KUALA LUMPUR: The United States' decision to impose tariffs on solar panels from Southeast Asian nations could present challenges for industry players in Malaysia and the broader region.
Tradeview Capital fund manager Neoh Jia Man noted that the proposed tariff rate, exceeding 20 per cent, is likely to have a significant impact on solar photovoltaic (PV) manufacturers in Malaysia and Southeast Asia.
He said that the final ruling on anti-dumping tariffs is expected by June 2025, with the countervailing duty investigation set to conclude by April 2025.
"Consequently, if these tariffs are implemented, some solar manufacturing plants in Malaysia and the region may face challenges.
"Given the industry's inherently thin profit margins, these operations, primarily established to serve European and US markets rather than domestic ones, are facing significant challenges," he told Business Times.
He added that domestic customers in Southeast Asia typically source panels directly from China at lower costs, making it harder for local manufacturers to compete.
Neoh pointed out that this is especially significant as most solar PV manufacturers in Malaysia are foreign-owned.
He anticipates that these manufacturers will likely pass on the added costs from tariffs to end customers, though the success of this move will depend on market pricing and competition.
"Manufacturers in countries unaffected by US tariffs, or those assigned lower or zero rates such as Hanwha Q Cells Malaysia, stand to gain a significant competitive advantage under these circumstances," he noted.
Last Friday, the US trade officials announced new tariffs on solar panel imports from Cambodia, Malaysia, Thailand, and Vietnam after American manufacturers claimed these countries are unfairly flooding the market with cheap goods.
The American Alliance for Solar Manufacturing accused Chinese solar companies with factories in these nations of driving down global prices by dumping products.
As such, the US Commerce Department's preliminary decision set dumping duties between 21.31 per cent and 271.2 per cent, depending on the company.
Jinko Solar received a 21.31 per cent duty on products from Malaysia and 56.51 per cent on those from Vietnam.
Trina Solar faces a 77.85 per cent duty for products made in Thailand and 54.46 per cent for those from Vietnam.
However, the Commerce Department did not set a dumping margin for Hanwha Qcells' products from Malaysia.
In October, the department calculated a subsidy rate of 14.72 per cent for Hanwha Qcells.
Final determinations are scheduled for April 18, 2025, with the International Trade Administration to finalise its decisions by June 2 and issue final orders by June 9.
An industry insider, meanwhile, opined that the anti-dumping tariff could put a lot of pressure on smaller or less financially stable Malaysian solar producers who rely heavily on the US market.
He said the immediate impact will likely be higher prices for Malaysian solar panels in the US, making them less attractive to buyers compared to cheaper alternatives from other countries, which could hurt sales and market share.
"If these companies cannot absorb the cost increase or find ways to remain competitive, they might struggle to stay afloat.
"For some players, the higher cost of exporting to the US might make it unprofitable to continue operations targeting that market.
"In the worst-case scenario, we could see some companies scale back operations or shut down entirely, especially if they can't pivot quickly to other markets or adjust their business models," he added.
On the other hand, the expert said the larger, more established companies with diverse markets and robust financials might weather the storm better.
"They have the resources to innovate, cut costs, and focus on expanding into other regions," he noted.
He also said the key is not to rely solely on the US market and to be adaptable, finding ways to stay competitive and relevant in the changing global solar industry.