
Trade tensions may fuel Malaysia's port growth
KUALA LUMPUR: The uncertainty surrounding US trade policy may hit global port activity but Malaysia stands to benefit from the diversion of trade especially those from China.
Industry experts said cargoes that were initially US-bound may be redirected to Malaysia or other ports in Southeast Asia due to the tariffs on imported goods into the US.
Maritime industry analyst Nazery Khalid said the tariff war is one of the biggest geopolitical developments that will lead to repercussions for many countries.
He opined that the imposition of tariff by the US could backfire and adversely affect its economy as small and medium enterprises there bear the brunt of higher imports
"What has happened is that products are piling up at US ports as their local importers from industries or companies refuse to pick up the cargos they have ordered because they have been slapped with higher tariffs.
"What this will also lead to is diversion of trade. Cargoes that otherwise would have gone to the US will now shift to other regions because a lot of the things imported by the US are also needed elsewhere," he told Business Times.
Notably, some ports in Malaysia are already seeing an increase in container throughput, including Sapangar Bay Container Port, said Nazery.
"Sapangar Bay has seen an increase of 23 per cent in volume in March 2025 compared to March 2024. This shows that there is a pick up in volumes of intra-Asia trade arising from the diversion of cargo into this region," he added.
Prior to the issues arising from the tariff war, Nazery said some local ports were faced with challenges such as bottlenecks along the supply chain, poor connectivity of ports or volatility in freight rates, among others.
"This tariff war which results in recalibration of trade from the US to our region can be used as a time to improve efficiency, to beef up capacity and also for local and regional ports to leverage on the growing amount of cargo in this region," he said.
LBB International chief executive officer Dr Marco Tieman said the tariffs are affecting the US and economies in the European Union due to their high debt levels. This is likely to affect trade volumes in the coming years.
He said that there may be issues surrounding transshipment container volumes which will go down if both of the economies are not doing well.
"Mid-term however, Malaysia might even benefit from more China trade flowing through Malaysia as well as increase in foreign direct investment from China where selected production from China might move to Malaysia.
"Malaysia is providing value added logistics services, like repacking and light processing," he said.
In the long term, Tieman said Malaysia will need to focus more on Asia as well as trade among Organisation of Islamic Cooperation countries.
"There are opportunities for Malaysian ports to facilitate halal trade flows as a global hub," said Tieman.
Meanwhile, Fitch Ratings said in a note that the overall impact of US tariffs on ports in Asia will be modest as they generally benefit from "take-or-pay" contracts and have lower exposure to the US.
"Higher tariffs on China will benefit other Asian ports as US importers switch to suppliers in other countries and shippers reroute transshipments through other ports in the region.
"Vietnam, India, Thailand, Indonesia and Malaysia could see an increase in intra-Asian trade and transshipment volumes, which could help offset the negative effects of a global economic slowdown," the firm said.
On the global front, Fitch expects the impact on global port sector credit to be muted overall, due to various factors that mitigate the effects of volume and revenue pressures on port credit quality.
Port ratings have been resilient to prior periods of volume declines, such as in 2023 when the US and European port volumes dropped 13 per cent and four per cent, respectively.
The decline took place as consumer spending rotated to services from goods following the pandemic.
