Latest news with #CertificatesofOrigin
Focus Malaysia
09-07-2025
- Business
- Focus Malaysia
New US tariff threats loom, but Malaysia remains resilient in ASEAN trade race
MALAYSIA'S re-export activities have demonstrated a significant increase, constituting approximately 19-22% of total exports in 2023-2024, a notable rise from 13-14% observed in 2015-2016. This upward trend suggests an enhanced role for Malaysia as a trans-shipment hub, potentially influenced by intensified US-China trade tensions. The United States remains a key destination for these re-exports, accounting for an estimated 5.0-6.0% of the total and ranking as the fifth largest recipient. In 2024, Malaysia mainly exports manufactured goods to the US (98.1%), followed by mining (0.1%) and agriculture (1.8%). Under the E&E segment, semiconductors account for just 24% of the broader category. This underscores the limited diversification of Malaysia's exports to the US, which are heavily concentrated in manufactured goods, particularly E&E products. Nonetheless, the high share of E&E imports reflects Malaysia's integral role in the global electronics supply chain, especially in semiconductor packaging and testing. The US remains Malaysia's third-largest trading partner. Specifically, if Malaysia were to secure a transhipping tariff rate below the 20% that currently applies to overall goods from Vietnam (and certainly below the 40% rate imposed on specific 'transhipping' activities as seen with Vietnam), it could substantially enhance its competitive advantage. Such a favourable rate would make Malaysia an even more attractive intermediary for international trade flows destined for the US, particularly when compared to Vietnam's current tariff environment. This could potentially lead to a significant increase in Malaysia's re-export volumes, further solidifying its position in global supply chains. Furthermore, this enhanced trade activity would directly benefit associated domestic sectors, including logistics, warehousing, and trade facilitation services, driving economic growth and creating new opportunities within the country. While Vietnam exhibits a very strong correlation, a similar analysis for Malaysia reveals that its imports from China and subsequent exports to the US also demonstrate a notable relationship. A correlation study between China's imports to Malaysia and Malaysia's exports to the US yielded a high correlation of 78.7%, also with a strong one-month lag impact. This indicates that these two series are highly sensitive to each other, though to a lesser extent than observed with Vietnam. The slightly lower correlation for Malaysia (78.7% compared to Vietnam's 95.7%) suggests that while re-export of Chinese products through Malaysia to the US is still significant. Nevertheless, this strong positive correlation for Malaysia also suggests a significant re-export of Chinese products through Malaysia to the US. To enhance the integrity of trade flows and mitigate illicit transhipment, Malaysia's Ministry of International Trade and Industry (MITI) has taken a decisive step to centralise the issuance of Certificates of Origin for all exports destined for the US. Effective in May-25, the authority to issue these crucial documents, which verify a product's origin for customs and trade requirements, will be exclusively held by MITI, discontinuing the previous practice of delegation to business councils, chambers, or associations. This stringent measure directly addresses concerns regarding the potential misuse of Malaysia as a conduit for third-country goods, particularly those from China, seeking to circumvent US tariffs. By tightening control over origin documentation, Malaysia aims to bolster transparency and credibility in its trade with the US, thereby fostering stronger, more reliable bilateral trade relations and reducing instances of trade circumvention However, even with the new rates, Malaysia remains one of the lowest among the ASEAN countries, which is a competitive advantage against regional peers (excluding Vietnam at 20%). Malaysia remains among the lowest. Given the new US transhipment rules, which impose a higher tariff based on the rerouting of the goods for the US market, in our view becomes a paramount factor in attracting Foreign Direct Investment (FDI) aimed at serving the US market. This means that countries able to secure a lower general tariff rate for their exports to the US, coupled with robust and verifiable rules of origin to avoid the severe transhipment penalty, will disproportionately benefit in terms of FDI inflows. For businesses seeking to 'de-risk' their supply chains from higher-tariff origins (like China), investing in production facilities within a country that offers both a genuinely lower tariff for direct exports to the US and the assurance of avoiding transhipment accusations becomes a strategically attractive proposition. This dynamic incentivises real value-added manufacturing and supply chain transparency, rather than mere logistical rerouting. Malaysia is benefiting from the transhipment rule. On the other hand, MITI reaffirmed Malaysia's independent foreign and economic policy stance, and the engagement with any multilateral platform is focused on trade facilitation and sustainable development, guided by national interest, not ideological alignment. For Malaysia, which is a