Latest news with #FederationofMalaysianManufacturers
New Straits Times
an hour ago
- Business
- New Straits Times
Manufacturers face RM1bil loss if Sept 15 holiday not formalised: FMM
KUALA LUMPUR: Manufacturers may suffer up to RM1 billion in losses if the government does not promptly formalise the Sept 15 public holiday, the Federation of Malaysian Manufacturers (FMM) cautioned as it pressed for immediate gazettement. Yesterday, Prime Minister Datuk Seri Anwar Ibrahim declared that Sept 15 would be observed as a public holiday in conjunction with Malaysia Day, with the Human Resources Ministry stating that employers must comply. However, FMM said official confirmation via a gazette notification under the Holidays Act 1951 was still pending. "This is critical to provide legal clarity and enable businesses to plan operations, workforce scheduling, and ensure compliance with the Employment Act 1955," the federation said in a statement. FMM president Tan Sri Soh Thian Lai said last-minute declarations of public holidays disrupt tightly scheduled production timelines, export commitments and labour shifts, particularly in sectors that rely on continuous operations. "Declaring Monday, Sept 15, as a holiday effectively creates a four-day disruption for many manufacturers, covering Saturday through Tuesday for shift-based and continuous operations. Such interruptions require production lines to stop and restart, which is both costly and inefficient," he said. FMM estimated that each additional unplanned public holiday could result in up to RM1 billion in productivity and output losses for manufacturers. The impact is especially severe for export-driven industries and those with continuous production lines, such as steel, food processing and chemicals. Small and medium-sized enterprises, in particular, would struggle to absorb the added costs or manage overtime and replacement shifts, the group added. "Frequent ad hoc holiday declarations do not augur well for a country striving to achieve high-income nation status and position itself as a competitive, reliable, and attractive destination for investment," it added. FMM stressed the importance of policy clarity, consistency, certainty and credibility, noting that abrupt decisions could erode investor confidence and weaken Malaysia's standing in global supply chains. While acknowledging the spirit behind the Malaysia Day celebration, the federation called on the government to expedite the official gazettement, providing immediate legal certainty and enabling businesses to mitigate operational risks effectively.
The Sun
3 hours ago
- Business
- The Sun
How tariffs, taxes can derail climate ambitions
AT a time when Malaysia must accelerate its climate transition, can we afford foreign and domestic policy shocks that will destabilise our climate finance and green technology agenda? The recent announcement by US President Donald Trump to impose a sweeping 25% tariff on 'any and all Malaysian products' starting Aug 1 has jolted Malaysia's economy and potentially, its entire energy transition trajectory. This move not only threatens our US$80 billion (RM338 billion) annual trade relationship with the US but also risks undercutting the financial and industrial scaffolding needed to meet our net-zero ambitions by 2050. For a country that has pledged a 45% reduction in carbon intensity by 2030, this is not just an economic setback but also a stress test of our climate governance, resilience and readiness. The potential impact is immense. Sectors like electrical and electronics (E&E), which comprise nearly 40% of our exports, stand particularly exposed. With the Green Technology Master Plan relying heavily on E&E to drive decarbonised manufacturing, this development will place our climate-linked industrial strategy in jeopardy. At the same time, Malaysia's expanded Sales and Service Tax (SST), which came into effect on July 1, adds pressure from within. Over 4,800 previously exempt items, including industrial equipment and low-emission machinery, are now taxed at 8%, up from the previous 6%. While the SST expansion is projected to yield RM3 billion in additional revenue, its timing could not be worse. The Federation of Malaysian Manufacturers warns that these cascading tax burdens will inflate costs, shrink margins and deter future investment, especially in capital-intensive green infrastructure. The National Energy Transition Roadmap (NETR), launched in 2023, sets ambitious targets: increasing renewable energy in the national mix to 70% by 2050, developing CCUS (carbon capture, utilisation and storage) and attracting RM435 billion in investments. But these goals rely on a strong private sector, foreign direct investment and investor confidence. Reduced export earnings due to tariffs, paired with higher domestic operating costs from the SST, could stall clean energy adoption, battery storage scaling and smart grid investments. Small and medium green-tech enterprises already