KUALA LUMPUR: The Agreement on Reciprocal Trade (ART) was crucial to secure the future of the Malaysian semiconductor industry, where the US is the largest export destination, says Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani. Johari pointed out that in 2024, Malaysia exported roughly RM60bil worth of semiconductors to the US, which is the largest amount compared to other countries.
"Other countries exporting semiconductors to the US include South Korea for US$3.2bil, Chinafor US$2.1bil, Japan for US$2bil and Germany for US$2bil. If our semiconductors are expensive, investors will move to other sources. They will go to other countries because of higher tariffs. It has nothing to do with politics," said Johari during his debate on the Royal Address on Wednesday (Jan 21).
According to Johari, the US has imposed higher tariffs on countries that did not negotiate ART, including 40% in Myanmar, 40% in Laos and 25% in Brunei. Malaysia's involvement in ART is to ensure stable and consistent market access to the US, which is the main trading partner and the main investment destination for Malaysians.
Johari was responding to Datuk Seri Hamzah Zainudin, of Perikatan Nasional, who asked about Malaysia's commitment to ART as other countries in Asean have not ratified the document. According to Johari, Malaysia's negotiations with the US on ART are not finalised and ratified yet.
"We must redefine certain matters, such as misunderstandings on sovereignty and national interest, before it is ratified. Before I was involved, discussions were centred on economics and there is no clear definition," said Johari.
Meanwhile, Johari said four regional countries are in the process of negotiating ART with the US - Malaysia, Indonesia, Philippines and Thailand.
"If we don't do this, we will get 40% in tariffs due to no negotiations and it will have an impact on our exports," he said.
ART was signed between Malaysia and the US on Oct 26 last year by Prime Minister Datuk Seri Anwar Ibrahim and US President Donald Trump. Under ART, tariff rates on Malaysian export products have been reduced from 25% to 19%, one of the lowest among Asean countries.
