KUALA LUMPUR: As the United States moves forward with plans for sector-specific tariffs on semiconductors, Malaysia isn’t panicking—instead, it’s holding steady. According to Bank Negara Malaysia (BNM), the country is prepared to weather the storm, thanks to its well-diversified export base and continued global demand for its key products.
Speaking with calm confidence, BNM Governor Datuk Abdul Rasheed Ghaffour assured Malaysians that the ripple effect from US tariffs is expected to be manageable.
“Malaysia has long positioned itself smartly in the global supply chain,” he said during a recent press briefing on the nation’s Q1 2025 GDP results. “We’ve seen a front-loading of exports, especially as companies anticipate tariffs. Plus, nearly one-third of our exports to the US—including critical products like semiconductors—are already tariff-exempt.”
He added that many of Malaysia’s major exports, such as electrical machinery and scientific instruments, are considered price inelastic. In simple terms, even if prices rise slightly, global buyers are unlikely to cut back.
Malaysia’s economy grew 4.4% in the first quarter of 2025, a modest improvement over the same period last year, though slightly down from Q4’s 4.9% growth. The uptick was supported by resilient consumer spending, strong job numbers, and targeted government policies.
Abdul Rasheed also highlighted that businesses are not standing idle—they’re taking action. “We’ve observed companies boosting exports ahead of any tariff enforcement. This shows robust demand, especially in the electrical and electronics (E&E) sector, which remains crucial to our role in global trade and emerging technologies like AI.”
To back this up, BNM has spoken directly with companies to understand how tariffs are affecting them on the ground. Encouragingly, fewer than one-third of firms surveyed expect any real short-term setbacks. Some even see opportunities ahead. “In many cases, companies have already secured orders for the next few months, giving them a cushion,” he said.
Adding another layer of optimism, Abdul Rasheed pointed to Malaysia’s growing tourism momentum. Improved flight connections, extended visa-free entry, and promotional efforts ahead of Visit Malaysia Year 2026 are expected to further support economic growth.
Still, he didn’t sugarcoat the challenges ahead. “We’re keeping a close eye on risks—whether it’s rising trade barriers or softening global demand, especially in tourism.”
But if there’s a key message in the Governor’s words, it’s this: Malaysia is not just reacting—it’s adapting, evolving, and holding its ground.
