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.
According to BERNAMA News Agency, the newly announced 25 per cent blanket tariff, if implemented as scheduled, is expected to intensify pressures across the board, particularly for companies operating on thin margins or bound by long-term supply contracts. Soh stressed the importance of elevating Malaysia’s case at the highest levels of US policymaking, supported by strategic positioning that highlights Malaysia’s value to US supply chains. He also advocated for domestic countermeasures to support affected industries, including financial relief, export promotion, and structural reforms.
To support exporters in adapting to current challenges and positioning for growth, Soh recommended enhancing export facilitation by increasing the Market Development Grant ceiling, waiving Malaysia External Trade Development Corporation (MATRADE) administrative fees for association-led trade missions, and providing incentives for branding, certification, and digital market access. He underscored the need for productivity-led growth through the acceleration of Industry 4.0 adoption, supported by tax incentives, digitalisation grants for SMEs, and low-interest financing for technology upgrades.
Soh highlighted the necessity of workforce upskilling programmes and inclusive access to government support funds, ensuring all firms can engage in the transition. He also suggested redirecting foreign worker levy collections into dedicated funds to support apprenticeship schemes and high-tech investment. As Malaysia leads ASEAN, Soh proposed the establishment of a regional ASEAN Supply Chain Coordination Council to ensure cohesive regional responses to global trade shocks and enhance supply chain resilience.
Strategically, Malaysia should expand its trade architecture by concluding the Malaysia-European Union Free Trade Agreement and intensifying negotiations with new and emerging markets, including Africa, Latin America, and the Middle East. A broader trade base is crucial to reduce reliance on any single export destination and reinforce Malaysia’s global competitiveness amid ongoing external shocks.
The federation also urged the government to review and reform the Sales and Service Tax (SST) structure by introducing a B2B service tax exemption for licensed manufacturers, automatically applied with a valid sales tax licence number. Soh emphasized that the long-term solution must involve creating a tax framework that removes the tax-on-tax element and ensures neutrality across the manufacturing supply chain.