navigating tight financing margins may pivot to survival mode, postponing research and development or abandoning green upgrades entirely. This fiscal constriction directly threatens the creation of 23,000 green jobs forecasted under NETR and it risks reducing Malaysia's contribution to global clean energy supply chains at a time when demand is rising. On the other hand, Malaysia's voluntary carbon market (VCM), launched via the Bursa Carbon Exchange in late 2022, was one of Southeast Asia's most promising climate finance innovations. With a projected market value of US$237 million by 2030, it was expected to fund reforestation, conservation and industrial decarbonisation projects. However, the VCM and the upcoming carbon tax and Emissions Trading Scheme under the National Climate Change Bill are all sensitive to macroeconomic conditions. Historically, economic downturns or trade disruptions often lead governments to delay carbon pricing reforms in the name of economic recovery. Malaysia is no exception. Unless insulated, our carbon governance mechanisms may stall or regress under fiscal and political pressure just when they are needed to drive long-term decarbonisation and attract green capital. Climate change disproportionately affects the poorest and most vulnerable communities in Malaysia, from coastal erosion in Sabah to urban flooding in Kuala Lumpur. But so too will economic instability. Tariff-related export losses could result in job cuts in key industrial areas while SST inflation will raise living costs. When people are forced to choose between short-term survival and long-term sustainability, the environment always loses. Without targeted support, our vision of a 'just transition' risks becoming rhetorical. The National Climate Change Bill framework, which emphasises equity and protection for vulnerable populations, must be backed by resilient fiscal policy and progressive social safety nets and not sacrificed in budget cuts driven by external shocks. In this regard, what can Malaysia do? Firstly, Malaysia must demand clarity on the tariff scope and seek exclusions for clean technology, solar components and environmental goods, aligning with the World Trade Organisation environmental exceptions. Next, allocate funds from the new SST intake to fund VCM capacity-building, CCUS pilots and green job retraining programmes. SST exemptions or rebates for low-emission equipment, energy-efficient machinery and carbon audit services must also be provided to incentivise clean industrial investments. Additionally, as the Chair of Asean this year, we also have an upper hand in using this moment to lead within Asean, pushing for regional carbon border adjustments and green mutual recognition agreements that support decarbonised exports. Lastly, fast-track funding for climate policy education, especially in carbon markets, climate law and environmental economics, to prepare the next generation of climate experts. In conclusion, economic shocks will come and go but the climate crisis is permanent and intensifying. As floods grow more frequent, air pollution worsens and biodiversity collapses, the cost of inaction will grow steeper each year. Trade and tax policies must serve and not sabotage our climate goals. Malaysia must not retreat from climate ambition in the face of tariffs or taxes. We must instead use these shocks to recalibrate our economic tools, reaffirm our global leadership in climate governance and build a greener, more resilient Malaysia that does not trade short-term relief for long-term collapse. Mogesh Sababathy is a youth climate advocate, National Consultative Panel member to the Natural Resources and Environmental Sustainability Ministry and PhD candidate at Universiti Putra Malaysia. Comments: letters@
The Sun
09-07-2025
- Business
- The Sun
FMM calls for bold reforms to counter levy blow
PETALING JAYA: The Federation of Malaysian Manufacturers (FMM) has urged the government to act swiftly and decisively as a coordinated response to the United States' decision to impose a 25% blanket tariff on most Malaysian goods entering the US market, with certain exemptions, from Aug 1. FMM President Tan Sri Dato' Soh Thian Lai warned that the new tariff risks further destabilising an already fragile industrial landscape, besides severely undermining export competitiveness and straining manufacturers. 