Malaysia says it’s in better position to negotiate any US chip tariff

[KUALA LUMPUR] Malaysia’s improved bilateral relationship with the US has strengthened the South-east Asian country’s position in its negotiation on potential semiconductor tariffs, according to a minister. 

The nation is within a “small group of Washington’s key partners,” following an upgrade in ties to Comprehensive Strategic Partnership, said Investment, Trade and Industry Minister Zafrul Aziz. That gives Malaysia a “direct line of sight to high tech-investment opportunities, technology transfer, and more secure supply chain access,” he told parliament on Wednesday (Oct 29).

Malaysia “is now negotiating as a critical supply chain partner, and not just a regular vendor,” he said.

The US said it will give due consideration to Malaysia as it determines the outcome of an investigation, under Section 232 of the Trade Expansion Act, which includes probes into sectors such as semiconductor products, Zafrul said. 

President Donald Trump is considering tariffs of as high as 300 per cent on semiconductor imports. Malaysia – the world’s sixth-largest chip exporter – is negotiating to be spared from them. 

Thanks to its status as a supply-chain partner, Malaysia has the potential to attract more investments from the US as well as other countries that wish to export to the US, Zafrul said. Malaysia is also encouraging foreign investment and technology sharing for rare-earth mining activities, and welcomes strategic cooperation with the US and other countries in the development of the local rare earth elements industry, he said.

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Separately, Zafrul said Malaysia is maintaining its ban on the export of raw rare earths exports despite signing a critical minerals deal with the US on Sunday. BLOOMBERG