Zero tariffs on U.S. products risk undermining local SMEs, Malaysian business group warns

KUALA LUMPUR, Aug. 7 (Xinhua) -- Malaysian small and medium enterprises (SMEs) could be impacted by zero-duty access for over 1,300 industrial products from the U.S., a business group representing the country's SMEs warned on Wednesday.

The country's long-term interests must be taken into account when opening the domestic market to foreign products without duties, the president of the Small and Medium Enterprises Association, William Ng, said in an interview with local media.

While not opposing trade liberalization policies, Ng noted that U.S. products typically have advantages in terms of production scale, efficiency, and technological support, and this could lead to unfair competition for local SMEs.

"We are concerned that this move could erode the competitiveness of local SMEs that are not yet ready to compete directly with large companies from the U.S."

"Trade liberalization must be strategic and based on fair reciprocity, especially in the context of trade with developed countries like the U.S.," he said.

Malaysia has eliminated tariffs on 1,347 industrial products and 191 agricultural products as part of its trade liberalization commitments with the U.S. following the U.S.'s move to reduce tariffs on Malaysian imports from 25 percent to 19 percent.

This brings the total number of U.S. products receiving zero-duty access to Malaysia to 6,911, an increase from the 6,567 products agreed upon during previous Malaysia-U.S. trade negotiations.

Meanwhile, Malaysia's Minister of Investment, Trade and Industry Tengku Zafrul Abdul Aziz told the parliament in a statement that the government is bracing for potential disruptions in the electrical and electronics sector as the U.S. reviews its trade policy on semiconductor imports, raising concerns that higher tariffs could jeopardize up to 100,000 jobs.

Zafrul said his ministry and its agencies will conduct outreach sessions to help local industries, particularly small and medium enterprises, adapt their business and export processes to meet any new requirements stemming from U.S. countervailing tariffs.■