The news about Trumps imposition of a 25% tariff on Malaysian goods was portrayed as ‘shock and awe”. Likewise, the government is playing up the lowering of the US tariff to 19% as a great win to the government, in particular prime minister Anwar Ibrahim.
However, the truth is that only 61% of goods exported to the United States will incur this tariff. Most of Malaysia’s exports to the United States are actually not affected.
Malaysia’s palm oil, rubber and latex gloves, semiconductors, agricultural commodities like rubber and cocoa, and pharmaceuticals are exempt from the 19% tariff.
From this point of view Malaysia got of lightly. With product categories such as furniture, Malaysia still has the same relative advantage as it did before the tariffs because competitor exports face the same 19% tariff.
That’s the good news.
However, Malaysia has now committed USD 240 billion in commercial transactions over the next five years including USD 150 billion in the purchase of US manufactured equipment, USD 19 billion in Boeing aircraft, USD 3.4 billion purchases in LNG, and USD 70 billion investment in the US economy. In addition, Malaysia must eliminate tariffs on US goods on 98.4% of goods coming into Malaysian from the United States.
This is an RM 850 billion commitment to the United States, which is just as large as the forecast spending of the 13th Malaysian plan. Since most of the money committed to the US will be by GLCs and not the private sector, one would expect continued pressure on Malaysia’s national debt over the next five years.
Malaysia’s fiscal freedom has been hijacked and in the end, the people will have to pay for all of this. There is going to be a lot of pressure on the government to increase taxes over the next few years.
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"In addition, Malaysia must eliminate tariffs on US goods on 98.4% of goods coming into Malaysian from the United States."
Should have included the list of 98.4% of goods coming into Malaysia that must have tariffs removed?
Doesn't take much to figure out why Malaysia was spared. Most of Malaysia's large and export based industries like chips manufacturing are foreign (American) owned. Why would they want to tax their own goods?
Malaysia is not a technology or science based economy. It is merely a large smokeless factory for the Western and for Japanese capital. Malaysia poses no threat to the economies of the West especially a USA on the ropes now.
Malaysia is no home to scientists of any worth except for the occassional rote learnig scholar who does nothing more than to regurgitate someone elses work and score high marks.
India and China on the other hand are a threat to Western economies like the USA because they are the engine rooms of today running the economies and production of the US and other Western industrial nations.
Anwar is their man in KL. They say jump and he asks "How High Master?".