Latest news with #FederationofMalaysianManufacturing
Focus Malaysia
an hour ago
- Business
- Focus Malaysia
FMM: Ad hoc holidays unproductive, creates costly, inefficient disruption for manufacturers
THE Federation of Malaysian Manufacturing (FMM) has urged the government to immediately issue the official Gazette notification confirming the status of the holiday under the Holidays Act 1951. Its president Tan Sri Soh Thian Lai was responding to a recent announcement by Prime Minister Datuk Seri Anwar Ibrahim declaring Sept 15 as an additional public holiday in conjunction with the Malaysia Day celebrations. 'This is critical to provide legal clarity and enable businesses to plan operations, workforce scheduling, and ensure compliance with the Employment Act 1955,' he stated. 'The manufacturing sector is highly sensitive to last-minute holiday declarations due to tightly scheduled production timelines, export commitments, and labour shifts.' According to Soh, declaring Sept 15 a holiday effectively creates a four-day disruption for many manufacturers whereby such interruptions require production lines to stop and restart, which is both costly and inefficient. 'Based on past estimates, each additional unplanned public holiday can result in up to RM1 bil in productivity and output losses for the manufacturing sector alone,' he continued. 'The impact is particularly severe for export-oriented industries and those with continuous processes such as steel, food processing, and chemicals. 'SMEs, in particular, will face challenges in absorbing these costs or managing overtime and replacement shifts. These disruptions also have a cascading effect across supply chains and logistics operations.' Soh further stressed that policy announcements must reflect clarity, consistency, certainty, and credibility. He noted that 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. 'Investors and global buyers require predictability and stability. Sudden changes that disrupt production and supply chain commitments risk undermining Malaysia's competitiveness, especially when the nation is working hard to secure global supply chain opportunities and high-value investments,' he elaborated. 'While FMM appreciates the spirit of celebrating Malaysia Day, we strongly urge the government to expedite the official gazettement to provide immediate legal clarity and enable businesses to manage operational risks effectively.' ‒ July 24, 2025
Straits Times
6 days ago
- Business
- Straits Times
Malaysia's export-oriented businesses fret as deadline for US tariff deal draws near
– As Malaysian trade negotiators race against the clock to seal a deal that could reduce the 25 per cent Trump administration tariffs before the Aug 1 deadline, the business community, especially those in export-oriented sectors, continues to grapple with uncertainty of the American levies . Given the economy is heavily reliant on exports – with export figures at RM1.5 trillion (S$460 million) in 2024 – local manufacturers such as those in the electrical and electronic and furniture sectors are particularly worried about US President Donald Trump's threat to impose higher tariffs on 'transshipped goods'. This is the Trump administration's attempt to curb the practice of rerouting Chinese products through a third country before they are exported to the US in order to disguise their true origin and evade US duties. This common practice is legal in global supply chains under regulations issued by individual countries. But it can and has been abused to evade duties. Washington had earlier said it would impose an unspecified additional levy on transshipment goods via Malaysia . It has not yet defined what percentage of Chinese inputs would classify goods as transshipment. The threat of US enforcement actions that target China-based supply chains will weigh down the competitiveness of Malaysia's exports as the country is a regional manufacturing hub and is deeply integrated with Chinese intermediate goods, said Mr Soh Thian Lai, president of the Federation of Malaysian Manufacturing. An intermediate good is a product (for example, steel) used in the production of a finished or final good (a stainless steel wok) . Although there are no available figures for intermediate goods imported from China, Malaysia recorded imports of intermediate goods totalling RM748.9 billion in 2024, representing a 74 per cent increase since 2020. Separately, Malaysia imported RM296.5 billion worth of goods from China in 2024 , a 72 per cent increase from 2020. Tan Sri Soh said that in recent years, global supply chains have shifted or expanded out of China. This has made the regional value chains all the more complex, and will make decoupling from China difficult. Mr Soh said Malaysian manufacturers in sectors such as electronics, medical devices and engineered parts, who are locked into long-term contracts and operate on tight margins, will be especially hurt by the upcoming 25 per cent tariff imposed by the US. Malaysia's electrical and electronic sector is also heavily reliant on sourcing silicon from China. But Mr Keat Yap of global management consultancy Kearney is of the belief that these Malaysia-made goods should not be categorised as transshipment products. In 2024, China accounted for 80 per cent of global silico n production. 