KUALA LUMPUR – Local firms are advised to conduct due diligence to ensure that potential Chinese partners are not using Malaysia to evade high tariffs imposed by Washington on Beijing amid rising trade tensions between the two nations.
With the increasing US tariffs, Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz stated in a parliamentary written reply that Malaysia could seize the opportunity to attract investments from China.
“Malaysian firms are recommended to do their due diligence in ensuring that Chinese firms interested in being partners do not intend to make Malaysia a destination for them to avoid paying high tariffs to the US.
“Despite the advantages of the government’s policy of not siding with any of the economic powers, the long-term trade tension between the US and China is also subject to the same unilateral action by the former,” he said.
Tengku Zafrul said this included increasing export controls on strategic industries, such as the semiconductor sector.
He said this would inhibit the potential of Malaysian firms to boost collaboration and innovative efforts with Chinese companies, which had more advanced technological capabilities and higher commercial value than local firms.
Tengku Zafrul said this in response to former Johor menteri besar Datuk Seri Hasni Mohammad (Simpang Renggam-BN), who asked about the risks and implications Malaysia must bear amid the US-China trade tensions.
Meanwhile, Tengku Zafrul said Malaysia would continue to be bipartisan but maintain good relations with all trading partners, including the US and China.
He said Malaysia’s neutrality in the global geopolitical scene made it an attractive source for imports of raw materials, parts, components and finished products for firms wishing to reduce reliance on a specific nation.
Uncertainties in the US-China trade relationship also encourage multinational firms from other countries to seek alternative production locations in third countries, including Malaysia. This shift could lead to increased foreign investment and career opportunities.
In May, US President Joe Biden announced tariff increments on Chinese imports in various sectors, reportedly to protect local industries and address alleged unfair trade practices, following a recommendation by the US Trade Representative’s office.
This includes tariff increments on 14 import categories, such as from 25% to 50% and 100% for semiconductors and electric vehicles, respectively, and the proposal of 19 temporary tariff exclusions involving equipment for solar manufacturing. – July 12, 2024