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New Straits Times
07-08-2025
- Business
- New Straits Times
Less punitive than feared, says expert on impact of US' planned tariff on Malaysia's semiconductor exports
KUALA LUMPUR: Malaysia's risk exposure to the United States' proposed 100 per cent tariff on semiconductors may be lower than feared, said CGS International head of research Jeremy Goh. Goh said the bulk of the country's chip exports come from US-based companies, which could be exempted from the measure. "Roughly two-thirds of Malaysia's semiconductors come from US-based companies. "There's quite a high chance that these US-based companies will of course commit to expand in American soil to avert these semiconductor tariffs. "It's still a very developing situation, but I don't think it's as scary and as punitive as that 100 per cent tariff deadline sounds," he said during the Economic & Market Outlook panel session at the Invest Shariah Conference 2025. While the proposed tariff has raised concerns, Goh believes the actual impact could be less severe than the headline number suggests, especially given the exemption criteria outlined by US President Donald Trump. Trump planned to impose a tariff of 100 per cent on semiconductor chips imported from countries not producing in the US or planning to do so. He said the new tariff rate would apply to all chips and semiconductors coming into the US but would not apply to companies that had made a commitment to manufacture in the US or were in the process of doing so. "From Trump's statements, he did say that if the semiconductors are coming from US or US-based companies… "These companies have committed to expand in US soil, or are already in the midst of expanding in, thus they would be exempted," he said. Goh added that Malaysia's direct market exposure to the US is minimal, despite the country being a major export destination. "Thirty per cent of our exports goes to US, our second-largest export destination, but at the stock market level, that exposure is much lower. "We found that in terms of our coverage universe, only 2.4 per cent of the aggregate revenue is derived from US "As for the FBM KLCI, the 30-key stock index, only about 0.5 per cent of its revenue comes from the US. "So the direct US exposure of our local stock market is relatively much more muted compared to the overall economy. That's the second so-called saving risk that we have," he said. With ongoing efforts by the Malaysian government to seek clarification from the United States Trade Representative (USTR), Goh believes the outlook remains manageable. Meanwhile, CGS International chief economist Nazmi Idrus said the tariff, if implemented, could spell trouble for Malaysia's export-reliant economy. "Half of our products are actually being sold in the US and there will be more impact on the Malaysian economy because we are quite reliant on US products," he said. He warned that the move could further fracture the global trade landscape, accelerating shifts in supply chains and trade flows. "You're likely to see some changes in the global supply chain going forward. It's probably going to benefit the US more than other countries," he said. According to Nazmi, the US currently enjoys tariff advantages in many overseas markets due to relatively lower import duties. This could push more countries to favour American goods at the expense of regional trading partners. "So what happened now is that because we are still lower our tariff levels in the US, US products have more advantage in other countries. "So probably a lot of countries will start to import a lot more of US products and a lot less on their national trading partners," he added. Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said Malaysia had sought clarification from the US over thecproposed 100 per cent tariff on imported semiconductor chips. He cautioned that such move could adversely affect one of the country's most critical export sectors. He said the government had contacted both the US Trade Representative and the Department of Commerce this morning to obtain an official statement on the matter.
Daily Express
05-05-2025
- Business
- Daily Express
Economy can withstand tariffs
Published on: Monday, May 05, 2025 Published on: Mon, May 05, 2025 By: David Thien Text Size: Dr Choy acknowledged that Malaysian consumer spending has dropped, accompanied with higher external demand, as Malaysia's manufacturing PMI declines by a margin. Kota Kinabalu: Sabah and Malaysia are not expected to be impacted drastically this year despite global economic uncertainty due to the tariff regime imposed by United States President Donald Trump. Growth rate is expected to be around 4.4 per cent. This is due to the strength of local economic activities, said Dr Roy Choy Swee Yew, the Chief Economist of MARC Ratings Berhad at the 'Economic & Market Outlook for 2025 and Beyond' session of the Sabah Renewable Energy Conference 2025 at Shangri-La Tanjung Aru Resort, recently. 'Sabah is the largest palm oil producer in Malaysia. Petroleum products and natural gas account for 50 per cent of Sabah's total exports,' Dr Choy said. He noted that currently, the high impact renewable energy projects in Sabah are the RM120 million Seguntor Bioenergy and the RM250 million Tadau Energy Solar Farm which is Malaysia's first green sukuk-financed renewable energy project. No economic crisis is seen for 2025, although the withdrawal of fuel subsidies later in the year may hike inflation temporarily for six months. Bank Negara is expected to maintain the OPR rate for this year, Dr Choy said. On the high impact infrastructure projects in Sabah include the RM40 billion Pan Borneo Highway and the RM7.5 billion Sabah–Sarawak Link Road (SSLR), he said. The high impact agriculture projects in Sabah include the RM33.59 million Land optimisation and Agro-Food Development and the activities under the Sabah Agricultural Blueprint 2021 – 2030. Dr Choy acknowledged that Malaysian consumer spending has dropped, accompanied with higher external demand, as Malaysia's manufacturing PMI declines by a margin. There is a broad-based increase in manufacturing exports. 'Domestic economic growth remains resilient despite a weaker external environment,' he said, adding that: 'Malaysia's inflation is expected to remain anchored following Trump's tariff announcements.' 'Central banks are adopting a more dovish stance, with plans to implement further interest rate cuts,' Dr Choy revealed. He foresees global economic growth is projected to reach 2.8 per cent in 2025, as global inflation is cooling. 'However, global trade flows and inflation dynamics remain vulnerable to U.S. tariffs. Trump's new tariffs also target the trade imbalance with Asean,' Dr Choy said, as Malaysia chairs the organisation this year. 'Financial market uncertainties rise amid heightened trade wars. Bond market retreated following the U.S. treasuries sell off as tariff hike on pause,' he said. Malaysia is going to introduce a carbon tax by 2026. 'Markets are pricing in a dovish Federal Reserve path, likely in response to expectations of slowing inflation and recession fears. Year-to-date, our ringgit has held up well. 'Persistent foreign outflows from Malaysia's bond and equity markets reflect waning investor confidence,' Dr Choy said. * Follow us on Instagram and join our Telegram and/or WhatsApp channel(s) for the latest news you don't want to miss. * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
