06/06/2025

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FRIDAY | JUNE 6, 2025

OECD urges M’sia to step up efforts to boost competitiveness and resilience KUALA LUMPUR: The Organisation for Economic Cooperation and Development (OECD) has urged Malaysia to implement further measures to enhance economic competitiveness and strengthen resilience. Speaking during a virtual conference on the OECD Economic Outlook on Wednesday, the organisation’s head of division for Southeast Asia, Jens Arnold, said Malaysia should consider additional reforms to bolster its resilience amid ongoing global uncertainties. Recent media reports indicate that the United States has proposed a so-called “revenge tax” – a retaliatory initiative aimed at countering what it views as unfair tax practices by other nations. The proposed measure would apply to passive income earned from US investments and profits generated by companies operating within the country. It specifically targets foreign-owned entities, including governments, corporations and private foundations, potentially affecting a broad spectrum of international stakeholders. Arnold said improvements in Malaysia could include reducing the remaining restrictions on foreign direct investment (FDI) and ensuring a more level playing field between state-owned enterprises, government-linked companies, and the private sector. “Malaysia has some scope for support on the monetary side. Inflation is low and has been very well contained, but beyond that, it is even more important to consider structural policies that can enhance the economy’s competitiveness going forward.” He emphasised the importance of ad dressing labour market challenges, parti cularly skills mismatches, through increased investment in education to better equip the workforce for future disruptions. “These are critical steps to make the economy more resilient and capable of withstanding shocks on the horizon,” Arnold said. Meanwhile, OECD chief economist Alvaro Pereira said Malaysia’s economy is projected to grow by 3.8% in 2025, due to expectations of softer export performance. He noted that although Malaysia recorded a stronger export performance in 2024, continuing global uncertainties may weigh on trade this year. Pereira also said Malaysia’s inflation was 1.8% in 2024, and is expected to rise modestly to 2.2% in 2025, before climbing to 2.7% in 2026. “Currently, Malaysia’s labour market is remarkably strong and is expected to support private consumption going forward. Unemployment is at a 10-year low, while labour force participation continues to rise steadily,” he said. He added that the current monetary policy stance is broadly neutral and is rightly expected to remain so, though there is some room for easing should growth weaken. However, he cautioned that monetary authorities should remain vigilant to potential price pressures, especially from a tight labour market, as well as increases in the minimum wage and civil servants’ salaries. – Bernama

Be prepared for future US tariffs, Malaysia told o Now’s the time for country to reassess domestic policies and consider reforms to strengthen investment appeal and mitigate potential fallout, says US-Asean Business Council chief policy officer

under US scrutiny. “Now is the time for Malaysia to reassess its domestic policies, particularly in key industries, and consider reforms to further streng then investment appeal and mitigate potential fallout. Engage with the US government, but also look inwards,” said Mealy. “What changes can Malaysia make to en hance competitive

KUALA LUMPUR: Malaysia must be prepared to negotiate the next wave of potential US tariffs targeting key strategic sectors and products such as semiconductors, technology products and pharma ceuticals, rather than focusing solely on negotiating reciprocal tariffs reductions currently with the United States. US-Asean Business Council (US-ABC) executive vice-president and chief policy officer Marc Mealy ( pic ) warned that although the 50% tariffs on aluminium and steel may not severely affect Malaysia in the near term, future tariffs imposed under US national or economic security provisions could have a direct impact on Malaysian industries that are highly inte grated into global supply chains. “Steel and aluminium are not Malaysia’s primary export sectors to the US, so these new (alumi nium and steel) tariffs, which come into effect today, may not hit Malaysia as hard as they would some other countries. “But we should be clear, there

Mealy noted that under US law, additional tariffs could be imposed unilaterally by invoking national or economic security rea sons, citing Section 232 of the US Trade Expansion Act, which opens the door for Washington to target sectors beyond those currently under reciprocal tariff nego tiations. “In the semicon ductor space, Malaysia is globally competitive and that puts it directly in the line of sight for possible future US tariffs. “So, when Malaysian officials, like Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz, go to the US, I would expect them to raise this issue and start negotiating for exclusions or carve-outs in these areas,” he added. The same concerns apply to Malaysia’s medical devices and pharmaceutical exports, as these sectors could also fall

are other tariffs coming and when we talk about semiconductors, high-tech products, pharma ceuticals, the impact on Malaysia could be significant,” he told Bernama in an interview after appearing as a guest on Bernama TV’s The Nation programme hosted by Jessy Chahal. Malaysia was hit with baseline and reciprocal tariffs totalling 24% on April 5, along with 168 other US trading partners, with tariffs ranging as high as 54% and a stag gering 145% on China but which have now been reduced to 30%. US President Donald Trump then paused the implementation of the tariffs for 90 days, which are supposed to end on July 8, but he moved forward to impose sectoral tariffs on aluminium and steel imports into the US. In a further twist to the tariffs saga, a US Federal Court struck down most of Trump’s tariffs, ruling them illegal, but the ruling has now been temporarily halted following an appeal by the Trump administration.

ness? And as Asean Chair, Malaysia can lead the region to push for progress on ini tiatives like the Asean Digital Economy Framework Agreement – that will show global investors that this region is serious about

future-proofing its economy.” Mealy underscored that the US private sector remains deeply committed to Asean, with many American companies continuing to expand in Malaysia, particularly in the technology and medical sectors. “The private sector sees value in Malaysia and Asean, but trade policy changes from Washington could complicate that, unless miti gated by smart diplomacy, reform and regional cooperation.” Although Malaysia might not be severely impacted by the initial round of reciprocal tariffs – which could result in import duties of up to 24% on selected products – the real concern lies in future sectoral tariffs, that could reduce US demand for Malaysian exports. “Even a 15% to 19% import tax can be a tipping point for an American buyer to source from another country,” Mealy said. He also pointed out that while some Asean countries may not complete negotiations within the current 90-day time frame, he did not rule out the possibility of the US extending the pause or focus on select countries for deeper dis cussions. “For Malaysia, which has been strategic and measured in its approach, this may work to its advantage. But the time to prepare for the next round of trade measures is now,” Mealy said. – Bernama

NTIS has helped commercialise 27 local tech products KUALA LUMPUR: The National Technology and Innovation Sandbox (NTIS) has helped com mercialise 27 local technology products, generating RM87.2 million in sales since its launch in August 2020, said Science, Technology and Innovation Minister Chang Lih Kang. He noted that the platform has supported more than 190 home grown technology solutions and stressed that Malaysia must move beyond relying on imports and adaptation. “If we’re serious about becoming a high-tech nation, we must dare to innovate, create and test new ideas in real-world settings,” he said in a Facebook post on Wednesday. Describing NTIS as an “innovation accelerator”, Chang said the initiative offers researchers, startups and tech entrepreneurs a space to trial ideas with flexible regulatory backing. “It’s not just a testing ground. It is a space that believes in local talent, where Although the 50% tariffs on aluminium and steel may not severely affect Malaysia in the near term, future tariffs imposed could have a direct impact on Malaysian industries that are highly integrated into global supply chains, US ABC’s chief policy warns. – AFPPIC

there’s room to fail, learn and return with better solutions.” He added that each innovation tested under NTIS takes Malaysia a step closer to building a more mature innovation ecosystem, one where ideas are not just conceived, but refined and brought to market. – Bernama