Kuala lumpur: The Small and Medium Enterprises Association (SAMENTA) has advised small and medium enterprises (SMEs) to reduce their dependence on a single Western export market due to the recent implementation of the United States' 10 per cent import tariff.
According to BERNAMA News Agency, SAMENTA national president Datuk William Ng emphasized the importance for SME exporters to capitalize on Malaysia's regional trade agreements, particularly the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP). These agreements could facilitate expansion into high-growth markets in East Asia, Australasia, and West Asia.
Ng highlighted the need for SMEs to upgrade their product value chains towards high-specification and customized manufacturing. Such a move would result in higher switching costs for buyers, thus providing a competitive edge. The new 10 per cent import tariff, enforced under Section 301 of the US Trade Act of 1974, serves as a regulatory penalty at the sovereign level, rather than indicating any non-compliance by Malaysian exporters.
Ng pointed out that the tariff broadly impacts national export categories, unfairly affecting compliant SMEs that have invested in meeting international standards for labor, environmental, and social and governance (ESG) practices. SMEs face a challenging decision of either absorbing the additional duty, impacting their cash flow, or raising export prices, which could lead to losing US buyers to competitors.
SAMENTA has also called on the Ministry of Investment, Trade and Industry (MITI) and the Malaysia External Trade Development Corporation (MATRADE) to implement targeted measures to support local exporters. This includes establishing export diversification matching grants through the Market Development Grant (MDG) or creating a supplementary scheme to aid SMEs in covering market entry and certification costs in alternative markets.
Ng suggested that financial assistance, such as co-funding for labor compliance audits, would be beneficial for SMEs. Additionally, SAMENTA hopes to collaborate with the government to promote the Circular Economy Certification (CEC) nationwide, which is the first of its kind in ASEAN. By embracing circular economy practices, SMEs can minimize resource dependency, reduce energy costs, and enhance their environmental and ESG credentials.
Ng also called for the government to fast-track the legislative framework governing third-country import prohibitions related to forced labor. He described this as a critical step towards ensuring Malaysia's permanent removal from the USTR Section 301 list.