'Even if the silicon comes from China, it cannot function as a chip unless it is diced into pieces, assembled with electrical connectivity, encapsulated for protection against elements, and then tested... In reality, there is no transshipment but significant value additions in Malaysia,' Mr Yap told ST. Malaysia ships a significant portion of its electrical and electronic sector products to the US. In 2024, such goods, including semiconductor and telecommunication equipment, made up 60 per cent of its exports to the US and were valued at RM119.86 billion. To address Washington's concerns regarding transshipments and increasing scrutiny over allegedly fraudulent origin claims of Malaysian products , the Ministry of Investment, Trade and Industry (Miti) in May revoked the authority of other organisations like local business councils, chambers or association , to issue non-preferential certificates of origin (NPCOs) for US-bound cargo. Industry sources whom ST spoke to in May , said there have been cases of Chinese manufacturers using Malaysia as a transshipment hub, allegedly going as far as to falsify certificates of origin in an effort to bypass US tariffs. The ministry is now the sole body authorised to issue NPCOs. These documents are used to certify the origin of goods for international shipments, helping to fulfil customs or trade requirements in the destination country. Muar Furniture Association chairman Steve Ong welcomed Miti's stricter move on NPCOs, saying that it would protect Malaysia's wooden furniture export industry, which is valued at RM9.89 billion in 2024 , half of which was shipped to the US. 'It's now harder for exporters to obtain fake certificates of origin for transshipment,' he told ST. 'However, Malaysia still faces higher tariffs compared with neighbours like Indonesia, which enjoys a 19 per cent rate, so there's a risk transshipment could shift there instead.' Miti on July 14 also tightened the oversight of the movement high-end chips from the US by imposing a strategic trade permit requirement, a move analysts say is part of the government's negotiation tactic to lower the tariff rate. Regionally, the US levied a tariff of 36 per cent against Thailand's exports , and 20 per cent against the Philippines, and 10 per cent on Singapore in a July 18 announcement. Vietnam secured a deal for a 20 per cent tariff rate and 40 per cent rate on goods deemed to be transshipped. Earlier in May, the US Department of Justice's (DoJ) criminal division issued a memo detailing the ' threats to the US economy' where it listed 'tariff evasion ' as a priority area it must tackle as part of combatting white-collar crime. Washington later in June reached a trade deal with China , which saw duties on Chinese goods cut to around 55 per cent – down sharply from a previous 145 per cent. AmBank Group Chief Economist Mr Firdaos Rosli said that comparing tariff rates between countries should not be the main focus for Malaysia , given the broader uncertainty posed by Mr Trump's trade policies. ' Although the US is a major global consumer market, the world is bigger ... Perhaps we should focus more on trading among ourselves rather than relying so heavily on a single nation,' he said. A former US DOJ prosecutor turned consultant Mr Artie McConnell said the lack of a common definition and the high burden of proof by prosecution to show that transshipping has occurred could hinder Mr Trump's efforts to criminalise the practice . 'When you have, say, a chemical mixture or a high-end electronic item, and there's no precedent under the (World Trade Organisation's) Harmonised Tariff Schedule (HTS), classifying the item can be very difficult,' Mr McConnell, now a partner at US lawfirm BakerHostetler told a forum on July 15. He advised firms to implement basic compliance programmes, such as having essential paperwork in order. With these processes in place, he said 'you've already completed 90 per cent of the work' to ready oneself for the new era of tariffs.
