US tariff threat puts up to 4pc of Malaysia's solar export value at risk, prompting calls for market diversification

Malay Mail

25-05-2025

KUALA LUMPUR, May 25 — Malaysia could lose up to four per cent of the export value of its solar panels if the United States (US) proceeds with its proposed tariffs on solar panel product imports, according to industry observers.
Earlier this week, the media reported that the US International Trade Commission (US ITC) had determined that US domestic solar panel makers were materially harmed or threatened by a flood of cheap solar panel imports from four South-east Asian nations, namely Malaysia, Thailand, Cambodia and Vietnam.
'A 'yes' vote by the three-member US ITC means the Commerce Department will issue orders to enforce countervailing and anti-dumping tariffs on solar products imported from the four countries,' the report said.
UOB Kay Hian Wealth Advisor head of investment research Mohd Sedek Jantan said that the tariffs could lead to a loss of billions in export revenue, noting that global photovoltaic (PV) trade exceeded US$40 billion (US$1=RM4.23) in 2021.
He said, assuming a 30 per cent demand reduction (based on trade elasticity), Malaysia could see a significant decline in export earnings, severely affecting the solar sector.
To mitigate the impact, Mohd Sedek suggested that Malaysia adopt a Geoeconomic Hedge Strategy by diversifying its export markets to regions such as Europe, India, and Latin America.
This strategy helps countries, companies, and investors manage risks arising from geopolitical and economic instability, particularly in areas such as global trade, supply chains, and investment flows.
He pointed out that over-reliance on a single major market, especially one prone to protectionist trade policies, creates significant vulnerability for Malaysian manufacturers.
'The solar industry is a major part of the energy sector, which contributes nearly 20 per cent to Malaysia's gross domestic product (GDP).
'As such, it is highly advisable for the country to diversify its solar panel export markets beyond the US due to the ongoing high tariffs,' he told Bernama recently.
Meanwhile, industry player Itramas Corporation Sdn Bhd believes that while the company could be significantly affected by the US tariff hike, the effect could be cushioned by revenue from its renewable energy (RE) projects in Malaysia.
'However, we think that Bank Negara Malaysia might potentially lower the interest rates if there are signs of recessionary stresses or shocks.
'In this scenario, the ringgit will weaken against the US dollar, which would affect us negatively as our technology components are purchased in the US currency,' said managing director Lee Choo Boo.
Lee emphasised that it is extremely important that Malaysia move up the value chain and reduce its dependence on imported technologies.
'In the RE sector, we must be steadfast and stay the course of local supply chain development and not just focus on constructing power plants based on the purchase of foreign technology components,' he added. — Bernama