Experts: Move will address issue of transhipment
PETALING JAYA: The government's decision to centralise the issuance of non-preferential certificates of origin (NPCOs) for exports, especially to the United States, is meant to protect the country's economic integrity and international reputation amid rising global trade tensions, say experts.
Prof Dr Wong Chin Yoong from Teh Hong Piow Faculty of Business and Finance, Department of Economics, Universiti Tunku Abdul Rahman (UTAR), said transhipment activities provide no tangible benefit to Malaysia's economy.
He said transhipment neither creates value-added production nor generates meaningful employment opportunities.
'It is certainly not helpful at all when it comes to our export competitiveness.
'I would even argue that transhipment resembles a shortcut for Malaysian companies to profit without putting any effort into meaningful activities, other than simply changing the rules of origin tag,' he added.
He warned that such a business model could undermine the spirit of entrepreneurship in Malaysia over time.
Wong also said that in the current climate of geoeconomic tension between China and the United States, allowing transhipments could further damage Malaysia's international reputation.
'I just don't see any benefits in continually allowing transhipments,' he added.
Transhipments using Malaysia's entry and exit points refer to goods being brought into Malaysia and then quickly re-exported, often without any significant processing, to conceal their true origin.
This practice is sometimes used to bypass international trade restrictions or tariffs, potentially damaging Malaysia's trade reputation and exposing the country to sanctions.
As a result, the authorities are tightening controls on such practices.
International Islamic University Malaysia Department of International Relations Asst Prof Dr Lee Pei May said the move to appoint Miti as the sole agency to issue the certificates signals Malaysia's firm commitment to ensuring that goods exported to the United States genuinely qualify as Malaysian-made.
'It shows that Malaysia is serious about addressing the issue of transhipment and ensuring that all products bound for the US market contain sufficient local content,' she said.
She acknowledged that some Malaysian exporters who may have benefited from relabelling foreign goods as Malaysian-made could face repercussions under the new policy regime.
However, she noted that tighter controls and audits will help ensure that only products with genuine value-added input from Malaysian firms are exported.
'With Miti now solely responsible for issuing certificates for US-bound shipments, the ministry will likely face a heavier administrative burden, which could lead to longer processing times,' she said.
To address this, Lee stressed the need for clear and efficient standard operating procedures (SOP).
'Miti must strike a balance, being stricter without compromising on efficiency. A well-defined SOP will be key to ensuring smooth implementation,' she added.
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