KUALA LUMPUR (March 26): Concerns are mounting over potential US restrictions on semiconductor exports, which could disrupt supply chains and impact Malaysia’s trade balance, according to the Asean+3 Macroeconomic Research Office (AMRO).

AMRO is an organisation that aims to contribute to securing the macroeconomic and financial resilience and stability of the region comprising the Asean member states and their key trading partners, China, Japan and South Korea.

AMRO's group head (country surveillance) Peh Kian Heng said any restriction imposed by the US on targeted products such as semiconductors could have a significant adverse impact on the country’s trade performance.

US President Donald Trump has announced plans to impose a "25% or higher" tariff on all imported semiconductors. In addition to semiconductors, automobiles and pharmaceuticals are also among the targeted industries.

Malaysia contributes 13% of global semiconductor testing and packaging, making it a significant player in the industry and the world’s sixth-largest semiconductor exporter.

“I’m not too pessimistic about the trade outlook. This is because what we are discussing here is the 'known unknown' — meaning we are aware of the risks and are prepared for them,” Peh said.

“However, what concerns us more is the 'unknown unknown' — a black swan event that none of us can predict, which could take various forms,” he said during a panel discussion at the 2025 Bank Negara Malaysia Governor’s address on the Malaysian Economy, on Wednesday.

He added: “For me, global trade is very complicated. Many of the exports that Malaysia sends to China do not remain there—they eventually end up in the US. Our calculations show that about 6% of Malaysia’s export value to China is ultimately consumed in the US.”

BNM’s 2024 annual report projected Malaysia’s gross exports to grow at a moderate pace amid global uncertainties. They are expected to grow by 5.2% in 2025, compared to 5.7% in 2024, the report said, but noted that Malaysia’s diversified export base and markets are expected to cushion the economy against external shocks.

Peh said Malaysia’s financial market volatility is expected to persist amid global uncertainties and interest rate adjustments by other central banks.

“However, I agree with BNM that the aim of the monetary policy is to ensure price stability. I believe that as long as Malaysia remains focused on anchoring inflation and promoting sustainable economic growth, the ringgit will remain stable throughout the year,” he said.

Also speaking in the panel discussion was BNM deputy governor Datuk Marzunisham Omar, who reiterated that coordinated actions by the central bank and the government to encourage the repatriation and conversion of foreign earnings by corporations and institutional investors have helped prop up the local currency.

“Like any other currency, the ringgit’s performance will ultimately reflect the fundamentals and competitiveness of the economy,” he said.

Marzunisham added that Malaysia’s strong banking system, prudent fiscal management and ongoing economic reforms will continue to provide long-term stability and support economic resilience.