5/09/2025

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FRIDAY | SEP T 5, 2025

M’sia in talks with China on rare earth cooperation

Liew:Move to diversify supply chains in semiconductor sector KUALA LUMPUR: Malaysia aims to diversify supply chains in the semiconductor sector to ensure that foreign and local investments remain strong and resilient, said Deputy Investment, Trade and Industry Minister Liew Chin Tong. He said that in the new context, Malaysia, together with Singapore and Vietnam, aspires to be an attractive supply chain for foreign and local investors, as driven by the National Semiconductor Strategy (NSS) launched in May 2024. “We (Malaysia) have shifted from the ‘just in time’ era to the ‘just in case’ era, where international companies seek to create multiple supply chains, compared to previously, when they only had a single supply chain. “At the same time, during reciprocal trade negotiations with the United States, the Ministry of Investment, Trade and Industry (Miti) had clarified that Malaysian exports complement each other’s supply chains and proposed that the US consider granting exemptions to Malaysian products not produced or manufactured in the US,” he said. He was replying to a supplementary question from Senator Datuk Nelson W Angang about efforts being taken or considered by the government to ensure that confidence among investors and semiconductor industry players would not be impacted by uncertainties due to the US tariffs. Earlier, Liew said Miti collaborates with key industry bodies such as the American Malaysian Chamber of Commerce and the US Asean Business Council to ensure responsive efforts and feedback can be channelled effectively. He said the ministry also regularly holds engagement sessions with American investors in Malaysia, think tanks and other relevant stakeholders. The deputy minister said US President Donald Trump on Aug 15 hinted that semiconductor and pharmaceutical products could be subject to additional tariffs. The US government is conducting an investigation under Section 232 of the Trade Expansion Act of 1962, where specific tariffs on the products in question may be imposed by the US. “The results of this investigation are expected to be announced before December 2025,” said Liew. – Bernama

o Aim is to expand local refining capacity, says ministry secretary-general

Ű BY HAYATUN RAZAK sunbiz@thesundaily.com

KUALA LUMPUR: Malaysia is in talks with China on rare earth (RE) cooperation to expand local refining capacity, following the government’s ban on unprocessed exports. Ministry of Economy secretary-general Datuk Nor Azmie Diron said discussions with Beijing are difficult, as China’s policy is to only import raw materials and not allow its processing plants or technology to be transferred abroad. “The issue with RE is the technology, it is held by China,” he said at the Malaysian Institute of Economic Research (MIER) Brown Bag Talk titled “RMK13: Policy Empowerment to Sustain Economic Growth” yesterday. Nor Azmie was responding to a participant’s concern over Malaysia’s reliance on exporting raw materials such as bauxite instead of processing them locally, where value-added products such as aluminium can generate higher returns. He stressed that Malaysia has already adopted a policy to halt the export of both bauxite and rare earths. “Of course, currently, we are put on hold on exporting the raw material. Be it bauxite, be it RE.” Nor Azmie explained that Malaysia seeks to balance cooperation between Australia’s Lynas, which is already operating in the country, and potential collaboration with China. “Our intention is to have both. Australia, which we regard as Western, but the China part also we need to have in Malaysia.” Malaysia’s vast rare earth deposits are

Nor Azmie speaking at the Malaysian Institute of Economic Research Brown Bag Talk titled ‘RMK13: Policy Empowerment to Sustain Economic Growth’.

new rules that permit exports after pro cessing. Rare earths are vital for electric vehicles, renewable energy technologies and elec tronics, with China dominating the global supply chain. Although China produces about 70% of mined output, Beijing controls nearly 90% of global processing, holding a near-monopoly through its refining and separation technology, which it does not export. According to the US Geological Survey, the United States sourced 70% of its rare earth imports from China in 2024, followed by 13% from Malaysia, 6% from Japan and 5% from Estonia. Some supplies from outside China were still derived from concentrates that had been processed in China and Australia.

estimated to be worth over US$200 billion (RM844 billion), but the country lacks the technology to process them. Last month, Malaysia imposed a ban on the export of unprocessed rare earths. Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said the government wants international firms to invest in downstream processing within Malaysia instead of shipping raw materials abroad. He said the government is positioning Malaysia as a processing hub rather than a raw material supplier. Tengku Zafrul said Australia’s Lynas Rare Earths, which processes rare earth in Gebeng, Pahang and mining in Gua Musang, Kelantan, is one of the players currently allowed to export from Malaysia under the

BNM keeps key rate at 2.75%, cites resilient demand and global growth PETALING JAYA: Bank Negara Malaysia (BNM) has maintained the Overnight Policy Rate (OPR) at 2.75% as the central bank’s indicators point towards continued expansion in global growth, supported by sustained consumer spending and front-loading activities. Nonetheless, trade policy developments are still expected to weigh on global growth going forward, as announced tariff rates take effect and the frontloading activity dissipates, it said. BNM noted that risks remain, though to a lesser degree, with potential triggers including higher, product-specific tariffs and rising geopolitical tensions. (GDP) growth to 3.9%, below BNM’s 4.0-4.8% forecast range. “For 2026, we expect GDP growth of 3.8% as the base effects related to export frontloading activities dampen growth in 1H26, also impacting associated wholesale and retail sectors, even as growth picks up more convincingly in 2H26,” the bank’s research firm noted. trade, weaker sentiment and lower-than expected commodity output. Upside factors include favourable US trade outcomes, pro-growth policies in major economies, continued demand for electrical and electronic goods and robust tourism, which could lift exports and growth.

OCBC Global Market Research senior Asian economist Lavanya Venkateswaran, in a report, said BNM’s assessment of growth risks is more balanced than that in July, when it was assessed to be to the downside, while it views inflation risks as contained. “Our baseline is for another 25bps rate cut from BNM. The timing of the cut, however, is less certain and will depend on the incoming data,” she said. BNM said the conclusion of many trade negotiations has, to some extent, eased global uncertainty. The central bank also noted that the global growth outlook would remain supported by favourable labour market conditions, less restrictive monetary policy and fiscal stimulus.

Headline and core inflation averaged 1.4% and 1.9% in the first seven months of 2025. Inflation is expected to remain moderate through 2025–2026 amid contained global costs and easing commodity prices; core inflation should stay near its long-term average, reflecting steady activity without excessive demand pressures. The inflation impact of announced and upcoming domestic policy reforms is expected to be contained. BNM said at the current OPR, the Monetary Policy Committee views the stance as appropriate and supportive of the economy with price stability, and will continue to monitor developments and the balance of risks.

“These uncertainties could increase volatility in global financial markets and commodity prices. On the upside, outcomes from ongoing US trade negotiations and pro growth policies in major economies could support the outlook,” the central bank said. OCBC Global Market Research said BNM’s statement suggests that the central bank would take significant downside surprises to growth for it to move the needle on the policy rate. “However, we are expecting a slower growth path of 3.5% in 2H25 from 4.4% in 1H25 as the impact of frontloading of exports to the US fades and domestic demand slows modestly.” This will bring 2025 gross domestic product

BNM noted that Malaysia’s economy grew 4.4% in first-half 2025, supported by steady spending and investment, and remains on track for 4.0–4.8% growth this year. Momentum into 2026 should be sustained by resilient domestic demand, aided by jobs, wage gains and income-related measures. Ongoing multi-year public and private projects, strong realisation of approved investments, and catalytic initiatives under national master plans and RMK13 will drive investment. Key uncertainties stem from global developments: downside risks include slower