Tengku Zafrul: Malaysia makes trade concessions to US to keep exports flowing, protect 100,000 jobs

Tengku Zafrul: Malaysia makes trade concessions to US to keep exports flowing, protect 100,000 jobs



Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Abdul Aziz explained that the United States remains Malaysia’s largest export destination, with exports reaching RM198.65 billion in 2024, and is also a major source of foreign investment, contributing RM32.82 billion to date. — Bernama pic

Monday, 04 Aug 2025 1:18 PM MYT


KUALA LUMPUR, Aug 4 — Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Abdul Aziz said Malaysia has agreed to a series of trade concessions in response to demands from the United States (US) to safeguard the country’s export-driven economy and protect local jobs.

He explained that the United States remains Malaysia’s largest export destination, with exports reaching RM198.65 billion in 2024, and is also a major source of foreign investment, contributing RM32.82 billion to date.


“..... Any changes in US trade policy cannot be taken lightly, as they could have a negative impact on Malaysia’s economy.

“For example, it is estimated that up to 100,000 workers, particularly in Penang and Kedah, could be at risk of losing their jobs if electrical and electronic products can no longer be exported to the US due to high tariffs,” he told the Dewan Rakyat today.


He added that although semiconductor products are currently exempt from countervailing tariffs, they are under investigation by the United States under Section 232 of the US Trade Expansion Act of 1962.



He said there is a possibility that the US may impose additional tariffs on national security grounds.

He also said the US had requested Malaysia to reduce or remove import duties and to exempt American agricultural and industrial products from sales and excise taxes when brought into Malaysia.


He said the talks initially focused on specific US requests, but were later expanded to cover all American imports, resulting in Malaysia offering to reduce or eliminate import duties on 98.4 per cent of all tariff lines.

“For sales tax, Malaysia agreed to remove discriminatory taxes on US agricultural imports such as fruits and seafood.

“However, we maintained our position not to offer any removal or exemption of excise duties,” he added.

Tengku Zafrul also said Malaysia had committed not to impose any digital service tax that discriminates against US companies.

He stressed that Malaysia’s tax policies, including digital taxes, are based on the principle of non-discrimination.

“In addition, we removed the requirement for US-based social media and cloud service providers to contribute six per cent of their revenue in Malaysia to the Universal Service Provision (USP) Fund. We also permanently cancelled the directive requiring all Domain Name System (DNS) traffic to be rerouted to local DNS services,” he said.

He added that the US raised concerns about export controls, particularly in relation to transhipment, to prevent tax avoidance through false declarations of origin.

In response, he said Malaysia tightened its procedures by limiting the issuance of Non-Preferential Certificates of Origin (NPCO).

“Starting May 6, 2025, MITI will be the sole authority authorised to issue NPCOs for all exports to the US,” he said.

Malaysia also agreed not to impose export restrictions on rare earth elements or other critical minerals bound for the US.

However, he clarified that this does not imply any exclusive rights for the US over Malaysia’s mineral resources.

On the export and transit of artificial intelligence (AI) chips from the US to third countries, he said Malaysia will strengthen its oversight by enforcing Section 12 of the Strategic Trade Act 2010 — also known as the “catch-all” control — with effect from July 14, 2025.