were hit with higher rates such as Cambodia (36%), Thailand (36%) and 40% in Laos and Myanmar, respectively.
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