KUALA LUMPUR: There is a possibility that Malaysia can negotiate a reduction in threatened United States tariffs as Washington has agreed to further talks, but the global trade war meant economic growth was likely to be below target this year, Prime Minister Anwar Ibrahim said on Monday (May 5).
Malaysia is facing a 24 per cent tariff rate in July for exports to the US, unless an agreement is struck between both countries.
“Although these are preliminary discussions … the United States government has agreed to further negotiate with Malaysia, and there is a possibility of reducing the reciprocal tariff imposed,” Anwar told parliament.
“Once again, I must stress that this process is still at an early stage, and no agreement has been finalised by either side.”
He said the suspension of most tariffs until July meant the impact was manageable for now, but said Malaysia was unlikely to meet its economic growth forecast of 4.5 per cent to 5.5 per cent this year.
Anwar noted that the International Monetary Fund has projected slower growth globally as a result of the tariffs, cutting it from 3.3 per cent to 2.8 per cent.
This included a revision for Malaysia, which went from 4.7 per cent to 4.1 per cent.
“Although the situation remains dynamic, there’s a big possibility we won’t be able to hit our Budget 2025 targets of between 4.5 to 5.5 per cent growth.
“As such, the Ministry of Finance and Bank Negara Malaysia are currently assessing the impact of these tariffs and will revise the GDP forecast once there is more clarity and we see the outcome of the future negotiations,” said Anwar.
Last month, the central bank governor Abdul Rasheed Ghaffour also said this year’s growth forecast would have to be lowered because of the global trade war.
Malaysia has said it is open to negotiating with the US on non-tariff barriers, reducing its bilateral trade surplus, and exploring a bilateral trade agreement.
The Southeast Asian country is one of 18 nations that have managed to have early discussions with the US government on its “reciprocal” tariffs, Anwar said on Monday, as quoted by local media platform the Malay Mail.
He said Minister of Investment, Trade and Industry Zafrul Abdul Aziz met with officials in Washington DC during a visit from Apr 22 to Apr 24 to discuss the matters, with encouraging results.
“The visit was to explore opportunities for cooperation, to identify what Malaysia could offer them, and to appeal for the US to consider exempting Malaysia from the retaliatory tariffs,” said Anwar.
Anwar said Malaysia would also aggressively explore new trading opportunities and boost exchanges between existing trade partners, including China and the European Union.
He said negotiations to improve a free-trade agreement between the ASEAN regional bloc and China will be finalised in the near future, with trade ministers from the respective countries set to meet on May 19.
The Malaysian premier also pledged to provide up to RM1.5 billion (US$356 million) in additional loan guarantees and financing for small and medium-sized enterprises (SMEs) affected by US tariff measures.
The government will raise the allocation under the Business Financing Guarantee Scheme to assist affected SMEs in securing commercial bank loans.
“In addition, the government will increase soft loan funds by RM500 million through development financial institutions to support affected SME entrepreneurs,” said Anwar, who also serves as the country’s finance minister, as quoted by local news platform The Edge.
Malaysia is chair of the 10-member Association of Southeast Asian Nations grouping this year.
Countries across export-driven Southeast Asia have been hit with steep tariffs, with six of 10 listed nations from the region slapped with levies of between 32 per cent and 49 per cent.
This is currently on a 90-day pause, with a universal 10 per cent tariff on most imports from other countries being imposed.
https://www.channelnewsasia.com/asia/malaysia-pm-sees-possible-reduction-us-tariffs-gdp-growth-likely-miss-target-5109016