partner country of BRICS, the implication of this latest threat is speculative; after the negotiation, if Malaysia were to fall under the 10% blanket tariff, this additional BRICS-related tariff could potentially raise its total tariff rate to 20%. However, at this juncture, this post is widely perceived as a threat rather than an imminent policy. Even at the current 25% tariff, nevertheless, added with a potential additional 10% BRICS tariff (total: 35%), Malaysia is still competitive relative to its ASEAN peers. Assuming that the 10% additional tariff will be implemented, other ASEAN countries like Indonesia (42%), Thailand (46%), and Vietnam (30%) are also partnering countries, which effectively will increase their rates as well; therefore, Malaysia will remain competitive among the ASEAN countries. We believe that these letters signal that the US is willing to continue negotiating. In the case of Malaysia, the slightly higher tariff can be seen as an indication that should Malaysia is not able to come to an agreement, that tariff will be enacted. —July 9, 2025 Main image: The Sun
The Star
13-05-2025
- Business
- The Star
Rush for furniture as tariffs loom
PETALING JAYA: American buyers of Malaysian furniture have asked that the products be sent to them before July in view of the uncertainty over US tariffs, says the Malaysian Furniture Council. 'Our customers in the United States have asked us to ship as much as possible during this 90-day suspension window – ideally before July,' said the council's deputy president, Matthew Law. 'What happens next depends on whether the US president announces new tariff policies. Only then will we know how to plan our business.' He said that although the United States imposes different tariff rates on different countries, Malaysia's main competitors are Vietnam, Cambodia and Indonesia. Margin for success: (From left) Law, Chan and Ng. Vietnam is subject to a 46% tariff, Cambodia 49% and Indonesia 32%. While the new tariffs have been temporarily suspended, all countries are currently operating under a base tariff rate of 10%. He said Malaysia's furniture exports primarily consist of wooden furniture, including items such as bedroom sets and kitchen furniture. He noted that local manufacturers face rising costs, including a 14.2% hike in electricity tariffs from July 2025, higher EPF contributions and increased foreign worker levies. He said the weak ringgit against the US dollar is also a major concern. Amid these challenges, US demand has begun to decline, signalling a market slowdown. According to the Investment, Trade and Industry Ministry (Miti) report card on the first quarter of 2025, Malaysia faces a 24% US tariff, well below Vietnam, Cambodia and Indonesia. It said Malaysia's furniture industry stands to gain from shifting US trade patterns, with lower tariffs making its products more appealing to American importers. Though Malaysia held only a 2.4% share of the US furniture market in 2024, its favourable tariff position offers strategic potential. Deputy Plantation and Commodities Minister Chan Foong Hin said the ministry remains cautiously optimistic as US negotiations continue, and is actively supporting talks by providing data and insights to Miti. 'At the same time, we are intensifying efforts to strengthen trade relationships with emerging markets and diversify our export destinations,' he told The Star. In the furniture sector, Chan stressed that the government will tighten enforcement to prevent Malaysia from being used as a transhipment hub for timber and timber products originating from countries hit with higher US tariffs. Among the steps being taken are stricter documentation processes, especially for the issuance of Certificates of Origin (COO). 'Both preferential COO issued by Miti and non-preferential COO issued by chambers and associations authorised by Miti play a critical role in verifying the origin of Malaysian exports and upholding the integrity of our trade practices,' he said. Samenta president Datuk William Ng said the higher tariffs on furniture imports from Vietnam, Cambodia and Indonesia have opened up a 'real and timely opportunity' for Malaysian SMEs to grow their presence in one of the world's largest furniture markets. 'Even a small shift in sourcing preference can translate into significant export gains for Malaysian SMEs. To fully leverage this, we need better marketing support, faster access to trade finance and streamlined logistics to meet increased demand,' he said. Despite the improved competitive position, Ng pointed out that local furniture manufacturers continue to grapple with rising operational costs, including labour, raw materials and energy. 'To overcome this and still grow our production and exports, we encourage SMEs to adopt automation and smart manufacturing to offset rising labour costs and improve output quality and consistency,' he added. He also stressed the need to strengthen upstream integration within the industry, noting that Malaysia still imports significant timber and related inputs. 'By nurturing a stronger local supply chain, including engineered wood and sustainable forestry, we can reduce dependency on volatile global raw material prices,' he said. Ng warned that despite the current opportunity, industry players should proceed with caution due to the unpredictable nature of US trade policy.
