PUTRAJAYA – US firms that have set up shop here in Malaysia have earned US$64bil (RM270bil) in profits, which is three times more than in 2019, thus showing how Malaysia has created values for the economic superpower, says Investment, Trade, and Industry (Miti) Minister Datuk Seri Tengku Zafrul Abdul Aziz.
Tengku Zafrul said that to date, there are 1,694 American manufacturing projects taking shape in the country, valued at US$58bil (RM245bil).
He further noted that the US firms that invested in the country have benefited from their investments here by having raked in larger profit margins which were sent back to the country.
“US$ 64 billion, which were recorded in 2024, were sent back to the US, which is around 3.5 times higher compared to 2019,” said Tengku Zafrul in a press conference on Miti’s performance report card at the ministry complex, here.
“This shows that Malaysia has created value for American firms and investors.”
According to the ministry, Malaysia-US trade in 2024 has gone up by 29.9% to RM324.91 billion. Meanwhile, exports rose 23.2% (RM198.65 bil), while imports rose 42.1% (RM126.26 billion). Additionally, trade surplus narrowed slightly by 0.05% to RM72.39 billion.
Impact of 24% tariffs
The US government has slapped a 10% base tariff on its trading partners and also separate tariff rates – with Malaysia’s at 24% – on different countries, subject to trade negotiations during a current 90-day pause.
Tengku Zafrul said that the ministry has carried out analysis on the first-level and second level impact of the “reciprocal” tariffs imposed by the Trump administration, should the full tariff rate be imposed.
On the first level impact, Tengku Zafrul explained that the policy and trade uncertainties would reduce the drive by Malaysian investors to invest in the US. Investors would then choose to diversify their investments to low-risk countries, potentially postpone or downsize their investments.
“Secondly, there will be disruptions in supply chains as cost increases and cancellation of orders would affect electric and electronic (E&E), electronic manufacturing services (EMS), semiconductors, car parts, and medical tech.
“Sectors that are vulnerable to the US (tariffs) face high risks of job reduction, which will have spillover effects on logistics and services (sectors),” he added.
The minister also highlighted that there will be firms that would consider reducing their production, possibly relocating their operations to the US or countries that were imposed lower reciprocal tariffs than Malaysia. Firms would also consider tariff costs and government incentives.
“(However), the impacts are limited and yet to be identified, as there are firms that will be facing minimal impacts or positive impacts. In terms of global expansion, we need to reevaluate our competition with other countries with higher or lower tariff rates than ours,” he added.
On the second level impact, Tengku Zafrul said that Malaysia is expected to see dumping of goods, especially in the sectors pressed by domestic demands and “under-cost” competition such as steel, ceramics, textiles and aluminium.
He also said that small firms that do not have scaling capacities like small medium enterprises (SMEs) would be affected. Additionally, over-dependency on Chinese imports and price competition would stifle innovation and short-term industrial growth.
On the impact of tariffs on certain sectors such as furniture, Tengku Zafrul said it remains unclear whether the sector has been affected, despite Malaysia facing lower tariff rates compared to Southeast Asian neighbours like Cambodia and Vietnam. As for the rubber glove industry, he said Malaysia is well-positioned to expand its exports to the US.
“We have about 47% of the market share in the U.S. rubber glove market, and we can expect it to increase to 55% based on what the feedback the industry has spoken to us, because our competitor, China, has been imposed with higher tariff rates for example,” he added.
Zafrul also said that Malaysia will continue to focus on new markets while exploring non-traditional markets to ensure the country’s economic and trade interests remain strong. He said that the government will continue to allocate funds to local companies, including SMEs, to explore new markets.
Yesterday, Prime Minister Datuk Seri Anwar Ibrahim informed the Special Sitting of the House of Representatives regarding the US tariff that the government will provide an additional allocation of RM50 million to the Malaysia External Trade Development Corporation (Matrade) to accelerate efforts in exploring new markets. – May 6, 2025.