Malaysia clamps down on transshipment practices to the US, to prevent goods rerouting by other countries.
SINGAPORE - Malaysia is imposing stricter rules to ensure exports to the United States are properly documented, in a bid to curb the transshipment of products that do not originate in Malaysia.
The move comes amid growing scrutiny from US authorities over countries, such as China, which seek to sidestep American tariffs by routing its exports via another country to disguise their true origin.
This practice, known as transshipment, has become a focal point in ongoing trade enforcement efforts by US customs officials since the Trump administration unveiled its so-called Liberation Day Tariffs on April 2.
Malaysia's Trade and Industry Ministry (MITI) announced on May 5 that with effect from May 6 , it will be the only body that will issue Non-Preferential Certificates of Origin (NPCO) for shipment to the US , while stopping the issuance of these certificates from MITI-appointed organisations like local business councils, chambers or associations.
The NPCO is a document that helps to identify the origin of the goods for international shipments in order to satisfy customs or trade requirements of the countries the products are shipped to, the Federation of Malaysian Manufacturers said on its website.
The government's new measure aims to eliminate loopholes that could enable the misuse of Malaysia as a conduit for goods seeking to bypass tariffs imposed by US trade regulations.
Malaysia's trade ministry said in its statement that 'it is unequivocally committed to upholding the integrity of international trade practices.'.
'As such, the government views any attempt to circumvent tariff through wrong or false declaration, whether related to the value or origin of goods, as a serious offence,' it added.
Malaysia faces a 24 per cent reciprocal tariff on its exports to the US, which is expected to come into force in July.
In the May 5 statement, MITI said it will also take additional measures to curb any transshipment offences to the US via Malaysia's entry or exit points.
This includes enhancing audits on NPCO applicants, and working together with the Customs Department to investigate and take action against offenders.
According to industry sources whom ST spoke to, some Chinese manufacturers have used Malaysia as a transshipment hub, allegedly going as far as falsifying their Certificates of Origin, in an effort to bypass the US tariffs.
An industry veteran, who requested anonymity due to the sensitivity of the issue, revealed that in some cases, the perpetrators pay as little as RM1 00 (S$30.60) to obtain fraudulent certificates of origin for containers bound for the US.
Addressing the matter in Parliament on May 5, Investment, Trade and Industry Minister, Tengku Zafrul Aziz, said: 'For countries with no Free Trade Agreements with Malaysia, like the US, we have a NPCO which is issued by business chambers, but due to this (transshipment) issue, MITI will take over the issuance of these certificates.'
He added that Malaysia has 'received many complaints from industry partners that say that many items coming from other countries are stamped as if they come from our country.'
Mr Zafrul, who visited the US in late April to meet with trade officials, also suggested forming a parliamentary caucus involving both pro-government and opposition MPs to debate on next steps to be taken by the government in handling the issue.
Malaysia's Prime Minister Anwar Ibrahim , who officiated a special parliamentary session on the US tariffs on May 5, said that 11 per cent of Malaysia's total trade is with the US, with the value of bilateral trade in 2024 amounting to RM325 billion.
Supporting the MITI move , the Associated Chinese Chambers of Commerce and Industry of Malaysia said in a statement on May 5 that the country's tariff advantage has encouraged businesses to reroute shipments and misclassify products to evade higher export tariffs.
'This could distort trade data and lead to the dumping of foreign goods, threatening local MSMEs already facing tight margins,' it added, referring to micro, small and medium enterprises .
Harith Mustaffa is a journalist covering Malaysia for The Straits Times, with a focus on Johor.
Additional reporting by Lu Wei Hoong.