"Revenues generally outperform volumes in weak economic years due to contractual revenue buffers, the presence of other stable revenues such as cruise fees, and rate flexibility," it said.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


The Star
3 minutes ago
- The Star
Singapore rail operator to pay lower fine of S$2.4m for line disruption; must invest at least S$600k to boost reliability
SINGAPORE: Rail operator SMRT will pay a lower fine of S$2.4 million (US$1.87 million) for a major six-day disruption on the East-West Line in September 2024, after it submitted representations to the Land Transport Authority (LTA). This is down from the financial penalty of S$3 million that LTA intended to hand out in June when the investigation findings into the incident were released. Announcing the updated penalty in a statement on July 25, LTA said the penalty will go to the Public Transport Fund to help lower-income families with their public transport expenditures. The authority added that it had directed SMRT to invest a minimum of S$600,000 to strengthen its capabilities, and address areas for improvement from the incident, so as to improve service reliability. 'In reaching this decision, LTA took into consideration the considerable challenges SMRT had faced in planning and executing their overhaul regime for the Kawasaki Heavy Industries (KHI) trains, particularly in procuring the necessary spare parts for the overhaul due to global supply chain disruptions caused by the Covid-19 pandemic.' The incident, which involved a faulty part on a first-generation KHI train, downed MRT services between Jurong East and Buona Vista stations and affected about one in six train trips daily from Sept 25 to 30 in 2024. An LTA spokesperson told The Straits Times that SMRT will need to channel S$600,000 towards improving its capabilities within a year, and submit a declaration and documented proof of this. In a Facebook post shortly after LTA's statement, SMRT Trains president Lam Sheau Kai said the operator will strengthen its direct engagement with original equipment manufacturers of trains and systems. The operator will also deepen its technical and engineering expertise through closer collaboration with these companies. On LTA's directive to invest a minimum of S$600,000 in beefing up its capabilities, Lam said the development and upskilling of its workforce have long been SMRT's priorities. In addition, the operator will continue supporting the secondment of LTA engineers to SMRT – an initiative introduced in 2018. It will also work closely with LTA and Alstom, the manufacturer of the new R151 trains, to roll out the fleet progressively. By 2026, there will be 106 R151 trains on the North-South and East-West lines. As at June 29, 61 of these trains were in service. The last of the KHI trains will be phased out by September. Investigations into the disruption showed that SMRT had extended the interval between overhauls for the faulty train without a detailed engineering and risk assessment. On its part, the operator had flagged supply chain disruptions arising from the pandemic, which delayed the delivery of new trains meant to replace the first-generation models and spare parts needed for overhauls. LTA had originally notified SMRT of its intention to impose the S$3 million penalty on May 30, and gave the operator two weeks to submit its representations. SMRT did so on June 6. While the details of SMRT's submission were not disclosed, representations may include reasons why the operator believes it should not be penalised as well as other applicable mitigating factors. LTA reviewed SMRT's representations before a notice of the penalty was sent to the rail operator on July 25. SMRT has 14 days to appeal to the transport minister if it wishes. If that happens, the final decision lies with the minister, who can opt to reject the appeal, or allow it and change LTA's decision. Responding to ST's query, Lam did not say if SMRT would lodge an appeal with Acting Transport Minister Jeffrey Siow. But he said the company had received LTA's notice to impose the penalty and noted that LTA had considered its representations. LTA reiterated that Singapore's rail system continues to be one of the most reliable worldwide. Since 2019, the mean kilometres between failure of the MRT network has remained above the one million train-km target, it noted. This means MRT trains travelled for more than one million kilometres between delays of more than five minutes. The revised S$2.4 million penalty is the second-highest to be levied on a rail operator, after the S$5.4 million fine that SMRT incurred over a 2015 disruption that crippled the entire North-South and East-West lines for more than two hours during the evening peak period. In June, LTA said a S$3 million penalty for the September 2024 disruption was 'proportionate' to the circumstances surrounding the incident. The authority said it also considered the cost that SMRT had borne from the repairs, and from providing free bus and shuttle train services at the affected stations. Investigations pointed