KUALA LUMPUR, Aug 4 \u2014 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\u2019s export-driven economy and protect local jobs.<\/p>\n
He explained that the United States remains Malaysia\u2019s 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.<\/p>\n
\u201c….. Any changes in US trade policy cannot be taken lightly, as they could have a negative impact on Malaysia\u2019s economy.<\/p>\n
\u201cFor 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,\u201d he told the Dewan Rakyat today.<\/p>\n
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.<\/p>\n
He said there is a possibility that the US may impose additional tariffs on national security grounds.<\/p>\n
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.<\/p>\n
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.<\/p>\n
\u201cFor sales tax, Malaysia agreed to remove discriminatory taxes on US agricultural imports such as fruits and seafood.<\/p>\n
\u201cHowever, we maintained our position not to offer any removal or exemption of excise duties,\u201d he added.<\/p>\n
Tengku Zafrul also said Malaysia had committed not to impose any digital service tax that discriminates against US companies.<\/p>\n
He stressed that Malaysia\u2019s tax policies, including digital taxes, are based on the principle of non-discrimination.<\/p>\n
\u201cIn 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,\u201d he said.<\/p>\n
He added that the US raised concerns about export controls, particularly in relation to transhipment, to prevent tax avoidance through false declarations of origin.<\/p>\n
In response, he said Malaysia tightened its procedures by limiting the issuance of Non-Preferential Certificates of Origin (NPCO).<\/p>\n
\u201cStarting May 6, 2025, MITI will be the sole authority authorised to issue NPCOs for all exports to the US,\u201d he said.<\/p>\n
Malaysia also agreed not to impose export restrictions on rare earth elements or other critical minerals bound for the US.<\/p>\n
However, he clarified that this does not imply any exclusive rights for the US over Malaysia\u2019s mineral resources.<\/p>\n
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 \u2014 also known as the \u201ccatch-all\u201d control \u2014 with effect from July 14, 2025.<\/p>\n
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