Join ST's Telegram channel and get the latest breaking news delivered to you.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
34 minutes ago
- Straits Times
US stocks rise as Apple surges
Sign up now: Get ST's newsletters delivered to your inbox Traders working on the floor of the New York Stock Exchange, in New York City, on Aug 6. NEW YORK - Wall Street stocks rose on Aug 6 with Apple and most other large tech companies rallying as markets largely shrugged off US President Donald Trump's latest tariff hikes. Apple piled on more than 5 per cent after White House officials said the tech giant plans an additional US$100 billion (S$129 billion) in capital spending in the United States. Amazon and Google parent Alphabet were among the other large tech names that also rose. 'By standing up and publicly announcing a domestic investment with President Trump, it reduces the likelihood of Trump imposing new tariff burdens on Apple,' said FHN Financial's Chris Low. The Dow Jones Industrial Average finished up 0.2 per cent at 44,193.12. The broad-based S&P 500 gained 0.7 per cent to 6,345.06, while the tech-rich Nasdaq Composite Index climbed 1.2 per cent to 21,169.42, less than 10 points from an all-time record. Mr Trump ordered an additional 25 per cent tariff on Indian goods. The levy, which is expected to come into force in three weeks, is due to New Delhi's continued purchase of Russian oil. A new wave of Trump tariffs is due to take effect on Aug 7 on dozens of other economies. But the Aug 6 gains suggest investors are becoming more inured to the levies. 'This is a market that's fuelled by enthusiasm,' said Mr Jack Ablin, of Cresset Capital Management. 'Nothing has blown up yet. Perhaps the impact of tariffs won't be as great as investors originally feared.' Among individual companies, Disney fell 2.7 per cent as it reported around a doubling of profits to US$5.3 billion and announced a series of new deals to boost its upcoming ESPN streaming venture. But McDonald's jumped 3 per cent as it reported an 11 per cent rise in profits to US$2.3 billion. While the fast food giant returned to sales growth at US stores, it warned that low-income consumers were cutting back amid financial pressures. AFP
Straits Times
an hour ago
- Straits Times
Switzerland facing 39% US tariff as president leaves Washington empty-handed
Sign up now: Get ST's newsletters delivered to your inbox Swiss President Karin Keller-Sutter (right) and Swiss Economy Minister Guy Parmelin leaving the US State Department after a meeting with US Secretary of State Marco Rubio on Aug 6. WASHINGTON/ZURICH - Swiss President Karin Keller-Sutter left Washington empty-handed on Aug 6 after a hastily arranged trip to avert a crippling 39 per cent tariff on the country's exports to the United States, its biggest market, three sources familiar with the matter said. Ms Keller-Sutter said she had a 'very good meeting' with US Secretary of State Marco Rubio, but one of the sources said she did not meet with US President Donald Trump or any of his top trade officials. The Swiss president had been seeking a tariff rate of 10 per cent, which US officials rejected, the source said, adding that most countries are facing much higher tariff rates and reducing the US trade deficit remained Mr Trump's goal. Washington is potentially seeking more energy and defence exports to Switzerland, according to a Swiss source familiar with the discussions. In return, the Swiss are looking for lower duties on goods sold into the US, a leading buyer of Swiss watches, machinery and chocolate. Mr Trump announced a tariff rate of 31 per cent for Switzerland in April as part of a broad push to reorder global trade, but increased the threatened tariff to 39 per cent last week. 'We had a very good meeting today. We had a very friendly and open exchange,' Ms Keller-Sutter told reporters after the meeting at the State Department in Washington. She did not answer a question about what further offers Switzerland would make. The higher tariff is due to take effect on Aug 7. Top stories Swipe. Select. Stay informed. Singapore MRT track issue causes 5-hour delay; Jeffrey Siow says 'we can and will do better' Singapore ST Explains: What is a track point fault and why does it cause lengthy train disruptions? Singapore Three people taken to hospital after fire in Punggol executive condominium Singapore Elderly man found dead in SingPost Centre stairwell could have been in confused state: Coroner Singapore 81 primary schools to hold ballot for Phase 2C of Primary 1 registration Singapore S'pore and Indonesia have discussed jointly developing military training facilities: Chan Chun Sing Singapore Two workers died after being hit by flying gas cylinders in separate incidents in 2025 Sport Young Lions and distance runner Soh Rui Yong left out of SEA Games contingent On social media, Ms Keller-Sutter later wrote that she and Mr Rubio had discussed bilateral cooperation, the tariff situation and international issues. The Swiss delegation was preparing to leave Washington without a deal on Aug 6, a source close to the Swiss delegation said, with the country's Cabinet due to hold a meeting on Aug 7 or 8. 'We came over with the intention of presenting new ideas to the American administration to resolve the tariffs matter, which we have done,' the source said. 'We are ready for negotiations to continue.' Switzerland was stunned by Mr Trump's decision last week to apply the steep rate - among the highest announced since he launched his global trade reset - which threatens to inflict major damage on its export-orientated economy. Ms Keller-Sutter and Business Minister Guy Parmelin flew to Washington on Aug 5 for last-minute negotiations aimed at reducing the tariffs before they go into effect on Aug 7. Additional talks are possible, even after the higher rate takes effect, the first source said. Mr Parmelin had already raised the possibility of Switzerland buying US liquefied natural gas to help secure a better deal. Under a deal the EU struck with Washington in July to secure a 15 per cent tariff rate, Brussels agreed to buy US$750 billion (S$960 billion) worth of LNG, oil, and nuclear energy products over the next three years. While the EU made no formal pledge to buy more US arms, it did indicate to US negotiators that US suppliers would benefit from an increase in defence spending in line with