KOTA KINABALU: Sabah’s economy is only minimally impacted by the 24% tariffs imposed on Malaysian exports to the United States, according to former chief minister Datuk Seri Yong Teck Lee.
The POIC Sabah Sdn Bhd chairman also said that Sabah’s direct exports to the United States account for just about 1% of the state’s total exports.
This translates to about RM1bil out of Sabah’s RM100bil in total exports, with the majority of Sabah’s exports directed to North-East Asia, India, Europe, and Asean countries.
“Sabah’s primary exports include oil and gas, palm oil and palm products, wood products, seafood, silica sand, and food products, most of which go to North-East Asian countries - China, Japan, Korea, India, Europe, and Asean countries, as well as Peninsula Malaysia,” he said.
Yong, who is also the Sabah Progressive Party (SAPP) president, highlighted that although the US remains a buyer of goods such as oil, gas, and wood products, copper foil exports to the United States have recently increased.
“The good news for Sabah is that copper, and some wood products, are among the few items exempted from the new tariffs, known as reciprocal tariffs. Therefore, Sabah’s exports of copper foil and some wood products are not affected by the so-called Trump tariffs,” he said in a statement on Sunday (April 6).
Regarding palm oil, Yong stressed that the quantity exported to the US is only a small portion of Sabah’s total palm oil exports.
The palm oil sector’s exports are primarily directed to China, India, and Europe, making it easier to redirect shipments away from the US market.
Yong also noted that while Sabah’s economy is not directly impacted by the US tariffs, the state could face challenges if the global trade slowdown affects key markets, such as Asean countries, China, Japan, India, and Europe, as it would reduce the purchasing power of importers.
Additionally, any potential decline in revenue from global oil prices could be offset by increased production from PETRONAS, in line with recent decisions by Opec+ (Organisation of Petroleum Exporting Countries Plus).
“The potential loss in revenue for the Sabah government due to a drop in global oil prices can be compensated by PETRONAS increasing production, as Opec+ did recently by raising production by 411,000 barrels per-day.
“Opec has also noted that world demand for oil and gas remains stable with strong fundamentals,” he said.
While the tariffs may present challenges for some states, particularly Penang and Selangor, where foreign high-tech industries are concentrated, Sabah’s economy remains largely insulated due to its strong trade relations within the Regional Comprehensive Economic Partnership (RCEP).
This agreement ensures lower tariffs with most of Sabah’s major trading partners.
Yong noted that Sabah’s economy is well-positioned to weather the effects of the US tariffs, thanks to its diversified trade partnerships and key exports that remain unaffected by the tariff changes.