Daily Express
08-05-2025
- Business
- Daily Express
Move may impact Sabah's RM1 billion exports to United States
Published on: Thursday, May 08, 2025 Published on: Thu, May 08, 2025 Text Size: Yong said the immediate question is how the Ministry at Putrajaya or branch in Kota Kinabalu would have sufficient and reliable information about Sabah exporters and products concerned in order to issue such Certificates of Origin. Kota Kinabalu: Chambers of Commerce in Sabah, which have been issuing Certificates of Origin for exports to the US, can no longer do so effective May 6. Former Chief Minister Datuk Yong Teck Lee said this sudden change in export regulations is bound to impact the RM1 billion worth of exports of Sabah products directly to the US. He said Federal Minister of Investment, Trade and Industry, Datuk Seri Tengku Zahfrul Abdul Aziz, issued a notice on this matter two days ago. Henceforth, only Federal Ministry of Investment, Trade and Industry is authorised to issue such Certificates of Origin. Yong said the immediate question is how the Ministry at Putrajaya or branch in Kota Kinabalu would have sufficient and reliable information about Sabah exporters and products concerned in order to issue such Certificates of Origin. Sabah's exports to the US is valued at RM1 billion (out of Sabah's total exports of RM100 billion) and consist mainly oil and gas, palm oil, timber products and copper. 'The regulation here is not about tariffs but about the origin of the products,' he said, differentiating the action from that of the tariffs imposed by President Trump on various countries, many of which he has paused for 90 days since. Yong said the relevant business organisations, Chambers of Commerce, trade bodies, and exporters should quickly engage with the relevant authorities in order to ensure the smooth conduct of business and exports, including ports operations. 'At the moment, this new regulation on Certificates of Origin affects only exports to the US because it is aimed at preventing the illegal transhipment of non-Malaysian products (meaning China) via Malaysian ports to the US. 'But, if the ongoing trade war continues, then it is possible that the new regulation (on issuing on Certificates of Origin only by the Federal Ministry) might be extended to other export destinations,' Yong said, in a statement. Earlier, the appointment of the Investment, Trade and Industry Ministry (Miti) as the sole issuer of Non-Preferential Certificates of Origin (NPCO) received broad support from business chambers and trade groups, who said the measure would help protect Malaysia's trade integrity, particularly with the United States. However, industry leaders cautioned that the possibility of poor execution, lack of preparedness and insufficient infrastructure could result in bottlenecks and delays, potentially disrupting shipments and hurting exporters nationwide. The Malaysian International Chamber of Commerce and Industry (MICCI) said the government's decision to centralise the issuance of the certificates will reinforce Malaysia's export credibility and protect legitimate trade flows, particularly to the United States. 'Exporters are advised to stay updated on the revised application procedures and to engage closely with the ministry to ensure full compliance with the new requirements,' MICCI president Christina Tee said. To support compliance and reduce the risk of transhipment-related offences, MICCI is urging exporters to maintain clear, comprehensive and transparent supply chain records. 'Businesses must declare origin of products accurately and avoid any practices that could be perceived as relabelling or misrepresentation,' she added. However, Tee acknowledged that recent tariff measures imposed by the United States could present challenges by increasing operational costs and reducing competitiveness in the US market. Malaysia Consortium of Mid-Tier Companies (MCMTC) honorary president Callum Chen raised concerns over Miti's preparedness to handle the new system. He said the absence of a dedicated facility and trained personnel could result in delays, as exporters now have only one access point instead of several. 'Does Miti have enough space and officers? How long will verification take, and how will exporters outside the Klang Valley be accommodated?' he asked. * 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