higher Nato commitments agreed under pressure from Mr Trump. Both concessions, along with a pledge to invest more in the US, were seen as important in clinching a deal, said a person familiar with the US-EU negotiations. Switzerland already purchases some military hardware from the US and has placed a 6-billion-franc (S$9.5 billion) order to buy Lockheed Martin F-35A Lightning II fighter jets. While the Swiss government is focused on sweetening its offer to Washington and says it is not planning countermeasures against the US tariffs, some Swiss politicians have called for the F-35 deal to be scrapped over the trade dispute. Looming economic hit Earlier on Aug 6, Ms Keller-Sutter and her team met with Swiss business leaders including Roche chairman Severin Schwan, as well as Mr Alfred Gantner and Mr Marcel Erni, founders of Swiss private equity firm Partners Group. Mr The group, which also included Daniel Jaeggi, president of global energy and commodity firm Mercuria, spoke about the tariffs situation, the government said, without giving further details. Further meetings are planned with executives from other Swiss companies present in the US. Business associations warn that tens of thousands of Swiss jobs are at risk if the 39 per cent tariffs are implemented. Swiss cheese producers, for example, are bracing for a steep drop in sales in the US, which bought 11 per cent of cheese exports like Gruyere and Emmentaler in 2024. 'The taxes are enormous,' said Mr Anthony Margot, a fifth-generation cheese maturer. 'We can't replace a market like the United States overnight.' The blue chip Swiss Market Index was down 1 per cent in early afternoon trading on Aug 6. Following talks with Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer, Switzerland had agreed a draft statement with the US in early July that was reported to include a 10 per cent tariff rate. Mr Trump's U-turn on Aug 1, however, followed what some US officials said was a fraught telephone call with Ms Keller-Sutter. Swiss sources said the call was not a success, but denied there was a falling out between the two leaders. Ms Keller-Sutter did not meet with Mr Greer, Mr Bessent or Commerce Secretary Howard Lutnick during her visit this week, the first source told Reuters. REUTERS
Straits Times
2 hours ago
- Straits Times
'I won't humiliate myself': Brazil's president sees no point in tariff talks with Trump
Brazil's President Luiz Inacio Lula da Silva poses for a picture after an interview with Reuters at the Alvorada Palace, in Brasilia, Brazil, August 6, 2025. REUTERS/Adriano Machado BRASILIA - As U.S. tariffs on Brazilian goods jumped to 50% on Wednesday, Brazil's President Luiz Inacio Lula da Silva told Reuters in an interview that he saw no room for direct talks now with U.S. President Donald Trump that would likely be a "humiliation." Brazil is not about to announce reciprocal tariffs, he said. Nor will his government give up on cabinet-level talks. But Lula himself is in no rush to ring the White House. "The day my intuition says Trump is ready to talk, I won't hesitate to call him," Lula said in an interview from his presidential residence in Brasilia. "But today my intuition says he doesn't want to talk. And I won't humiliate myself." Despite Brazil's exports facing one of the highest tariffs imposed by Trump, the new U.S. trade barriers look unlikely to derail Latin America's largest economy, giving Lula more room to stand his ground against Trump than most Western leaders. Lula described U.S.-Brazil relations at a 200-year nadir after Trump tied the new tariff to his demands for an end to the prosecution of right-wing former President Jair Bolsonaro, who is standing trial for plotting to overturn the 2022 election. The president said Brazil's Supreme Court, which is hearing the case against Bolsonaro, "does not care what Trump says and it should not," adding that Bolsonaro should face another trial for provoking Trump's intervention, calling the right-wing former president a "traitor to the homeland." "We had already pardoned the U.S. intervention in the 1964 coup," said Lula, who got his political start as a union leader protesting against the military government that followed a U.S.-backed ouster of a democratically elected president. Top stories Swipe. Select. Stay informed. Singapore MRT track issue causes 5-hour delay; Jeffrey Siow says 'we can and will do better' Singapore ST Explains: What is a track point fault and why does it cause lengthy train disruptions? Singapore Three people taken to hospital after fire in Punggol executive condominium Singapore Elderly man found dead in SingPost Centre stairwell could have been in confused state: Coroner Singapore 81 primary schools to hold ballot for Phase 2C of Primary 1 registration Singapore S'pore and Indonesia have discussed jointly developing military training facilities: Chan Chun Sing Singapore Two workers died after being hit by flying gas cylinders in separate incidents in 2025 Sport Young Lions and distance runner Soh Rui Yong left out of SEA Games contingent "But this now is not a small intervention. It's the president of the United States thinking he can dictate rules for a sovereign country like Brazil. It's unacceptable." The Brazilian president said he had no personal issues with Trump, adding that they could meet at the United Nations next month or U.N. climate talks in November. But he noted Trump's track record of dressing down White House guests such as South African President Cyril Ramaphosa and Ukrainian President Volodymyr Zelenskiy. "What Trump did with Zelenskiy was humiliation. That's not normal. What Trump did with Ramaphosa was humiliation," Lula said. "One president can't be humiliating another. I respect everyone and I demand respect." Lula said his ministers were struggling to open talks with U.S. peers, so his government was focused on domestic measures to cushion the economic blow of U.S. tariffs, while maintaining "fiscal responsibility." He also said he was planning to call leaders from the BRICS group of developing nations, starting with India and China, to discuss the possibility of a joint response to U.S. tariffs. Lula also described plans to create a new national policy for Brazil's strategic mineral resources, treating them as a matter of "national sovereignty" to break with a history of mining exports that added little value in Brazil. REUTERS