to degraded grease as the likely cause of the incident. This led to a faulty part of the train's undercarriage falling out on the morning of Sept 25, 2024. The part – an axle box, which holds the train's wheels to the axle, a rod connecting a pair of wheels – was dislodged near Dover station while the train was being withdrawn from service to Ulu Pandan Depot. This caused one of the train's 12 bogies – a structure below the train carriage – to derail. The six-carriage train could continue travelling, as the other 11 bogies remained on the rails. But the derailed portion of the third carriage caused extensive damage to 2.55km of track and trackside equipment, such as power cables and the third rail, which supplies power to trains. Associate Professor Walter Theseira, a transport economist at the Singapore University of Social Sciences, told ST that in the context of rail operations, the $600,000 requirement for improvements is not a very significant amount. It could fund reviews and process improvements, but would not suffice for any substantial engineering work. He also said new trains are 'not a cure for reliability by themselves', as they will result in better reliability only after teething issues have been sorted out. Prof Theseira also believes LTA should examine its own capability to judge the quality of a maintenance regime. 'While the operator is on the ground and has first-hand knowledge, it may also be that the regulator should have a well-formed second opinion.' - The Straits Times/ANN


Malay Mail
an hour ago
- Malay Mail
Lee Chong Wei, Tengku Zafrul among those to receive Penang titles today
GEORGE TOWN, July 26 — Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Abdul Aziz heads the list of 1,530 recipients of state awards, honours and medals in conjunction with the 84th birthday of Governor of Penang, Tun Ramli Ngah Talib, today. Tengku Zafrul will be honoured with the Darjah Panglima Pangkuan Negeri (DPPN), which carries the title Datuk Seri, followed by Chief Secretary to the Government Tan Sri Shamsul Azri Abu Bakar, Penang Malay Association President Tan Sri Dr Mohd Yussof Abdul Latiff, and MMAG Holdings Berhad Executive Chairman Datuk Farhash Wafa Salvador. A total of 17 individuals will be awarded the Darjah Gemilang Pangkuan Negeri (DGPN), which also carries the title Datuk Seri, including Penang State Secretary Datuk Zulkifli Long, Transport Ministry Secretary-General Datuk M Jana Santhiran, Communications Ministry Secretary-General Datuk Mohamad Fauzi Md Isa, and national badminton legend Datuk Lee Chong Wei. Meanwhile, 11 individuals will be conferred the Darjah Yang Mulia Pangkuan Negeri (DMPN), and 118 will be awarded the Darjah Setia Pangkuan Negeri (DSPN), both of which carry the title of Datuk. Among the recipients of the DMPN are the Bukit Aman Anti-Money Laundering Criminal Investigation Team (AMLA) Head Datuk Seri Muhammed Hasbullah Ali, Integrity and Standards Compliance Department Director and former Penang Police Chief Datuk Hamzah Ahmad, as well as the Legal Aid Department Director-General Datuk Norazmi Mohd Narawi. Penang Malay Association Chairman Datuk Abdul Wahab Hamid, Honorary Consul of Brazil in Penang Datuk Chin Lye Kheng, Penang Hokkien Kongsi Trustee Datuk Lawrence Lim Hua Kwang, and Pipesway Furniture Sdn Bhd Managing Director Datuk M Chandra Kumar will also be conferred the DMPN. Among the recipients of the DSPN are Penang Legal Adviser Wan Nor Sakina Saad, Lands and Mines Office Director Dr Faizal Kamarudin, Syariah Chief Judge Za'im Md Yudin, and Penang High Court Judge Kenneth Yoong Ken Chinson St James. Orthopaedic Consultant at Loh Guan Lye Specialists Centre, Dr Goh Eng Tat, social justice artist K Gunabalan, and Kwong Wah Yit Poh Press Bhd General Manager Lee Hin Chan will also receive the DSPN. A total of 85 individuals will be conferred the Darjah Johan Negeri, Bintang Cemerlang Negeri (43), Pingat Kelakuan Terpuji (222), Pingat Jasa Kebaktian (371), Pingat Jasa Masyarakat (641), and Pingat Bakti Setia (18). Penang State Legislative Assembly Speaker and Chairman of the State Government Official Ceremonies Committee, Datuk Seri Law Choo Kiang, announced that the investiture ceremony will be held from today until July 30. In a statement yesterday, he stated that this year, 150 individuals will receive state orders, and 1,380 others will be conferred medals and honorary awards during the four-day ceremony, comprising members of the state and federal civil service, politicians, corporate figures, members of non-governmental organisations, local entrepreneurs, and members of volunteer bodies. All ceremonies and official events in conjunction with Tun Ramli's 84th birthday, initially scheduled for July 12, were postponed due to a clash with the 269th Meeting of the Conference of Rulers. — Bernama


New Straits Times
2 hours ago
- New Straits Times
US EV policy rollback fuels China's rise in Malaysia, dims Tesla's edge