Borneo Post
07-05-2025
- Business
- Borneo Post
Yong: Chambers of commerce in Sabah can no longer issue Certificates of Origin to US
Datuk Yong Teck Lee KOTA KINABALU (May 7): Chambers of commerce in Sabah, which have been issuing Certificates of Origin for exports of products to the USA manufactured in their respective districts in Sabah, will no longer be authorised to do so with effect from May 6, 2025. This is according to the official announcement by the Federal Minister of Investment, Trade and Industry, Datuk Seri Tengku Zahfrul Abdul Aziz, said former chief minister Datuk Yong Teck Lee on Wednesday. Henceforth, only the Federal Ministry of Investment, Trade and Industry is authorised to issue such Certificates of Origin. 'How does the Ministry at Putrajaya and even its branch office in Kota Kinabalu have sufficient and reliable information on the Sabah exporters and products concerned in order to issue such Certificates of Origin? 'This sudden change in exports regulations is bound to have a stifling impact on the RM1 billion worth of exports of Sabah products directly to the US,' Yong said in a statement. He said Sabah's exports to the US, valued at RM1 billion (out of Sabah's total exports of RM100 billion) consist of mainly oil and gas, palm oil and timber products and copper. The regulation here is not about tariffs but about the origin of the products. 'The relevant business organisations, chambers of commerce, trade bodies, and exporters are advised to quickly engage with the relevant authorities in order to ensure the smooth conduct of business and exports, including ports operations. 'At the moment, this new regulation on Certificates of Origin affects only exports to the US because it is aimed at preventing the illegal transhipment of non-Malaysian products (meaning China) via Malaysian ports to the US. But, if the ongoing trade war continues, then it is possible that the new regulation (on issuing on Certificates of Origin only by the Federal Ministry) might be extended to other export destinations,' he said.
Borneo Post
07-05-2025
- Business
- Borneo Post
Chambers of commerce in Sabah can no longer issue Certificates of Origin to US
Yong KOTA KINABALU (May 7): Chambers of commerce in Sabah, which have been issuing Certificates of Origin for exports of products to the USA manufactured in their respective districts in Sabah, will no longer be authorised to do so with effect from May 6, 2025. This is according to the official announcement by the Federal Minister of Investment, Trade and Industry, Datuk Seri Tengku Zahfrul Abdul Aziz, said former chief minister Datuk Yong Teck Lee on Wednesday. Henceforth, only the Federal Ministry of Investment, Trade and Industry is authorised to issue such Certificates of Origin. 'How does the Ministry at Putrajaya and even its branch office in Kota Kinabalu have sufficient and reliable information on the Sabah exporters and products concerned in order to issue such Certificates of Origin? 'This sudden change in exports regulations is bound to have a stifling impact on the RM1 billion worth of exports of Sabah products directly to the US,' Yong said in a statement. He said Sabah's exports to the US, valued at RM1 billion (out of Sabah's total exports of RM100 billion) consist of mainly oil and gas, palm oil and timber products and copper. The regulation here is not about tariffs but about the origin of the products. 'The relevant business organisations, chambers of commerce, trade bodies, and exporters are advised to quickly engage with the relevant authorities in order to ensure the smooth conduct of business and exports, including ports operations. 'At the moment, this new regulation on Certificates of Origin affects only exports to the US because it is aimed at preventing the illegal transhipment of non-Malaysian products (meaning China) via Malaysian ports to the US. But, if the ongoing trade war continues, then it is possible that the new regulation (on issuing on Certificates of Origin only by the Federal Ministry) might be extended to other export destinations,' he said.
