PMKS Need Special Grants To Face US Tariffs

PETALING JAYA: The government needs to provide immediate assistance to micro, small and medium enterprises (PMKS), including matching grants, to face the 10 percent import tariff imposed by the United States (US).

President of the Small and Medium Enterprises Association of Malaysia (Samenta), Datuk William Ng, said although Malaysia was subjected to the lowest tariff rate among several ASEAN countries, the measure still places pressure on PMKS that depend on export markets, as they face shrinking profit margins.

“We are grateful that Malaysia is at the lowest tariff rate of 10 percent compared to some other ASEAN countries which are subjected to 12.5 percent, indicating early US recognition of the government’s commitment in implementing the forced labour prohibition policy.

“However, the imposition of tariffs based on country, rather than company-level assessment, means that local companies that have invested in compliance with international labour standards still have to bear the additional burden,” he told Utusan Malaysia.

According to him, most local PMKS serve as Tier 2 and Tier 3 suppliers in the global supply chain, thus risking pressure from US customers to absorb a portion of the tariff costs.

“PMKS now face the dilemma of either absorbing the additional costs, which will erode profits, or raising product prices at the risk of losing customers. For companies operating with profit margins below 15 percent, this situation places great pressure on cash flow,” he said.

Therefore, he said the government, through the Ministry of Investment, Trade and Industry (MITI) and the Malaysia External Trade Development Corporation (MATRADE), needs to introduce several forms of support to mitigate the impact of the tariffs.

He proposed that the government provide special matching grants to help PMKS cover the costs of registration, certification and marketing to penetrate new markets such as member countries of the Regional Comprehensive Economic Partnership (RCEP) and West Asia.

“In addition, the government should also offer vouchers or subsidies for ESG compliance audits and international labour standards to reduce the cost burden borne by companies.

“At the same time, MITI needs to continue bilateral negotiations with the United States Trade Representative (USTR).

“This is to accelerate the implementation of the import enforcement regime related to forced labour so that Malaysia can be removed from the Section 301 tariff list of the Trade Act 1974 in the future,” he told Utusan Malaysia.

Last Thursday, the US Trade Representative (USTR), Ambassador Jamieson Greer, via a statement, announced that Malaysia is among the ASEAN countries subjected to the lowest duty rate of 10 percent under the new US Section 301 tariffs.

Besides Malaysia, Cambodia and Indonesia were also subjected to the 10 percent duty.

Commenting on the sectors expected to be most affected, he said the manufacturing sector for general industrial goods and value-added consumer goods not listed under the basic exclusions will face the greatest impact from the implementation of the tariffs.

He said among the most affected sectors are the furniture and wood processing industries, as the US is their main export market, besides facing intense price competition.

“PMKS in the light electrical and electronic (E&E) components and plastics sectors that supply components for electronic devices and export-based plastic products are also expected to feel the spillover effect.

“The textile and apparel sector is also expected to be affected in the near term, given that the tariff rate quota (TRQ) mechanism for textiles has not yet been fully implemented.

“However, the palm oil sector and several specific raw commodities are not affected as they are listed under Annex A exemptions by the USTR,” he explained.

Utusan Malaysia