The Star
08-07-2025
- Business
- The Star
FMM seeks swift diplomatic and domestic interventions to counter US tariff impact
Federation of Malaysian Manufacturing (FMM) president Tan Sri Soh Thian Lai KUALA LUMPUR: The Federation of Malaysian Manufacturing (FMM) has called on the government to intensify its diplomatic and policy response following the United States' announcement of a 25 per cent blanket tariff on Malaysian exports. Its president, Tan Sri Soh Thian Lai, said these efforts must be escalated to secure an immediate deferral of the Aug 1, 2025, implementation and work toward a longer-term exemption or rollback. He said the newly announced 25 per cent blanket tariff, if implemented as scheduled, is expected to intensify these pressures across the board, particularly for companies operating on thin margins or bound by long-term supply contracts. "Malaysia's case must be urgently elevated at the highest levels of US policymaking, supported by strong data and strategic positioning that highlight our value to US supply chains. "At the same time, domestic countermeasures must be rolled out to support affected industries, including targeted financial relief, strengthened export promotion, and fast-tracked structural reforms to enhance cost efficiency and competitiveness," said Soh in a statement today. To support exporters in weathering current shocks and repositioning for growth, he recommended enhancing export facilitation by increasing the Market Development Grant ceiling, removing the Malaysia External Trade Development Corporation (MATRADE) administrative fees for trade missions led by associations, and providing targeted incentives for branding, certification, and digital market access. Soh noted that Malaysia must drive productivity-led growth by accelerating Industry 4.0 adoption through tax incentives, digitalisation grants for small and medium entrepreneurs (SMEs), and low-interest financing for technology upgrades. "These incentives must be backed by workforce upskilling programmes and inclusive access to government support funds, ensuring all firms can participate in the transition. "In addition, foreign worker levy collections should be redirected into dedicated funds to support apprenticeship schemes and high-tech investment," he said. Soh highlighted that Malaysia should lead efforts under its ASEAN chairmanship to establish a regional ASEAN Supply Chain Coordination Council. He said that this will ensure cohesive regional responses to global trade shocks, reduce overreliance on external supply chains and enhance intra-ASEAN production linkages, policy alignment, and supply chain resilience. "At the strategic level, Malaysia must actively expand its trade architecture by accelerating the conclusion of the Malaysia-European Union Free Trade Agreement and intensifying negotiations with new and emerging markets, including in Africa, Latin America, and the Middle East. "A broader and more diversified trade base is essential to reduce reliance on any single export destination and reinforce Malaysia's global competitiveness amid continued external shocks," Soh emphasised. The federation also urges the government to review and reform the Sales and Service Tax (SST) structure by introducing a business-to-business (B2B) service tax exemption for licensed manufacturers, automatically applied upon provision of a valid sales tax licence number. He said the long-term solution must be the creation of a tax framework that fully removes the tax-on-tax element and restores neutrality across the manufacturing supply chain. - Bernama
The Sun
08-07-2025
- Business
- The Sun
FMM urges diplomatic push and domestic reforms to counter US tariffs
KUALA LUMPUR: The Federation of Malaysian Manufacturing (FMM) has urged the government to ramp up diplomatic efforts and introduce domestic policy measures to counter the impact of new US tariffs on Malaysian exports. The US recently announced a 25 per cent blanket tariff set to take effect on Aug 1, 2025, raising concerns for local manufacturers. FMM president Tan Sri Soh Thian Lai stressed the need for immediate intervention to delay the tariff implementation and secure long-term exemptions. He warned that the new levy would strain businesses, particularly those with tight margins or fixed supply contracts. 