GEORGE TOWN: Penang is poised to gain from the Malaysia-United States Reciprocal Trade Agreement (ART), particularly in the electrical and electronics (E&E) sector, says Chief Minister Chow Kon Yeow.
He said that at the same time, small and medium enterprises (SMEs), agriculture players and halal producers must brace for stiffer competition.
The pact was still new and its full impact would take time to assess, he told Izhar Shah Arif Shah (PN-Seberang Jaya) during the state assembly meeting here on Tuesday (Nov 18).
Early indications point to expanded market access for Penang’s E&E exporters, strengthened investor confidence and greater pull for high-technology foreign direct investment (FDI) from the United States, Chow added.
He said the agreement is expected to open broader avenues for local semiconductor and electronics manufacturers to penetrate the US market, while giving Malaysia a firmer footing to attract cutting-edge investments.
He noted that this is also likely to create more high-skilled job opportunities in Penang’s industrial ecosystem.
Chow added that Penang’s Technical and Vocational Education and Training (TVET) ecosystem would receive a boost as industries scale up to meet global standards.
"The growth will require greater upskilling and enhanced training programmes for the local workforce," he said.
However, the Chief Minister acknowledged that SMEs, agricultural producers and halal industry players may face challenges, particularly in dealing with competitive pressures and higher compliance requirements.
He stressed that the state is already coordinating with federal agencies to support these sectors through capacity-building programmes, technology adoption and export-readiness initiatives.
In a supplementary reply, Chow referenced explanations given by federal ministers and the Prime Minister, noting that Malaysia continues to enjoy tariff exemptions for 1,700 export products worth US$5bil (RM20.84bil), about 12% of national exports to the United States.
He said the ART ensures continued tariff stability, enabling exporters to plan with confidence.
"Without this agreement, older tariff rates would remain unchanged, and the impact on our exporters would be far greater. ART provides certainty and stability for our industries because tariffs are now set at lower and more predictable levels," he added.
He also said Penang’s decades-long R&D and semiconductor capabilities make the state one of the few global locations considered a strategic supply chain partner by Washington.
He reminded the assembly of the pandemic episode when the Federal Government classified E&E and semiconductor operations as essential services, allowing factories to continue operating to safeguard global supply chains.
"This reflects how critical our role has been. The strength we have built over decades ensures we remain competitive even amid rising global challenges," he said.
Chow said this strategic positioning helps Penang continue drawing high-value FDI while reinforcing its importance in the global supply chain network.
