KUALA LUMPUR: Transparent engagement and compliance are among the ways of minimising the risks of United States tariffs and restrictions, says Tengku Datuk Seri Zafrul Abdul Aziz.
The Investment, Trade and Industry Minister said this was crucial in light of concerns over the US tariffs and restrictions which may impact Chinese products manufactured here.
"At the moment, Malaysia has entered 17 free trade agreements but not with the US.
"This provides the opportunity for companies under the FTAs including from China to invest in Malaysia.
"The concern is whether goods manufactured by the Chinese companies here would also be affected by the tariffs," he said when answering a question raised by Datuk Dr Ku Abd Rahman Ku Ismail (PN-Kubang Pasu) in Dewan Rakyat on Thursday (Feb 6).
He noted that Malaysia has been monitoring developments with regard to US tariffs since Donald Trump's first presidency including those imposed by his predecessor Joe Biden.
He cited the recent US tariffs on solar panels as an example where the products manufactured in Vietnam, Thailand and Malaysia using Chinese companies were affected.
"That is why we must hold transparent engagement with the US to provide clarification," he added.
He also said that there were also concerns with regards to the export of semiconductors and development of artificial intelligence (AI).
"It is crucial to ensure compliance and enforcement of the agreement with the US if there is a tariff hike or restrictions are imposed on the export of semiconductors," he said.
He said this in reference to the agreement inked under the Strategic Trade Act with the US on semiconductor supply chain resilience.
"This mirrors the commitment between the two nations to ensure that the supply chain of semiconductors remains strong and resilient so that trade relations between US and Malaysia remain strong," he added.
As of 2024, Tengku Zafrul said the US is Malaysia’s third largest trading partner with trade totalling almost RM325bil or 11% last year.
"Exports to the US stood at almost RM200bil while imports were almost RM126bil.
"The US is the largest investor with some 600 companies choosing Malaysia as their investment destination," he added.
He also noted that electronic and electrical products made up 40% of the exported manufactured goods from the country.
"Of this, 64% were semiconductors in which the US is the third largest importer," he said.
On US threats on the dedollarisation effort by BRICS to establish its own trade currency, Tengku Zafrul said this is unlikely and that Malaysia was not a member of the grouping but hold partnership status.
He said that countries trading with the US are still using US currency for the purpose.
"For example, trade between Malaysia and China is about 18% in which most companies are still using the US dollar for transactions.
"This is to mitigate the risk related to the exchange rates.
He added that companies from Malaysia and China using the ringgit and the Chinese yuan for trade remain low.
"The currencies are used more for settlements rather than to do with dedollarisation," he added.
Meanwhile, to a question from Datuk Seri Wee Jeck Seng (BN-Tanjung Piai), Tengku Zafrul said emergence of artificial intelligence (AI) platforms, such as China’s DeepSeek, will not jeopardise Malaysia’s data centre industry.
“Advancements in AI, such as DeepSeek and Qwen, can actually drive demand for data centres," he said.
He said that RM145bil will be used to develop data centres here in light of the growing industry.