KUALA LUMPUR: Malaysia's electric vehicle (EV) market may be on the cusp of a turning point as shifting global tides, particularly the United States' rollback of EV incentives, reshape the competitive landscape and weaken Tesla's global momentum. The US' move to end its US$7,500 federal EV tax credit and phase out emissions-related regulatory credits, signed into law on July 4, is expected to weigh on Tesla's future earnings and competitiveness, especially in price-sensitive markets. The incentives, which expire after Sept 30, had been instrumental in fueling EV adoption in the US and supporting Tesla's dominance. The company has already posted its weakest quarterly profit in over a decade, hit by falling deliveries and lower vehicle prices. With that safety net set to disappear, analysts say the door is now open for rival brands, particularly from China, to gain ground in emerging markets like Malaysia. "Brands like BYD, Great Wall Motor (ORA), and Chery are expanding aggressively through competitive pricing, faster product rollouts, and local partnerships," said automotive analyst Rosli Khan. He added that Tesla's lack of local manufacturing or assembly, along with its premium positioning, leaves it vulnerable in a price-sensitive and infrastructure-dependent market like Malaysia. "With Tesla's expansion slowing, Chinese brands can now accelerate their market dominance through local assembly and better after-sales support—areas where Tesla has been relatively absent," Rosli said. He also pointed out that Malaysian buyers are increasingly gravitating toward mid-range, functional EVs rather than high-tech, premium models, a trend that plays directly into the hands of Chinese players with localised strategies. Amid growing demand in this mid-market segment, another analyst Hezeri Samsuri said Malaysia's own EV tax incentives, set to expire at the end of 2025, could tip the scales against premium players like Tesla. "Tesla might be a strong global brand, but in Malaysia, they can be replaced by other EV brands. Once the incentives end, the gap they leave will likely be filled by various other players," said Hezeri. He also said the government must look beyond attracting EV brands and focus on ensuring a robust after-sales ecosystem, especially if foreign players begin to retreat once the tax holidays expire. Malaysia's EV tax incentives currently include full import and excise duty exemptions for fully imported EVs, road tax exemptions for EV owners and tax breaks for locally assembled models. However, with the exemptions for imported EVs and road tax set to expire at end-December, EV prices, particularly for premium imported brands like Tesla, are expected to rise significantly, weakening their competitiveness in the local market. Meanwhile, despite efforts to position Malaysia as an EV hub, both analysts agreed that the country continues to trail behind regional pacesetters like Thailand and Indonesia. "Malaysia has political stability, a strong manufacturing base, and solid port infrastructure, but delays in EV charging infrastructure, slow regulatory approvals, and inconsistent coordination between federal and state governments remain significant bottlenecks," Hezeri said. "Thailand and Indonesia offer better EV policy execution, clearer investment roadmaps, and more complete supply chain ecosystems." Even so, Rosli said Malaysia can still carve out a niche as a Tier-2 or Tier-3 manufacturing hub, especially for Chinese EV makers seeking to hedge against Western geopolitical risks, if structural reforms are implemented decisively. Looking past showrooms and into the supply chain, they said Malaysia could evolve from a passive EV consumer to a strategic contributor in the regional EV manufacturing network, particularly in high-value areas like battery systems, software integration, and electronics. Electronikar editor and analyst Shamsul Yunos said national automakers Proton and Perodua would be better served by partnering with Chinese players rather than trying to outpace them. "Malaysian automakers can forge strategic partnerships with Chinese manufacturers and focus on niche market development by leveraging their technology and supply chain," he said. Shamsul added that Malaysia's automotive policy must shift away from low-value assembly towards high-value activities such as research and development, especially in battery packaging, battery management systems and power electronics. "Regardless of the US policy shift, the last 40 years show Malaysia needs to move beyond export substitution and develop deeper technical capabilities," he said. Rosli echoed this sentiment, noting that Malaysia's mature semiconductor industry gives it a head start in EV component production, particularly in sensors, power electronics, and control systems. "The government should align investment incentives with local capability-building through talent development and supply chain localisation. "If this alignment is achieved, Malaysia could integrate more deeply into the EV manufacturing network, not just with Chinese brands but also with Japanese and Korean Tier-1 suppliers," he said, adding that such a move could position Malaysia as a strategic springboard into the Asean EV market.