Bank Negara Malaysia (BNM) expects any impact from potential United States (US) tariffs on semiconductors to be limited for Malaysia, thanks to the country’s diversified export base and continued demand in key sectors.
Governor Datuk Abdul Rasheed Ghaffour pointed out that Malaysia is well-positioned to manage the risks.
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Governor Datuk Abdul Rasheed Ghaffour pointed out that Malaysia is well-positioned to manage the risks.
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NewsTranscript
00:00And to the question on any U.S. Pacific sector, as I mentioned earlier on, about 30% of our
00:11semiconductor are exempted from tariffs. Again, I think there could be certain other announcement
00:18that may come post the negotiations. We do not know. So that's why we need to remain vigilant
00:24and we'll take it as it comes. And what we have said is that we know that I think in terms
00:30of our export is diversified. As I said, there is no country operating partner that has more
00:37than 15% in terms of the account for more than 15% of our export. So therefore, the diversification
00:43of the export itself will be able to manage or mitigate the potential impact from any
00:49implications from the tariffs itself. First, Malaysia clearly benefited from the front
00:58loading of exports as businesses try to avoid higher tariffs. Second, 32% of our exports to
01:07the U.S. are actually exempted from tariffs, including the key products such as semiconductors.
01:13Third, our exports tend to be priced inelastic, which means the quantity demanded for our exports
01:22will not drastically change in the short term when prices increase due to tariffs. Examples
01:29of these products include electrical machinery, computer hardware, and optical and scientific equipment.
01:36Tending to the middle chart, we have already observed some signs of front loading in E&E exports as
01:46firms try to soften the impact of tariffs. And this underscores the strong underlying demand
01:52for E&E products. And we expect demand for E&E to continue, supported by malicious and trans
02:00position in the global value chain and AI-related demand. Tourism will also continue to play a significant
02:09role in 2025. The improved flight connectivity, the extension of visa-free policies, and the promotional
02:19efforts leading up to the visit in Asia Year 2026 are projected to boost both tourist arrivals and also receipts.
02:28Of course, we are vigilant to downside risk, particularly from higher trade restrictions and
02:35potentially weaker income and demand from international tourism affecting Malaysia's goods and services exports.
02:44To complement our data assessments, the bank also engaged export-oriented firms to collect on the ground
02:51insights on the tariff impact. In fact, we did this quite recently. And these insights suggest that in the
02:57near term, less than one-third of surveyed firms indeed expect to be negatively impacted by the tariff measures.
03:06However, most firms foresee limited impact or even positive impact in the next three months. This stems from
03:15several factors. As mentioned earlier, some of our exports to the U.S. are currently exempted from tariffs. And in some cases,
03:24orders have already been secured for the upcoming months and providing a buffer against any immediate
03:32disruptions. Firms have also confirmed the presence of front-loading activity by their overseas clients,
03:40as observed from the macro data. Inventory building by these clients has led to a surge in demand for
03:48malicious exports.