'Malaysia's case must be urgently elevated at the highest levels of US policymaking, supported by strong data and strategic positioning that highlight our value to US supply chains,' Soh said. Domestically, he proposed financial relief for affected industries, enhanced export promotion, and structural reforms to boost competitiveness. Key recommendations include raising the Market Development Grant ceiling, waiving MATRADE fees for trade missions, and offering incentives for branding and digital market access. Soh also emphasised the need for productivity-driven growth through Industry 4.0 adoption, supported by tax incentives and digitalisation grants for SMEs. Workforce upskilling and reinvestment of foreign worker levies into apprenticeship schemes were also highlighted as crucial steps. On a regional level, he suggested leveraging Malaysia's ASEAN chairmanship to form a Supply Chain Coordination Council, strengthening intra-ASEAN trade resilience. Additionally, accelerating free trade agreements with the EU and emerging markets was deemed vital to diversify Malaysia's trade base. The FMM further called for a review of the SST structure, proposing B2B service tax exemptions for licensed manufacturers to ease supply chain costs. - Bernama
Focus Malaysia
08-07-2025
- Business
- Focus Malaysia
Where have we erred? FMM urges swift diplomatic interventions to counter 25% US tariff impact
THE Federation of Malaysian Manufacturing (FMM) has expressed deep concern over the latest announcement under the US reciprocal tariffs which will see a 25% blanket tariff imposed on all Malaysian products entering the US market effective Aug 1. This announcement comes as a surprise given the intensive and on-going negotiations between the Malaysian government and the US coordinated by the Investment, Trade and Industry Ministry (MITI) under the National Geoeconomic Command Centre (NGCC) framework. 'The manufacturing sector is already reeling from the earlier 10% US tariff and escalating domestic cost pressures, including the expanded Sales and Service Tax (SST) and electricity base tariff revisions which will most impact the high voltage customers,' lamented FMM president Tan Sri Soh Thian Lai. 'This latest escalation risks further de-stabilising an already fragile industrial landscape, severely impacting export competitiveness and placing additional strain on manufacturers.' Feedback from manufacturers during the initial 10% US reciprocal tariff implementation already pointed to serious concerns over the sustainability of export operations with many warning that further tariff hikes would result in significant declines in shipments and severe erosion of profit margins. 'The newly announced 25% blanket tariff, if implemented as scheduled on Aug 1 is expected to intensify these pressures across the board, particularly for companies operating on thin margins or bound by long-term supply contracts,' warned Soh. 'While some critical products such as semiconductors are exempted, the broader ecosystem that supports the semiconductor industry, including suppliers of parts, machinery and supporting services, remains exposed to significant disruption.' On this note, the vast majority of Malaysian exports including rubber products, textiles, furniture and industrial components will be adversely affected, thus placing added strain on companies already grappling with rising input costs and market uncertainty. 'FMM is particularly concerned by Malaysia's relative disadvantage in the evolving tariff landscape,' asserted Soh. 'Although Malaysia's initial proposed 24% tariff in April 2025 was lower than peers such as Cambodia, Vietnam and Thailand, the new blanket 25% rate places Malaysia in a more punitive position, especially as Vietnam has since secured a bilateral arrangement which reduces its rate to 20%. Editor's Note: MITI will be holding a media conference to address the latest reciprocal tariff rate of 25% on Malaysian exports to the US at 6pm at Menara MITI tomorrow (July 9) following the Cabinet meeting, according to Minister Tengku Datuk Seri Zafrul Abdul Aziz. Tengku Zafrul was speaking to the Malaysian media covering the country's trade mission to three countries – Italy, France and Brazil – led by Prime Minister Datuk Seri Anwar Ibrahim. Compounding the issue, other ASEAN members such as Singapore, Brunei and the Philippines were not named in the latest tariff wave. These disparities risk diverting US sourcing to lower tariff alternatives and eroding Malaysia's market share. 'Malaysia's integral role in US and global high technology supply chains, particularly in electrical and electronics (E&E), medical devices and precision engineering, must be strongly asserted in negotiations,' stressed Soh. 'Our compliance record, investment linkages and value-added contribution should form the basis for seeking targeted relief or differentiated treatment to prevent long term structural damage to Malaysia's export position.' – July 8, 2025 Main image credit: Tengku Zafrul/Facebook
