The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) welcomes the Government’s preparation and initiatives as well as measures to manage the economic and business impact of the US administration’s reciprocal tariffs on the Malaysian goods to the US. We have earlier submitted our feedback and proposed measures to YAB Prime Minister and YB Minister of Investment, Trade and Industry.

President of ACCCIM, Datuk Ng Yih Pyng expresses delight at reading about the positive feedback received from the US Government, and the Malaysian Government has agreed for MITI to initiate negotiations with the US. The chamber believes that continued cordial negotiation between the two governments can lead to a fair and balanced trade deal to deepen more bilateral trade and investment between Malaysia and the US through the enhancement of market access and reduced tariffs.

Datuk Ng said that there is no reason for inflicting severe economic damage on businesses from both countries, particularly those sectors and industries that have significant market presence in the US and vice versa.

Backing the Government’s announcement of measures to support exporters, especially SMEs, including an increase of RM1 billion in Government Guarantees under the Business Financing Guarantee Scheme; RM500 million soft loan facilities by DFI;  and an additional RM50 million allocations to MATRADE to accelerate the venturing into new markets, ACCCIM suggests that Market Development Grant (MDG) be enhanced in terms of the maximum amount of grant given to international fairs or exhibitions  held in Malaysia (RM5,000 currently) and held overseas (RM25,000 currently) respectively. ACCCIM also supports the efforts to engage more FTAs, including resume the FTA negotiations with the Republic of Korea and the EU.

ACCCIM expresses concerns that Malaysia’s competitive position in ASEAN (due to the lower tariffs advantage) could result in trade rerouting practices and “renegade products” to circumvent higher tariffs imposed on their products. It involves businesses that might employ tactics to evade tariffs by misclassifying or rebadging products to avoid higher tariffs on certain goods. This not only distorts trade statistics but also increases the risk of anti-circumvention investigations and punitive measures.

Additionally, with many countries now facing an extraordinary wall of tariffs, many micro, small and medium enterprises (MSMEs) have expressed fear that more products from our trading partners will be dumped in Malaysia, weakening local industries. The flooding of foreign goods would nonetheless increase competitive pressure on domestic MSMEs, particularly in sectors (such as trading, retailing, furniture, iron and steel, consumer durables, e-commerce) where margins are already tight.

The ACCCIM proposes a multifaceted approach to rein in “Rebadge” products. (a) Enhance customs inspections and enforcement with risk-based profiling and targeted inspections, focusing on sectors/products with high tariff differentials; (b) Mandate stricter verification and compliance of the Certificate of Origin (CO) and Rules of Origin (RO) to avoid the ‘renegade products) activities at the port; (c) Invest in technology (e.g., track-and-trace systems, data analytics) to improve monitoring; (d) Establish formal information-sharing agreements and conduct joint enforcement operations with key trading partners, particularly the US and source countries often associated with transshipment risk, to detect and deter illicit activities collaboratively and also enhance ASEAN-level cooperation on customs enforcement.

As part of the measures to regulate the establishment of foreign entities in retail sector, ACCCIM proposes the following: (a) Review the threshold level and capital requirement for business establishment; (b) Review the “Guidelines on Foreign Participation in the Distributive Trade Services Malaysia” to strengthen enforcement and expand the Negative List to prohibit or restrict certain industries; (c) Introduce more rigorous conditions for foreign investments in sensitive sectors, such as capping foreign equity, mandating higher minimum paid-up capital, and ensuring a majority of local directors; (d) Measures that promote local sourcing and employment; and (e) Establish a monitoring mechanism for newly established foreign companies to ensure they contribute positively to the Malaysian economy.

Given the highly uncertain economic and business environment, while ACCCIM welcomes the Government’s recently announcement to implement the SST expansion on a later date; however, ample lead time (at least 6 months) be given to the businesses for preparation. Additionally, we urge the Government to put on hold any changes in domestic policies that would add cost pressures on businesses, dampen businesses and consumers’ sentiments. These include RON95 fuel subsidies rationalisation, a proposed hike in electricity tariff and a multi-tiered levy.

The ACCCIM is dedicated to collaborating with the government and relevant agencies to closely monitor tariffs development and its impact on domestic industries, as well as to develop swift strategies to mitigate the impact of tariffs.