Industry experts applaud govt's quick action on US tariffs

New Straits Times

06-05-2025

KUALA LUMPUR: Industry experts have welcomed the government's swift action in response to the United States' sudden imposition of reciprocal tariffs.
The RM50 million allocation to the Malaysia External Trade Development Corporation (Matrade) is seen as a timely move to boost trade resilience and help exporters explore new market opportunities.
Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai said the initiative reflects the government's urgency in protecting Malaysian exporters from external shocks.
It also signals a broader push to strengthen Malaysia's economic agility amid mounting global trade uncertainties.
Soh said the additional funding for Matrade, aimed at supporting export efforts in regions such as the Gulf Cooperation Council, BRICS nations, South Africa and Latin America, is a timely and strategic move to diversify market exposure.
"FMM has consistently called for targeted market access strategies as well as stronger backing for trade missions and export promotion initiatives in regions beyond Malaysia's traditional export partners.
"These efforts are especially critical in the current climate, where many exporters are urgently repositioning away from the US market in response to tariff-related uncertainties," he said.
According to Soh, the FMM's recent survey found that over half of the respondents are actively pursuing market diversification as a key strategy.
To maximise the impact of this funding, he said it must be accompanied by more effective and responsive instruments particularly enhancements to the Market Development Grant (MDG).
In addition to better supporting small and medium enterprises, Soh said the MDG framework should also empower trade associations such as FMM to organise targeted export missions and activities tailored to industry needs.
"This includes raising funding caps for association-led missions, waiving the RM25,000 collaboration fee for partnering with Matrade and expanding eligible activities to include product adaptation, certification, digital marketing and market research.
"Enabling associations to play a more proactive role in export promotion will significantly strengthen the reach and help businesses capitalise on new opportunities in non-traditional markets," he said.
However, economist Dr Geoffrey Williams cautioned that while the government's allocation to the Matrade is a welcome move, it is only a modest measure in the broader effort needed to cushion Malaysian exporters from the fallout of the US' reciprocal tariffs.
"The RM50 million allocation is small, but it will help cover some costs for a limited number of exporters.
"Pivoting to new markets requires more than funding, but it demands identifying viable customers, building new supply chains, and navigating each country's trade regulations," he told the Business Times.
Williams said over half of Malaysia's exports to the US come from the electrical and electronics sector, which remains largely unaffected by the new tariffs.
However, industries such as iron and steel could face significant exposure if no bilateral resolution is achieved.
He stressed that the government's emphasis on long-term market diversification is the right approach.
"Markets like the European Union come with their own trade barriers, so looking to Asean, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, Regional Comprehensive Economic Partnership and Organisation of Islamic Cooperation countries, especially for halal goods, may offer more realistic alternatives," he said.
Meanwhile, Williams said structural reforms will be needed to reduce Malaysia's reliance on any single export market.
"If the outcome of this crisis leads to a more liberal global trade environment, Malaysia can come out stronger. But this will require patience, consistency and smarter policy execution," he added.