Economist Geoffrey Williams says the 90-day reprieve provides Malaysia with a crucial opportunity to address the areas of concern raised by the United States.
PETALING JAYA: Malaysia has a critical 90-day window following the United States decision to pause reciprocal tariffs, and experts caution that the nation must address key non-tariff barriers (NTBs), which are likely to dominate the talks during the Malaysian delegates’ visit to the United States later this month.
Failure to do so could risk disrupting bilateral trade and hinder market access.
Economist Geoffrey Williams highlighted that the 90-day reprieve provides Malaysia with a crucial opportunity to address the areas of concern raised by the United States.
“We would hope that the 90 day reprieve would help Malaysia clarify and focus on the areas of concern to the United States to remove non-tariff barriers in a comprehensive way,” he told StarBiz.
He added that the negotiations should begin with a list of US concerns, prioritising those issues that can be quickly resolved, while recognising that some – such as gazetted laws and regulations – may take longer to address.
The 2025 US National Trade Estimate report, released on March 31, highlighted several trade barriers, including Malaysia’s import restrictions on automobiles in a bid to favour local carmakers, stringent halal certification requirements for meat imports compared to international practices, and the ban on all US live poultry products due to health concerns.
The report also pointed out challenges in government procurement practices, which require foreign companies to partner with bumiputra partners for tenders.
For pharmaceuticals, it noted the Malaysian government’s preferences for locally manufactured products, which discourage the use of imported pharmaceuticals.
The Office of the United States Trade Representative (USTR) also pointed out that Malaysia’s financial services sector is subject to foreign ownership limits.
Currently, Bank Negara limits foreign ownership to a maximum of 70% in domestic Islamic banks, investment banks, and insurance companies, and to a maximum of 30% in commercial banks.
While acknowledging that addressing some of these barriers may impact certain industries, Sunway University professor of economics Yeah Kim Leng assured that they won’t pose “great harm” to the local economy.
“Many of these non-tariff barriers can be negotiated with the Trump administration without imposing great harm to Malaysia’s economy,” he noted in a reply to StarBiz.
He added that while some adjustments might be required in sectors like halal certification and phytosanitary regulations, these issues are less challenging.
“These could be overcome with mutual agreement on proper processes and adequate investment in facilities,” he explained.
However, he emphasised that changes to the limits on foreign ownership in key sectors, such as financial services, would have broader implications for Malaysia’s economy.
“Any change to the limits on foreign ownership will have across-the-board effects for industries subject to local equity participation rules,” he said, highlighting that the financial services sector – particularly banks and insurance companies – would be more significantly impacted due to prevailing foreign equity ownership limits.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid noted that the negotiation with the White House will likely cover all aspects, including NTBs.
He pointed out that the United States has raised concerns regarding Malaysia’s national approved permits system, which they allege is administered in a non-transparent manner.
Additionally, he said the halal certification process has been highlighted as a barrier, especially with regard to US beef exports.
Afzanizam also noted that counterfeit goods, particularly those available at Petaling Street, have been flagged.
The market was included in the 2024 Review of Notorious Markets for Counterfeiting and Piracy.
“Hence, addressing such concerns is paramount to secure some concessions from the United States,” he added.
Williams stressed that the 90-day period provided serves as a goodwill gesture to allow negotiations to take place.
“If it is misused to delay or resist changes, there is a risk of the full implementation of reciprocal tariffs or even higher tariffs, as happened in Canada and Mexico.”
