RIO DE JANEIRO: Malaysia remains on high alert for any shifts in U.S. policies, particularly new tariffs that could disrupt supply chains, especially in the semiconductor sector.
Minister of Investment, Trade, and Industry Datuk Seri Tengku Zafrul Abdul Aziz highlighted industry concerns regarding the potential increase in import tariffs pledged during the recent U.S. presidential campaign.
"The main concern is tariff increases that could disrupt and raise the prices of semiconductor chips," said Tengku Zafrul during a press conference here.
He is accompanying Prime Minister Datuk Seri Anwar Ibrahim on a working visit to the G20 Summit.
If the new U.S. administration under Donald Trump implements the proposal to raise the tariffs by 60 per cent on goods manufactured in China, there is a worry of an increase in production costs and semiconductor chip prices.
"Price hikes could hinder the adoption of new technologies such as artificial intelligence (AI), which relies on semiconductor chips," explained Tengku Zafrul.
As a result, Malaysia sees the need to engage with local and multinational semiconductor companies, as well as with parties in the U.S., China, and Europe, to ensure that supply chains remain unaffected.
Tengku Zafrul stated that his ministry is currently in discussions with companies involved in the industry to ensure the resilience of supply chains.
"Their concern isn't just about the supply chain but also about tariffs. There have been rumors, or during the recent U.S. presidential campaign, Trump indicated that he plans to increase tariffs in sectors like semiconductors and other strategic sectors.
"But this is still speculative; it's too early to say," he remarked.
However, he emphasized the need to be prepared for any eventuality.
During his presidential campaign, Trump promised to increase tariffs by 10% or 20% on all goods imported into the U.S. and by as much as 60% on China-made products.
Despite these challenges, Malaysia is seen to benefit from the ongoing trade war in terms of investment.
"Many investors, particularly from China and Europe, are adopting a '+1 Strategy' and choosing ASEAN as an alternative investment location.
"This is because they want to reassess supply chains to ensure they are more resilient and secure," said Tengku Zafrul.
He highlighted Malaysia's over 50 years of experience in the electrical and electronics (E&E) sector as a key attraction.
Tengku Zafrul explained that so far, geopolitical tensions have had a positive spillover effect on ASEAN countries, as the bloc is viewed as strategic and neutral.
"When we look at ASEAN, Malaysia is one of the countries selected because of our extensive experience in the electrical and electronics (E&E) field," he said.