'With strong government-industry collaboration, clear and timely policies, and bold structural reforms, Malaysia can preserve its manufacturing leadership, withstand short-term shocks, and chart a sustainable path forward,' said Soh in a statement today. Soh said the announcement came as a surprise since intensive negotiations were ongoing between Washington and the Ministry of Investment, Trade and Industry (MITI) through the National Geoeconomic Command Centre (NGCC). He said that the manufacturing sector is already burdened by a previous 10% tariff, along with rising costs from the expanded Sales and Service Tax (SST) and electricity base tariff hikes. Soh said that feedback from manufacturers indicated the 10% tariff had already threatened the sustainability of export operations. He added that many feared further hikes would lead to steep shipment declines and eroded profit margins. He said that while critical products like semiconductors are exempt, supporting industries, such as suppliers of parts, machinery and services, remain exposed to significant disruption. He added that key export segments such as rubber products, textiles, furniture and industrial components will also be adversely affected. 'Although Malaysia's initial proposed 24% tariff in April was lower than those of peers like Cambodia, Vietnam and Thailand, the new blanket 25% rate places Malaysia in a more punitive position,' said Soh. He highlighted that Vietnam has negotiated a reduced 20% rate, while Singapore, Brunei and the Philippines were excluded entirely from the latest round. FMM urged the government to intensify diplomatic engagement to secure a deferral or rollback of the tariff, citing Malaysia's vital role in US and global supply chains. It called for the country's compliance record, investment linkages and value-added contributions to be strongly asserted. Domestically, FMM is pressing for targeted financial relief, export promotion and structural reforms to improve cost efficiency. Among its key demands is SST reform, including a business-to-business (B2B) service tax exemption for licensed manufacturers. 'The absence of a business-to-business (B2B) exemption mechanism means service tax is imposed on critical production-related services such as logistics, warehousing, leasing, and contract processing resulting in cascading tax effects that not only inflate production costs but ultimately pass through to consumers. 'This undermines tax neutrality, distorts input choices, and reduces Malaysia's industrial and export competitiveness,' said Soh. FMM proposed measures such as raising the Market Development Grant ceiling, waiving MATRADE fees for association-led trade missions, and supporting exporters in branding, certification and digital access. FMM also recommended tax incentives for automation and digitalisation, a MADANI Manufacturing Digitalisation Grant for SMEs, and low-interest financing backed by workforce upskilling to accelerate Industry 4.0 adoption. To harmonise regional responses to trade shocks and strengthen intra-ASEAN production links, FMM suggested the swift establishment of a National Supply Chain Council and a dedicated ASEAN Supply Chain Coordination Council under Malaysia's ASEAN Chairmanship. It further urged the government to fast-track the Malaysia-European Union Free Trade Agreement and pursue trade partnerships in Africa, Latin America and the Middle East to reduce overreliance on any single export destination and to reinforce Malaysia's global competitiveness.
The Sun
09-07-2025
- Business
- The Sun
Malaysia-US trade tensions rise as tariffs strain bilateral relations
KUALA LUMPUR: Trade relations between Malaysia and the United States face growing strain after the US imposed a 25 percent tariff on Malaysian exports, prompting concerns over long-term economic disruptions. Analysts suggest Malaysia must strengthen ties with other trade partners and enhance economic resilience to mitigate external shocks. Economist Samirul Ariff Othman noted that while Malaysia has refrained from retaliatory measures, prolonged US pressure could force a tougher stance. 'Quiet diplomacy can only go so far. Should the US persist, Malaysia will need to recalibrate its strategic alignments,' he said. Khazanah Research Institute Deputy Director Yin Shao Loong attributed the tariffs to missed US negotiation deadlines but expressed optimism for future progress. Meanwhile, Federation of Malaysian Manufacturers President Soh Thian Lai warned of destabilised supply chains, stating, 'This latest escalation risks further destabilising an already fragile industrial landscape, severely impacting export competitiveness.' The Institute for Democracy and Economic Affairs (IDEAS) urged ASEAN solidarity against disruptive US policies, emphasising collective action to counter Washington's divide-and-conquer approach. 'Malaysia must continue to avoid being drawn into retaliatory trade barriers or a false choice between major powers,' it said. - Bernama
Malaysiakini
08-07-2025
- Business
- Malaysiakini
FMM sounds alarm over looming 25pct US tariffs, urges swift govt action
The Federation of Malaysian Manufacturers (FMM) has raised the alarm over a looming 25 percent blanket tariff on all Malaysian exports to the United States, set to take effect on Aug 1. In a statement today, FMM described the latest move under Washington's reciprocal tariffs as a major blow to local exporters already grappling with cost pressures and a challenging global trade environment. 'The manufacturing sector is already reeling from the earlier...
